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New overtime rules could hit nonprofits hard

Effective Dec. 1, state will require for-profit and non-profit employers to pay overtime to salaried employees earning less than $47,476 annually


Noel Mickelberry, executive director of Oregon Walks, often works weekends when she organizes a fundraiser for the nonprofit organization or projects to advocate for protecting Oregonians’ “right to roam.”

During one such event Nov. 20, Mickelberry led a crew of 30 volunteers setting up white silhouettes along roadsides to commemorate World Day of Remembrance for Traffic Victims.

Mickelberry’s long hours will have to end or be reduced under new federal rules requiring mandatory overtime pay for many salaried workers who work more than 40 hours.

New rules, effective Dec. 1, require both for-profit and nonprofit employers to pay overtime to salaried employees who receive less than $47,476 per year, up from a threshold of $23,660.

Both of Oregon Walks’ employees, including Mickelberry, earn less than $47,476. With a budget of about $150,000 per year, the nonprofit will have to be careful about keeping employees’ hours down, Mickelberry said.

“Fundraising events are a lot of work and require staff to put in a lot of hours leading up to them,” Mickelberry said. “We will need to look at either paying overtime or re-evaluating how we run those events. We are very supportive of the changes, but it is affecting the way we think about how we do our work to make sure we are compensating and supporting staff through those times.”

The new rules by the U.S. Department of Labor could give up to 4 million Americans a raise, according to the department.

President Obama first proposed the changes in 2014 with a memorandum directing the labor department to update the Fair Labor Standards Act overtime regulations. The department received more than 270,000 comments on proposed rules, including from pro-business groups such as Associated Oregon Industries.

“The proposed overtime wage threshold increase unevenly affects Oregon businesses due to Oregon’s lower wages while failing to address the varying characteristics of local and regional economies,” AOI and other business groups wrote in a letter to the labor department. “Instituting such an increase endangers both job security and advancement opportunity for far too many Oregonians.”

While for-profit employers have been vocal about how the changes will impact their bottom lines, nonprofit organizations also anticipate a boost in costs or a reduction in services due to the new rules.

There are more than 17,000 nonprofit organizations in Oregon. A vast majority of those have no paid staff. But between those that do, there are about 172,000 employees, said Jim White, executive director of the Nonprofit Association of Oregon.

It’s unclear how many of those are exempt from overtime and how many are hourly.

In discussions with the association, nonprofit leaders have generally been supportive of the new overtime rules but have felt burdened by the fact that the new rules will take effect shortly after Oregon’s new higher minimum wage rate takes effect July 1.

“We have heard concerns that it wasn’t one or the other but the back-to-back succession,” White said. “Nonprofits have expressed concerns: How are we going to do this? How are we going to make these changes simultaneously? They are concerned with being able to absorb changes without cuts in program services or cuts in staff.”

Oregon SMART (Start Making a Reader Today), a nonprofit organization that provides reading support in schools, has five to 10 employees out of 36 who could be eligible for overtime under the new rules, said Nell Whitman, director of finance and administration.

“We are, like many organizations, trying to ride the right line between fair compensation and making sure we keep the business side within budget and provide all the services to the community,” Whitman said. “I think we can make the rules work. I think they provide a pretty reasonable balance between those things.”

SMART will review its positions and determine whether to make some of them hourly or raise salaries to make employees exempt from overtime, she said.

“Organizations with a lot of government contracts and a set amount to spend will have more difficulty with the new rules,” she said. “We are not in that situation.”