Public Policy

Sept. 11 Federal Update: Social Current Seeks Feedback on Proposed Department of Labor Overtime Rule

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September 11, 2023

On Aug. 30, the U.S. Department of Labor (DOL) proposed a new rule that will directly impact overtime pay policies in the social sector. The social sector must have a seat at the table as the Department considers implementing its changes.

The Fair Labor Standards Act (FLSA) mandates minimum wage and overtime pay for eligible employees. An exemption known as the “white-collar,” or executive, administrative, or professional (EAP) exemption exists for certain employees, which is subject to specific criteria set by the DOL.

The proposed changes to the EAP exemption include:

  • Setting the standard salary level at the thirty-fifth percentile of weekly earnings for full-time salaried workers in the lowest-wage Census Region, currently $1,059 per week.
  • Establishing the highly compensated employee (HCE) total annual compensation threshold at the eighty-fifth percentile of full-time salaried workers nationally, currently $143,988 annually.
  • Maintaining the simplified standard duties test while updating the salary level to account for earnings growth and recent rulemaking experiences.
  • Ensuring fewer lower-paid white-collar employees performing nonexempt work are exempt while retaining the exemption for many lower-paid, white-collar employees.
  • Increasing salary levels in U.S. territories, except for American Samoa.
  • Updating the special base rate for employees in the motion picture industry.

The proposed changes aim to better define who qualifies for the EAP exemption by aligning salary levels with contemporary wage data. These updates are based on the DOL’s commitment to regularly review and adjust salary thresholds to keep pace with changing wages.

The Department estimates these changes could affect 3.4 million employees who would gain overtime protection and 248,900 employees affected by the HCE total annual compensation increase. The estimated direct employer costs over the first ten years would be $664 million, with $1.3 billion in annualized income transfers from employers to employees.

The proposed adjustments to the EAP exemption aim to ensure it remains relevant and effective in distinguishing between exempt and nonexempt employees while considering economic impacts on employers and employees.

Here are relevant resources to better understand the new rule:

Please read these resources and learn how it would impact your organization.

The DOL has opened the new rule to public comment for 60 days. Social Current is seeking feedback from the network to inform our response, which we will submit to the DOL by the deadline on Halloween. We also encourage network organizations to submit their own comments.

Please get in touch with our Government Relations Team at babelle-kiser@social-current.org and dkiernan@social-current.org with questions or feedback on the rule.

You can also submit feedback through this form.

New Nonprofit Workforce Shortage Crisis Report from NCN

The National Council of Nonprofits recently released its annual report 2023 Nonprofit Workforce Survey Results: Communities Suffer as Nonprofit Workforce Shortage Crisis Continues. The report, based on 1,600 survey responses from all 50 states and the District of Columbia in April, paints a stark picture of the social sector struggling to recover from the pandemic. Nearly three quarters of respondents reported job vacancies in their organizations, with 75 percent of respondents citing vacancies in program and service delivery positions, and 41 percent in entry-level positions. Almost 52 percent said they have more vacancies than before the pandemic, and 28 percent said they have longer waiting lists for services. The main staffing challenges are related to salary competition and budget constraints. 72 percent of respondents cited competition with other sectors as a barrier to recruitment and retention, and two-thirds referred to budget constraints/insufficient funds as a significant issue. About half of respondents named stress and burnout as an obstacle. Ominously, over 70 percent of nonprofits expect less or the same level of charitable giving in 2023.

The survey also asked respondents to mention solutions to the staffing difficulties they are facing. Four policy solutions topped the list, including reform of government grants and contracts, implementation of charitable giving incentives, support for the Public Service Loan Forgiveness Program, and funding for child care.

Possible Government Shutdown

With the deadline to pass the federal budget by Sept. 30 rapidly approaching, lawmakers in Congress are desperately trying to cobble together a continuing resolution that would avoid a debilitating government shutdown. Only three out of the twelve bills that constitute the federal budget are even close to passage in the Senate, and the House is nowhere near passing a single bill. Leaders on both sides of the aisle have agreed that a continuing resolution, which would fund the government at current levels for a short period of time, is necessary to buy time to reach a deal on the FY 2024 budget.

However, stark disagreements have emerged over supplemental funding for Ukraine and disaster aid many wish to see attached to the continuing resolution. The Senate supports President Joe Biden’s request for $24 billion in aid to Ukraine, but members of the House GOP are pressuring House Speaker Kevin McCarthy (R- Calif.) to drop it. In response, McCarthy is considering exchanging Ukraine aid for stricter border policies on immigration and asylum that the Freedom Caucus supports. Theoretically, McCarthy has enough votes from House Democrats and moderate Republicans to pass a clean resolution; however, he has felt intense pressure from far-right caucus members to give in to their demands.

Ultimately, a government shutdown would be disastrous for the country, as job growth slows, interest rates rise, and policymakers work to avoid a recession.

HHS Proposes New Rule to Bolster Anti-Discrimination on the Basis of Disability

On Thursday, the Department of Health and Human Services proposed a rule that would strengthen anti-discrimination provisions for people with disabilities. Section 504 of the Rehabilitation Act of 1973 prohibits discrimination on the basis of disability in access to health and human service programs that receive federal assistance. The rule would update and clarify Section 504 in light of the changing legal landscape of disability discrimination. It would prohibit medical professionals from using stereotypes and biases about individuals with disabilities, as well as judgments about their value and burden on others, as bases for making medical decisions. The proposal would also create enforceable standards for accessible medical equipment and require access to integrated, community-based settings when appropriate for people with disabilities. Finally, the rule clarifies non-discrimination provisions in the child welfare space, when it comes to areas, such as parent-child visitation, child removals and placements, as well as foster and adoptive parent assessment. The public has 60 days to register comments on the rule.

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