Last week, the house held hearings on the new overtime rules that double the base salary requirement for exempt employees. With these changes, if you make $47,476 a year or less, you can not be granted exempt status and, therefore, must be paid overtime when you work extra hours (per your state regulations). The hearings were dramatically one-sided, with testimony from a stream of nonprofits and small businesses that oppose the increase. My hope is that the politicians that staged this play had to look pretty far and wide to find nonprofits willing to participate, but I doubt that they did.
We can’t change the rest of the world by abusing the piece that we manage. If we want to cure diseases, reduce poverty, help Veterans or protect the environment, we can start by building an effective organization that is motivated and resourced to make a difference. And that means that we reasonably compensate our staff. I’ve blogged before on my take that the perk of serving a personally meaningful mission can offset some of my salary requirements, but that the discrepancy between a nonprofit salary and what one could make next door can’t be too vast, because too large of gap leads to high turnover and resentment.
What needs to be understood about this overtime law is that it isn’t setting some new bar. It’s addressing an existing abusive situation. The justification for exempt status revolves around the responsibilities an employee has, and their leverage to influence the success or failure of the company. Managers can be exempt. People with highly specialized skills can be exempt. And the odds are, if you have people on your payroll who, by being bad at their jobs, can sink your nonprofit, you’re already paying them $50,000 or more. It’s simple risk management: you don’t want to undervalue your critical personnel.
Accordingly, if you’re Easter Seals of New Hampshire (one of the nonprofits that testified at the hearing), and you’re saying that this increase will destroy your business, then I’m here to tell you that it’s one in a number of things that are lined up to take you down, starting with the mass walkout you might experience if your overworked and underpaid staff get fed up.
In my time in the nonprofit sector:
- I’ve learned of nonprofits that exploit “apprentice laws”, allowing them to pay people as little as $5 an hour to do repetitive labor while the CEO makes hundreds of thousands.
- I regularly see talented people ditch nonprofits after two or three years of doing amazing, transformative work, but never seeing a raise for it (or a penny of overtime). It takes these orgs months on end to recover.
- And I’ve seen nonprofits loaded with staff that have worked there for decades, doing their job in the same ways that they’ve done them since “Microsoft” was a company name yet to be coined.
Because paying people fairly and competitively isn’t a giveaway. It’s a sound business practice. And we can’t continue to say that we are the people improving lives when we’re abusing those closest to us. This increase is long overdue and, if it breaks the back of a nonprofit to compensate staff for working long hours, then they are supporting the wrong mission to begin with.