With 2016 underway, the first order of business for many employers includes bracing ourselves for the looming rollout of the Department of Labor’s revised overtime regulations. Informed and responsible businesses are undertaking due diligence. Armed with employee rosters, job descriptions, and payroll data, we meet and discuss time studies, staffing patterns, budgets, and contract obligations.
At the core of many of these discussions is the proposed increase to the exempt salary threshold, raising it from $23,660 to $50,440 - a staggering hike that will impact many sectors, especially non-profits.
As a Director of Human Resources for MHY Family Services (MHY) a long-standing social services provider that has supported youth and families for over 135 years, I can attest to the grim prospect of implementing the proposed regulations, and their impact on programming and budgeting.
MHY provides residential, educational and community-based services throughout western Pennsylvania that respond to diverse hardships and traumas. Non-profits that provide social services rely on skilled, educated professionals to coordinate and deliver complex and critical programs and services to individuals with the most significant human needs. Clients commonly suffer from trauma, neglect and abuse. We rely on our professionals to develop relationships that drive successful clinical and programming outcomes; to support staff during client crises; and with that, to teach and model best practices.
Nearly half of MHY’s employees are of exempt status, and 75% - or approximately 50 - of those exempt managers and professionals would be impacted by the proposed $50,440 salary threshold, and eligible for overtime. The potential resulting costs to MHY for these employees is estimated at about three quarters of a million dollars of unfunded expenses; equal to 9% of our budget, in an environment in which one simply can’t raise rates to counties and managed care organizations to offset such increases. Like many non-profits, we can’t sustain such costs and expect to survive.
At MHY the positions impacted by the proposed threshold largely are comprised of assistant directors, program and clinical management, and therapists. They work varied schedules to provide client services, therapy, supervisory oversight and crisis support to direct-care employees. Possessing Bachelor’s and Master’s degrees, these are professionals that value the autonomy to make crucial and timely decisions; provide direction during treatment and crisis; and prefer flexibility over clock-watching and shiftwork.
While it isn’t uncommon for these individuals to work over 40 hours, as the weeks’ events dictate, as exempt employees, they have flexibility in their schedules; a self-care practice mindfully cultivated at MHY. This autonomy and discretion around client care will be eliminated, and continuity of care to youth and families wholly undermined, if these employees are reclassified under the DOL rule and forced to consider overtime as much as service outcomes.
The Society for Human Resource Management (SHRM), of which I’m a member, agrees that the salary threshold is due for an update, and I expect most employers would say the same. However, to more than double the threshold – combined with the proposed rule’s provision for annual threshold adjustments– is life-threatening to a non-profit.
We respond to regulatory changes on an almost constant basis, and additional costs commonly accompany those. We manage it. Non-profits arguably do more (quite well) with less than any other sector, and we dig in. The impact of the DOL’s proposed regulations, however, present insurmountable programming and budget challenges to employers whose resources are spread paper thin as it is.
Final regulations need to consider the impact on all employers. Otherwise, many non-profits will be writing their final chapters.
I look forward to sharing this story February 1st at a U.S. Chamber of Commerce symposium on the Impacts of the Proposed Overtime Regulation on Vulnerable Employers – follow the discussion via the live stream.