The Soapbox and Toolbox for New York State's Nonprofits

December 27, 2016

State’s Proposed Overtime Rule Could Add Another Unfunded Mandate


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Though a federal regulation to increase the number of workers who qualify for overtime has stalled, some New York-based nonprofits are responding to a proposed state rule that would grant more workers overtime – but potentially undercut their struggling budgets.

The proposal by the New York State Department of Labor, introduced Oct. 19, reflects a push for better pay for low-income workers and would take effect on Dec. 31. While the rule would cover the for-profit sector as well, nonprofits are in the awkward role of questioning a policy that aligns with their values, but not their already stretched bottom lines.

In a Dec. 2 comment to the state DOL, the Human Services Council of New York, an umbrella group of social service organizations, asked for a reconsideration of the proposal, which, beginning Dec. 31, would make $42,900 the new salary threshold to be exempt from overtime for those working for large companies in the city – an increase of nearly $8,000.

“Faced with arbitrary limits on indirect costs by both government and philanthropic funders, as well as with stagnant contracts that have not kept pace with inflation, many organizations are already precariously balanced,” wrote HSC’s executive director, Allison Sesso.

The proposed rule follows the spirit of federal regulation introduced earlier this year by the U.S. Department of Labor, which was slated to take effect Dec. 1, before a federal court in Texas temporarily blocked the rule. Though White House lawyers appealed the injunction, the incoming Trump administration is unlikely to defend the regulations. New York’s rules will have a major effect on the nonprofit sector. With 1.3 million workers, New York had more nonprofit workers than anywhere else in the country, according to a recent State Comptroller’s report. (The report, which used data from 2012, found the average wage was $47,700.)

Once fully phased in, the state’s rule would ultimately push New York City workers’ threshold to earn time-and-a-half pay for every hour worked after 40 hours a week about $11,000 the Obama administration’s proposed cutoff of $47,476.

The thresholds were formulated based in part on the minimum hourly wage increase signed by Governor Cuomo in April. Starting next year, the base pay for employees in New York City will range from $10.50 to $11 an hour.

Neither the state DOL or governor’s press office responded to inquiries on the proposed timeline or the concerns from nonprofits. In the meanwhile, organizations are planning for the implications.

The rule will be applied based on size and geographic tiers, with large organizations in New York City operating under the highest threshold. For companies in the city with more than 10 employees, the weekly rate to be exempt from overtime pay, which is now $675 per week, will increase to $825 on Dec. 31, $975 at the end of next year, and $1,125 by the end of 2018. Smaller employers will phase in their increase in smaller increments to meet that number at the end of 2019; suburban counties will align with the new rate by 2021. By Dec. 21, 2020, employees across the rest of the state earning less than $937.50 per week will qualify.  


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