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Nonprofits with Government Grants/Contracts See Challenges, Seek Solutions for Coping with New Overtime Rule

The new federal overtime rules are generating moral support, operational anxiety, and concern for the public among nonprofit organizations providing services on behalf of governments, according to survey responses from more than a thousand nonprofits from all 50 states.

The U.S. Department of Labor’s Overtime Final Rule, published in late May and effective December 1, will require most for-profit, government, and nonprofit employers to pay overtime to full-time employees earning less than $913 per week (47,476/yearly) regardless of whether they are otherwise classified as white collar workers.

In a new report, The Nonprofit Overtime Implementation Conundrum, the National Council of Nonprofits presents the findings from a national survey it conducted of nonprofits with government grants and contracts. The survey found that a third of respondents (34 percent) reported they will likely reduce staff and a third (33 percent) expect to be forced to cut back on the services offered to the public. While many expressed support for the concept of the new rule, nonprofits with government grants and contracts expressed frustration at being caught between a rock and a hard place: bound by written agreements requiring them to do a certain amount of work at a fixed reimbursement rate when changes in federal wage and hour policy will impose operating expenses to levels that were not anticipated when the agreements were signed.

One solution identified in the report is for governments to agree to reopen or renegotiate the existing grants and contracts. Read the executive summary, full report, and infographic.