The Department of Labor’s new overtime rule set to take effect on July 1, 2024 generally raises the salary threshold for the so-called “white collar” exemptions. This rule applies to private employers and non-profit employers who are subject to the Fair Labor Standards Act (FLSA). However, it is important to remember that not all non-profits are subject to the FLSA. Coverage of non-profits under the FLSA is usually achieved in two ways: (1) the organization is a covered enterprise; or (2) a particular worker is individually covered.
To meet the enterprise coverage test an entity must have annual revenues, that is, volume of sales made or business done, of at least $500,000. As a general matter, non-proft organizations are not covered enterprises under the FLSA unless they engage in ordinary commercial activities that result in sales made or business done that meet the $500,000 threshold. Ordinary commercial activities are activities such as operating a business, like a gift shop. Activities that are charitable in nature, however, are not considered ordinary commercial activities, and do not establish enterprise coverage. Examples of activities that are charitable in nature and normally provided free of charge include the following: providing temporary shelter; providing clothing or food to homeless persons; providing sexual assault, domestic violence, or other hotline counseling services; and providing disaster relief provisions. Income that a non-profit organization uses in furtherance of charitable activities is not factored into the $500,000 threshold. Such income might include contributions, membership fees, monetary and non-monetary donations, and dues.
Organizations that are not covered on an enterprise basis likely still have some employees who are covered individually and are therefore entitled to the FLSA’s protections. An employee who engages in interstate commerce or in the production of goods for interstate commerce is covered by the FLSA. Employees whose work involves or relates to the movement of persons or things across state lines are also considered engaged in interstate commerce. Such activities include: making out-of-state phone calls; receiving/sending interstate mail or electronic communications; ordering or receiving goods from an out-of-state supplier; and handling credit card transactions or performing the accounting or bookkeeping for such activities. Note, however, that an employee is not covered if the employee spends an insubstantial amount of time on those interstate commerce activities or does so only on isolated occasions.
If you are having troubled determining whether your organization falls under the FLSA, please reach out to one of the employment law attorneys at PLDR Law.
