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These Are the FLSA Laws Your Non-Profit Is Probably Breaking

Posted by Kit Dickinson on Jul 20, 2017 8:05:00 AM
Kit Dickinson
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woman hiding behind a desk because her non-profit organization is breaking FLSA lawsWith Obama's final overtime rule getting so much media coverage in the past year, most non-profit organizations have a heightened awareness of the need to make sure they're compliant with FLSA overtime laws. But there's a lot more to FLSA regulations than having your exempt and non-exempt employees classified properly.

Even before the latest FLSA changes, there were a number of high-profile cases resulting in major fines against non-profits that weren't in compliance with FLSA regulations.

Because there are so many rules and regulations that are constantly changing, it’s easy to be noncompliant with FLSA and never know it - until an employment attorney or the DOL introduces themselves. Could you be breaking FLSA laws? Here are the top three FLSA scenarios we’ve seen non-profit organizations overlook.

3 FLSA Rules You Could Easily Be Breaking

1) Semi-monthly pay frequency

If you're paying overtime-eligible employees on a semi-monthly basis, their overtime hours and rate calculation must be based on defined workweeks (e.g., Sunday through Saturday) — NOT the entire semi-monthly pay period (e.g., July 1 - 15).

So, if the first pay period of the month ends on Thursday the 15th, and Louise works 38 hours from Monday through Thursday that week, and another eight hours on Friday the 16th, you will need to pay her for six hours of overtime — even though the overtime was earned after her pay period ended.

Often, that means you'll need to calculate overtime by going back to prior pay periods and making adjustments. Many time-and-attendance systems can track those overtime hours, but they can't go back to a prior pay period and calculate the overtime rate. That's up to you.

2) Salaried employees eligible for overtime

Some non-profit organizations classify certain employees as salary non-exempt. These employees earn a defined salary and receive an overtime rate for hours worked over 40 hours. But they don't get overtime pay if paid time off (PTO) contributed to the 40-plus hours.

This is a tricky snare for non-profits, because your payroll practitioner usually has to make those calculations manually, or using spreadsheet macros. If they're not on the ball, it's easy to miss the PTO loophole.

3) Overtime on a biweekly pay cycle

A fundamental requirement of FLSA is that the overtime hours and the corresponding average rate must be based on a weekly period. If your non-profit is paying employees every two weeks, you must split their overtime hours and rate calculations into what was worked in week 1 versus week 2 of the pay period. Failure to do this results in incorrect overtime pay and violation of FLSA regulations.

Avoid Noncompliance with Automation

If your non-profit deals with any of these scenarios, now is the time to look into an automated solution to complement your time-and-attendance and payroll systems.

IDI’s Time Bank solution reliably handles these confusing and often overlooked requirements. Time and payroll systems can't handle these calculations, but with Time Bank you'll never have to give them a second thought.

Check out solutions for the non-profit industry →

Topics: Nonprofit Industry Solutions