Employment

Million-Dollar Salaries and Charities: An Unlikely Mix?

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Feeling underpaid and overworked at your nonprofit organization?  For many nonprofit workers, such conditions are the norm.   Nonprofit employees are often willing to accept less pay than their private-sector counterparts because they also enjoy rich non-financial rewards:  helping others in need, serving worthy causes, and achieving goals not attainable through ordinary economic forces.   According to a recent Wall Street Journal article, however, top executives at some charities are increasingly very well paid.   The article states that over 2,700 top executives made more than seven-figure salaries in 2014.  How can some nonprofits justify such high salaries, and what can the rest learn from them? 

Q & A: Severance Pay for Nonprofit Employees

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Nonprofit organizations may legally provide severance pay.   But under what circumstances, and how much?  How do unemployment benefits fit with severance?  And why put it in writing?  Whenever a nonprofit employer considers whether to provide severance pay to a terminated employee, many significant questions can arise warranting careful evaluation of several factors including risk management, stewardship, fairness, and practical business decisions. 

Health Benefits Relief in Sight: Employer-Provided HRAs Back to Pre-Tax Treatment

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Reimbursing employees’ health insurance premiums and other health costs on a pre-tax basis again is available, thanks to the 21st Century Cures Act signed recently by President Obama.  The law becomes effective January 1, 2017.  A few words of caution - the law applies only to “small” employers, and it contains other significant limitations that could render it inappropriate in many circumstances.     

Federal Judge Halts New Overtime Pay Rule

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By Sally Wagenmaker and Michael E. Batts, CPA

Temporary Injunction Puts Implementation in Question

A federal judge yesterday issued a nationwide temporary injunction halting the implementation of a new overtime pay rule scheduled to go into effect on December 1, 2016.  The judge, Amos L. Mazzant III – appointed by President Obama – ruled that the Obama administration (specifically, the U.S. Department of Labor) exceeded its legal authority in implementing the new rule.   Consequently, this rule change is on hold for all U.S. employers.  

What Exactly is Time-and-a-Half Pay? The Answer May Be Surprising

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With the new federal overtime regulations becoming effective December 1, 2016, employers across the country are addressing how to calculate a salaried, non-exempt employee’s overtime wages. This question has become more acute now that many currently exempt employees will be classified as non-exempt, if they do not meet the increased salary threshold of $47,476 for the white-collar exemption, and therefore are owed overtime pay.[1] The specific calculation approach may significantly impact the resulting overtime pay owed, and the results may be surprising. The following examples and recommendations provide insights for optimal overtime pay practices.

White Collar Enough? FLSA Exemptions for Executive, Administrative, and Professional Job Duties

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Many nonprofits are acutely aware that the Fair Labor Standards Act’s (FLSA) salary threshold for the white collar exemption soon will more than double to $913 per week ($47,476 per year).  Another critical requirement for the white collar exemption’s applicability is the right job category, such as executive, administrative, or professional.  Absent such qualifying job duties, an employee will not fall within the exemption – even if his or her salary exceeds the salary threshold – and therefore will qualify for overtime pay as a non-exempt employee.  How are these job categories defined, and how can nonprofit employers make sure they properly classify their exempt employees?

Federal Court Denies Title VII Sexual Orientation Claim, But With Serious Reservations About Underlying Rationale

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Federal employment discrimination claims made on the basis of the plaintiff’s sexual orientation are not permissible in Illinois, Indiana, and Wisconsin, at least for now.   The Seventh Circuit Court of Appeals recently ruled against a woman’s employment discrimination claim based on sexual orientation, concluding that Title VII’s protection against discrimination based on “sex” does not extend to “sexual orientation.”  Hively v. Ivy Tech Community College (7th Cir. July 28, 2016).  In so ruling, the court adhered to its binding precedent mandating the result.  However, the court also concluded that excessively blurred lines exist between protection for gender-nonconforming claims (those in which adverse employment action was based on the employee’s failure to conform to others’ views on how a person of the employee’s gender should look or act),  which enjoy some protection under Title VII, and sexual orientation claims, which do not.

Educating Nonprofit Employees: Pre-Tax Benefits

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Imagine an employee who graduated with a degree in mathematics, handles finances for your nonprofit, and now wants to develop her skills by taking classes.  May the nonprofit help ease the accompanying tuition pain through pre-tax educational assistance?  To what extent may a nonprofit employer offer pre-tax educational benefits to its employees who seek to improve themselves, as a wonderful employee perk?   The short two-part answer is (a) up to $5,250, but with certain program conditions, or (b) to an unlimited monetary amount, so long as the educational program will develop the employee’s skills within her current role, and not prepare her for a different profession.

Paid Sick Leave Trending - Chicago and Beyond

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Paid sick leave laws are steadily gaining traction among states and local municipalities across the United States.  The legislation is popular for employees but poses new challenges for employers now required to comply with a patchwork of diverse legal requirements.  This summer, Chicago became the latest city to join the trend, enacting a new sick-leave law effective July 1, 2017.  Here’s what is required for Chicago employers, and what all employers should consider in developing sick-leave policies.   

The National Trend – Challenging for All Employers

California, Oregon, Massachusetts, and the District of Columbia are examples of states that have recently adopted sick leave laws.  At the same time, more than 25 local municipalities have joined the bandwagon by enacting their own versions, including New York City, Seattle, Philadelphia, and now Chicago.  Due to this mix of new municipal and state laws, other states – particularly within the South and Midwest (excluding Illinois) – have responded by passing laws preempting local paid sick leave laws, seeking to avoid a complicated patchwork of local laws burdening employers. 

FLSA Overtime Rules Finalized: U.S. Department of Labor Raises Salary Threshold for Exempt Employees

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The U.S. Department of Labor recently issued new overtime rules raising the salary threshold for “exempt” employees under the Fair Labor Standards Act, as anticipated within the Obama Administration’s closing months.  The new rule doubles the minimum salary from $455 per week ($23,660 annually) to $913 per week ($47,476 annually), effective December 1, 2016.  To address these legal changes and their implications, the Evangelical Council for Financial Accountability is offering a webinar on June 23, 2016, at 12 pm Central, with attorney Sally Wagenmaker as one of the featured speakers.  For more information and to register, please visit www.ecfa.org/Events.     

Background Basics

The proper classification of employees for FLSA purposes as “exempt” or “non-exempt” is an ongoing consideration for many nonprofits.  The FLSA imposes significant requirements for non-exempt employees, including minimum hourly wage amounts, “time-and-a-half” overtime pay obligations for more than 40 hours worked per week, and accompanying record-keeping requirements. An employer’s misclassification of its employees as exempt can result in serious liability under the FLSA when an employer fails to properly pay overtime or minimum wages. 

Under the DOL’s long-standing rules, the test for exemption is threefold and based on the following: (a) type of work; (b) whether the employee is salaried; and (c) salary amount.  The new DOL rule focuses on the salary amount.  Additional background information about FLSA requirements and development of the new DOL rule is contained in our law firm’s blogs – see August 2015November 2015, and March 2016

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