Hot Topics in Employment Law for Nonprofits

Transcription

1 Hot Topics in Employment Law for Nonprofits David Heinen Connect Learn Advocate Important Disclaimers If you can read this fine print, you are sitting too close to your screen! 1

2 Initial question: Are your nonprofit s workers employees or independent contractors? Worker Misclassification Employees vs. independent contractors 2

3 Employees vs. independent contractors Behavioral control Financial control Relationship of the parties Department of Labor standards 1. Is the work an integral part of the employer s business? 2. Does the worker s managerial skill affect the worker s opportunity for profit or loss? Department of Labor standards 3. How does the worker s relative investment compare to the employer s investment? 4. Does the work performed require special skill and initiative? 3

4 Department of Labor standards 5. Is the relationship between the worker and the employer permanent or indefinite? 6. What is the nature and degree of the employer s control? Worker Misclassification Recent Changes DOL enforcement changes Revocation of Administrator s Interpretation that focused on economic realities Factors are the same, but enforcement could be less strict State enforcement in North Carolina Employee Classification Section in NC Industrial Commission Better and more coordinated enforcement at the state level Fair Labor Standards Act 4

5 Fair Labor Standards Act Minimum wage Overtime pay for non-exempt employees Equal pay for equal work Fair Labor Standards Act Exemptions for executive, professional, and administrative staff 1. Paid on salary basis 2. Must be paid $455/week ($23,660 per year) 3. Must meet duties test Exemption for highly-compensated employees FLSA Exemption Duties Tests Duties tests have not changed recently but be certain that exempt employees meet one of these tests Warning: It appears that the regulations and fact sheets about the duties tests were written by lawyers! Further clarification on how these apply to nonprofit employees would be welcome 5

6 FLSA Exemption Administrative employees Primary duty is non-manual work Exercise discretion over work Salary of $913/week or more ($47,476 per year) FLSA Exemption Administrative employees some key quotes: Directly related to management or general business operations Exercise of discretion and independent judgment with respect to matters of significance FLSA Exemption Executive employees Primary duties are managerial duties of organization Supervision of 2+ FTE Authority to hire/fire Salary of $913/week or more ($47,476 per year) 6

7 FLSA Exemption Professional employees Primary duty is related to a learned profession or creative profession Salary of $913/week or more ($47,476 per year) With a few important exceptions, including teachers, doctors, and lawyers FLSA Exemption Professional employees some key quotes: Learned professional 1. Advanced knowledge that is predominantly intellectual in character in a field of science or learning customarily acquired by a prolonged course of specialized intellectual instruction FLSA Exemption Professional employees some key quotes: Creative professional 1. Performance of work requiring invention, imagination, originality, or talent 2. In a recognized field of artistic or creative endeavor 7

8 FLSA Exemption Professional employees some key quotes: Teacher Regular classroom teachers Pre-K teachers Some specialized instructors Some academic administrative personnel Obama-era overtime regulations Obama-era DOL overtime regulations 1. Would have raised salary threshold from $455 per week ($23,660 per year) to $913 per week ($47,476 per year) 8

9 Obama-era DOL overtime regulations 2. Would have raised salary threshold for highlycompensated employees from $100,000 per year to $134,004 per year Obama-era DOL overtime regulations 3. Would have automatically adjusted for inflation Salary thresholds last adjusted in 2004 Would have been adjusted every three years in the future So salary threshold would have been over $50,000 in 2020 Obama-era DOL overtime regulations Nonprofits typical feelings about the overtime rules are: Moral support But operational anxiety 9

10 Status of Obama-era overtime regulations Future Changes to FLSA Rules DOL has a new Request for Information seeking input on future overtime regulations Next round of regulations will likely raise salary threshold, but not to the extent of the Obama-era regulations Possibility of different salary thresholds for different employers Nonprofits can (and should) submit comments by September 25, 2017 Nonprofit-specific FLSA questions (and answers!) 10

11 Answers to some common nonprofit questions If staff are non-exempt, do they need to be paid on an hourly basis? No, it is permissible to pay salary to non-exempt staff (but you still need to track hours to pay overtime for hours worked over 40 per week) Answers to some common nonprofit questions If our nonprofit s work week is 35 hours per week, do we need to pay overtime when non-exempt staff work 36+ hours in a week? No, regardless of how you define your work week, you don t need to pay overtime until workers have exceeded 40 hours in a work week Answers to some common nonprofit questions Does our nonprofit s work week need to be Sunday through Saturday? No, you can define your work week as any period of seven consecutive days. You just need to be consistent for all staff and all times of the year. 11

12 Answers to some common nonprofit questions Some of our nonprofits employees work two different jobs with two different rates of pay. How do we calculate overtime? The regular rate of pay for each week is the weighted average of the rate of pay for each position. Overtime is calculated as 1 ½ times that weighted average. Answers to some common nonprofit questions Can we offer comp time instead of overtime to our non-exempt employees? No. But there is a bill in Congress that would allow this option for employers in the future. Answers to some common nonprofit questions Do we need to pay the minimum wage to our interns? It depends. Nonprofits can have unpaid, volunteer interns. Also, interns who qualify as trainees may receive stipends that are less than the minimum wage. Otherwise, nonprofits should pay interns at least the minimum wage for hours worked. 12

13 Answers to some common nonprofit questions Some of our staff are on call on evenings and weekends. Do we need to count their on-call time as hours worked? It depends on whether the on-call staff are engaged to be waiting (which means they are working) or are waiting to be engaged (which means they are only working at certain times). Answers to some common nonprofit questions Is it possible that the minimum wage could be raised in North Carolina or some cities in the state? It is unlikely in the near future. Legislation to raise the minimum wage has not gained traction in the General Assembly. Cities and counties are prohibited from adopting employment regulations until December 1, Other recent (and future) employment law trends affecting nonprofits 13

14 Immigration Compliance New Form I-9 effective September 18, 2017 E-Verify online system for checking immigration status of prospective employees Required for employers with 25 or more employees Proposed state laws would lower this threshold to 15 or more employees or require all nonprofits with government contracts to use E-Verify Immigration Compliance DACA unwinding September 5 Presidential action Possible congressional action by March 5, 2018 Considerations for nonprofits Know work permit status of all employees, particularly those on with temporary work authorizations Potential liability for terminating or not hiring DACA beneficiaries Workers Compensation Required for nonprofits with three or more employees Nonprofits don t need to provide coverage to uncompensated board officers But if nonprofits have any employees, they probably need coverage Rates set by activity risk Disability benefits are two-thirds of average weekly earnings 14

15 Unemployment Insurance Federal unemployment insurance taxes (FUTA) 501(c)(3) nonprofits are exempt State unemployment insurance taxes (SUTA) Does not apply to nonprofits with fewer than four employees who work 20 weeks in a year Administered by Division of Employment Security (DES) Unemployment Insurance State unemployment insurance taxes (SUTA) options 1. Payroll taxes based on experience rating Note: may be subject to surcharge in some years 2. Reimbursement method with 1% of payroll in escrow with DES New change in 2017 Reimbursing nonprofits may apply for a refund if they remit more than 1% of payroll to DES Paid Sick Leave Not required by law, but a good practice for nonprofit employers Legislation to require employers to offer paid sick leave to full-time employees has not gained traction 15

16 For more information David Heinen Vice President for Public Policy and 16