Getting An Education On Overtime

Nonprofit and university workers need overtime too.

Nonprofit And University Workers Need Overtime Too

Two weeks ago, the Obama Administration gave a big boost to working families by restoring a key wage safeguard for middle-class workers: the overtime salary threshold. And while most workers are celebrating the rule—polling shows that the Obama Administration’s move is a big hit with voters—the rule is receiving some resistance from some unexpected sources: higher education institutions and nonprofits.

First, a quick explainer on the overtime and why it’s so important. Salaried workers have a right to overtime pay, or time-and-a-half for every hour worked over 40 in a week, just like hourly workers do, but if these salaried workers earn more than the current overtime threshold of $23,660 every year they aren’t guaranteed to get overtime. The percentage of salaried workers earning under the threshold used to be much higher—in 1975, 62 percent of salaried workers were covered. But inflation has steadily eroded the threshold, and only 8 percent of salaried workers fall under the threshold today.

That’s why the Obama Administration acted to raise the overtime salary threshold to $47,476 a year, catching the threshold up to the 2016 economy. Restoring overtime is maybe the biggest single action the Obama Administration can take without Congressional approval to raise wages for workers, which is key given the unprecedented gridlock in Congress. The rule will directly benefit 12.5 million workers in all, including over 4 million parents. Additionally restoring overtime doesn’t just put more money into the pockets of workers, it grows the economy because it gives these workers more money to spend in their communities and even creates jobs.

Unsurprisingly, the usual cast of opponents to boosting wages for workers has come out swinging, saying the rule is an “absolute disaster” and a “job killer” or “career killer” that will “burden employers”. If that all sounds familiar, that’s because it probably sounds an awful lot like what these same elected officials and organizations say about increasing the minimum wage, ensuring employers provide paid sick days, and providing workers with paid family and medical leave, among other policies that help workers climb the economic ladder.

But a bit more surprising is the stiff resistance the rule is receiving from organizations that represent colleges and universities as well as organizations that represent nonprofits. Colleges and universities say that the rule will force them to raise tuition costs—putting even more pressure on middle-class families struggling to keep up with skyrocketing education costs, while nonprofits say the rule will stress their budgets because they have many employees on payroll earning under the new threshold of $47,476/year who work over 40 hours a week. While this is by no means a view shared by all higher education institutions and nonprofits, these arguments have struck a nerve.

Importantly, colleges, universities, and nonprofits are just like other employers. By paying workers less than the proposed overtime threshold amount but expecting their workers to put in more than 40 hours each week, they are both making it harder for their workers to climb the economic ladder and keeping their workers away from their families. Colleges, universities, and nonprofits shouldn’t get a pass: if they expect their employees to work overtime, then they need to pay it.

And the actual impacts to colleges, universities, and nonprofits could be quite small. According to economic analysis done by the Department of Labor, the total hit to payroll for complying with the new rule is expected to amount to just 0.03 percent of payroll costs in education and health services related industries, which includes colleges and universities. This is the same across all industries, including nonprofits—0.03 percent. Given that the current overtime salary threshold of $23,660 is lower than the poverty line for a family of four, raising the threshold to $47,476 brings the threshold up to date—though it’s by no means an extravagant salary. All it does is ensure that employees covered by the rule get a better chance of earning a wage that lets them keep up with the rising expenses of a middle-class life. Especially for colleges and universities, people might find the resistance to restoring overtime a little funny: claiming that tuition would have to go up because of overtime costs ignores that tuition is spiking for plenty of reasons, including huge salaries for university administrators and football coaches.

Working at a college, university, or nonprofit shouldn’t mean employees miss out on a key benefit that could raise their wages or give them more time to spend outside work without losing pay. These workers have a right to the benefits that all salaried workers get—fair compensation for working long hours. Where you work shouldn’t change that.

BOTTOM LINE: Colleges, universities, and nonprofits fill vital roles in our communities and our economy. But plain and simple: being underpaid for overwork is being underpaid for overwork, regardless of the industry or organization.

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