Does the New Overtime Rule Really Affect Nonprofits and Organizers?

overtimeNew Orleans     Randy Shaw, the executive director of the Tenderloin Housing Clinic and its burgeoning empire, first challenged me to think about whether the new FLSA overtime guidelines would prevent any future prospects of building a farmworkers’ movement or an ACORN, both of which famously focused on building an army of volunteer and professional organizers working “long hours at low pay,” as ACORN advertised for years. The new overtime rules, long overdue, as more and more people are realizing, double the level of eligibility for overtime from a 2004-floor of a bit over $23,000 per year to the mid-$47000 range. On organizing programs that are not easily shoehorned into a 40-hour grid, such a jump seems like a huge budget buster and dream crusher. Both the US Public Interest Research Group, the Nader-created group of researchers and students, and Judicial Watch on the right had both expressed fears of the new rules impact and how it would hurt their work.

Looking into this all more carefully and going back to the basics, I remembered our many tussles with the fine men and women of the Department of Labor’s Wage and Hour Division, an understaffed and overworked group, I mean this seriously, the likes of which has few parallels in government. At different times we were able to establish organizers as discretionary employees and therefore properly salaried, which still maintains. I also remembered once on a Local 100 review shaking the investigators hand as he left, having concluded in the mid-1980s that we were not involved in sufficient interstate commerce. To make the story shorter, I finally shook myself back from my stupor and went back to the basics.

At one level, the gross expenditures to establish coverage under the Fair Labor Standards Act (FLSA) is $500,000, so a huge number of nonprofits in general and organizing efforts in specific are far under that number and face years of work to have any worries in this regard. More importantly, a DOL Wage & Hours circular dated as recently as August 2015 reminds one and all that nonprofit organizations existing for charitable, education, and similar purposes are in fact exempt from coverage of the FLSA and that this is a long settled matter in the courts as well. The circular importantly for membership-based organizations like ACORN and the original UFWOC, says that dues, gifts, donations, and the like are NOT counted at establishing the gross revenues, and in ACORN’s case those were the revenues period. Furthermore, the coverage threshold is established by commercial activity, and the DOL is clear that a nonprofit can also separate out the workers and revenue involved in any sales or commercial work so that only those workers are under the FLSA. The same separation can be done for any individual staff involved in regular interstate commerce like phone calls and travel between states.

So, why did ACORN worry about these issues for its organizers? First, ACORN was a complicated organization as any look at the more than 130 “banned by Congress” list would establish, yet we operated under one organization-wide salary and seniority schedule, so the mix-and-match would have diluted that solidarity of mission and commitment. Secondly, we were involved in hundreds of living wage fights, and the “optics” were sometimes issues, including the one legal test where we challenged the coverage in California. It was easier to raise the minimum of our scale in 2004 at the last FLSA adjustment on overtime to over the threshold and more clearly differentiate hours for non-field staff. Nonetheless, that doesn’t change the fact that we believed under the FLSA, like all other similarly situated nonprofits that we were legally exempt, and we threw in arguments over freedom of speech and association into the mix as well.

Why are the US PIRG and Judicial Watch worried? Obviously, I can’t be sure. The PIRGs contract a lot of their fundraising to a for-profit, which may have been part of their concern. Judicial Watch is a unit of other conservative operations to the best of my knowledge, so there might be issues that are not immediately obvious. For the most part though, if they were willing to take the heat, they could still cook the same way even in the new kitchen.

So in short, yes, a farmworkers movement could be built again under FLSA with the additional argument I believe still exists that all of its $5 per day and room and board were volunteers under the FLSA guidance, and an ACORN could also be organized again. The obstacles to doing so are many and mountainous, but they are not the FLSA or the new overtime rules.