
Neither the FLSA nor the
regulations provide an exemption from the overtime requirements for nonprofit
organizations. However, some nonprofit organizations are not covered under the
FLSA because they are not an “enterprise” under the law. Nonetheless, nonprofit
organizations must be careful in determining coverage under the FLSA because
individual employees may still be eligible for overtime pay.
Enterprise Coverage applies to
businesses with annual sales or business of at least $500,000. For nonprofit organizations,
Enterprise Coverage applies only to the activities it performs for a business
purpose such as running a gift shop. In addition, funds received from
contributions, membership fees, many dues, and donations used for charitable
purposes are not counted toward the $500,000 threshold. However, certain
entities are named enterprises under the FLSA and are covered by the FLSA
regardless of the total of their annual sales or the type of business done or
their nonprofit status. Those named entities are:
- Hospitals
- Schools and preschools
- Government agencies
- Businesses providing medical or nursing care for residents
- Institutions of higher education
Individual Coverage applies to
specific employees if those employees are engaged in interstate commerce or in
the production of goods for interstate commerce. As a result, even if the nonprofit
organization itself is not covered by the FLSA, certain employees may be
covered. Examples of employees engaging in interstate commerce include:
- Making out-of-state telephone calls
- Receiving or sending interstate mail or electronic communications
- Ordering or receiving goods from an out-of-state supplier
- Handling credit card transactions or performing the accounting or bookkeeping for such activities
As you see, the coverage under
the FLSA is very broad. Nonprofit organizations should take steps to determine
if they or their employees are covered under the FLSA; however, that analysis
should be done on both an enterprise and individual level.
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