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Proposed overtime rule could threaten nonprofit providers of disability services

Julie Manworren

The U.S. Department of Labor is preparing to release a rule, likely in the next 90 days, that would more than double the salary threshold at which workers are exempt from overtime requirements. In addition, the salary level would increase or decrease automatically over time. This would qualify an estimated additional 20 million workers nationwide for overtime pay. On the surface it’s hard to see why this proposed rule could be a bad thing.

As longtime advocates for human rights here in Minnesota, we applaud the intention of this rule. We also have serious concerns about its potential impact on already underfunded nonprofit and publicly funded agencies and organizations. Contrary to popular misconception, many nonprofits will not be exempt from this rule, and instead will be held to the same standard as large for-profit corporations. Unlike most businesses, we cannot adjust our pricing in order to cover these new expenses.

Jon Pratt

While we support raising wages for workers, it is important that the government recognizes the devastating impact that implementing this rule will have on nonprofits like Living Well Disability Services and all Minnesota providers of community-based services for people with disabilities. Living Well Disability Services provides essential services in people’s own home, their family’s home, or in group homes to allow people to live as independently as possible. These services by definition are to be less costly than institutional alternatives and are funded almost entirely by state and federal Medicaid dollars.

No plan to raise reimbursement rates

This public funding is essential and it creates unique constraints. Unlike many businesses, complying with this rule will not be as simple as adjusting the price of goods sold to cover increased staffing costs. The state establishes the rate that is paid for each unit of Home and Community Based Services and, with the county, determines how many hours of care will be provided. In Minnesota these service reimbursement rates have failed to keep up with inflation and there is no plan to increase funding commensurate with the costs created by this new rule. 

Salary expense would rise by about 10%

If the salary threshold of this rule is implemented as proposed, Living Well Disability Services’ salary expense would increase by approximately 10 percent. This investment in wages would not address our priority to maximize the compensation of our lowest wage workers who provide exceptional direct services. These employees currently struggle to meet their basic needs on the wage supported by the reimbursement rate. In order to comply with the new rule and with no additional reimbursements, providers will be forced to make significant changes that would negatively impact our ability to effectively manage our workforce and provide quality services to the people we serve.

We urge Congress and the Department of Labor to balance the equally important priorities of ensuring adequate compensation for all workers with adequate funding necessary to comply with any revision to the overtime rule. If they do not, the rule will have significant unintended consequences and it will be the most vulnerable populations who may pay the price.

Julie Manworren is president & CEO of Living Well Disability Services, a 501(c)(3) nonprofit organization that provides services to people impacted by intellectual, developmental and physical disabilities. Jon Pratt is executive director of the Minnesota Council of Nonprofits, an organization dedicated to informing, promoting, connecting and strengthening the nonprofit sector in Minnesota.


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Comments (10)

  1. Submitted by Dennis Tester on 04/14/2016 - 08:41 am.

    Just the latest example

    of adverse effects of government meddling in the economy.

    Like the $15 minimum wage fiasco, these mandates are pushed by people in government who’ve never even run a lemonade stand.

  2. Submitted by Tim Smith on 04/14/2016 - 09:09 am.

    double trouble

    These same organizations are also getting hammered by the ACA.The employer mandate has forced many to have to pay for health insurance or face $2000/employee penalty. They don’t have the margins or the revenue and, as the article stated, they can’t raise their rates and revenue, only the government can. So much for the democrats false promises to help the middle class.

  3. Submitted by Craig Johnson on 04/14/2016 - 10:05 am.

    Who is to blame?

    The free lunch crowd. It seems we all believe in universal healthcare however what we fail to believe in is that it costs money. So we mandate critical programs and then try to figure out how to not pay for them, And we fail.

    Many people who enter into this vital work sector are driven by an understanding that if they don’t commit to provide essential services the services will just go unmet. It’s not the companies who have form to provide these services that should take it on the chin, it’s certainly not the people who directly provide those services should take it on the chin. It’s certainly not the affordable care act that is to blame. Ultimately it’s you and I who thinks someone else should be responsible.

    It’s impressive how frequently Rev. Niemöller’s prayer finds applicability
    “First they came for the Socialists, and I did not speak out—
    Because I was not a Socialist.

    Then they came for the Trade Unionists, and I did not speak out—
    Because I was not a Trade Unionist.

    Then they came for the Jews, and I did not speak out—
    Because I was not a Jew.

    Then they came for me—and there was no one left to speak for me.”

    I want to stand with the service providers because I know there will be a day when my needs will be there. Like so many problems when we fail to examine the fundamental root of the problem we come up with answers that are doomed to fail.

  4. Submitted by Max Millon on 04/14/2016 - 10:09 am.

    I’ve worked in nonprofits a lot of of my life. I know a lot of other people that work in nonprofits, many of them work preposterously long hours and are seem burned out and stressed all the time. Nonprofit burn-out is a real phenomena, and the culture of ‘martyrdom’ in nonprofits is a real phenomena too. Some might say that this is the personal decision-making of employees. But nonprofit organizations often stack the deck to hire only employees that will work extremely long, overtime hours for very little pay. This forces other job-seekers to fall in line if they want the chance at a position. Many nonprofits superficially endorse ‘self-care’ and ‘work-life-balance’ but set de facto internal policies or develop organizational culture that precludes these things from happening. At best it is a troubling flaw of the nonprofit field. At worst it is deliberate and predatory exploitation of employees. When I first started working at nonprofits I thought it was the former. Now I think it is the latter. How strange that a field that was supposed to do the most good treats employees in such a way.

    It’s not particularly surprising to me to see nonprofit executive coming out against a proposal that would actually pay their employees what they are worth and pay them for their time. The people that get screwed by overtime rules aren’t handsomely-paid executive directors, they are the nonprofit workers on the bottom of the totem pole who are making a pittance and not getting adequately compensated for the work they do. If these leaders in the nonprofit field actually care about employees like they claim to, they should also help reform a broken system which benefits from the underpayment and overwork of employees. If the only way we can help disabled individuals, for example, is by setting up a system that exploits employees well-being, then there is a serious problem with American society. Preventing employees from having the overtime they deserve isn’t the solution.

  5. Submitted by RB Holbrook on 04/14/2016 - 10:53 am.

    Three Points

    While I sympathize with the efforts of the authors to provide essential services with too little money, there are some points that should be raised.

    First, let us consider the proposed rule from the viewpoint of the employee. Paid employees of nonprofits, unlike many of the organizations they work for, are not themselves charities. They may have taken their particular job through charitable motives, but they still expect to be paid and make a living. Put another way, when they go to buy groceries or pay their rent, the grocer or the landlord will not give them a discount because they work for a non-profit.

    Second, beware of painting all non-profits with the same brush. Non-profits include struggling entities like Living Well Disability Services, but the world of non-profits also includes entities like Medica, Minnesota Public Radio and Thrivent Financial. Would a non-profit exemption from overtime rules be crafted to exclude them?

    My third point is actually directed to the conservative commentariat who see this article as further proof that big government is ruining everything for everyone: If you read the article, you will see that the major concern driving their opinion about the overtime rule is that groups such as Living Well are not receiving enough government money now, and are not likely to receive enough reimbursement from Medicare and Medicaid to cover the costs of the rule. So are you all for increasing their government funding, with your tax dollars?

  6. Submitted by Pat Terry on 04/14/2016 - 12:07 pm.

    Boo hoo

    Short summary of this piece: we want to continue not paying people for their work, and now the government won’t let us.

    Cry me a river.

  7. Submitted by Max Millon on 04/14/2016 - 12:08 pm.

    Executive Salaries

    According to Living Well Disability Service’s 990 form, Julie Manworren received $162,000 in compensation in 2014 along with an additional $31,500 of ‘other’ compensation. John Pratt received $136,000 with $32,500 in other compensation.

    I wonder how the rank and file employees at these organizations working overtime for $35,000 a year feel about their organization’s leaders’ stances on this issue?

  8. Submitted by James Hamilton on 04/14/2016 - 01:44 pm.

    If we want to treat employees fairly

    we have to be prepared to pay for it. It’s really that simple, whether we’re talking about McDonald’s employees or home health care aides.

  9. Submitted by Rachel Kahler on 04/14/2016 - 03:13 pm.


    While I’m sympathetic regarding budgets for nonprofit groups that help people with disabilities, the sad fact of the matter is that lots of workers who help people with disabilities are underpaid and overworked. My sister works in this area and the level of pay (and subsequent lack of giving a hoot by workers) is abysmal. In many cases, the individuals that these services are supposed to help aren’t able to communicate how horrible things really are, so the service providers are free to go on being paid next to nothing while providing services that are of a quality appropriate for the compensation.

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