From what I have been reading, the new Fair Labor Standards Act regulations regarding overtime pay is going be pretty tough for non-profit arts organizations to handle. If you aren’t up on the news, the salary threshold part of the overtime exemption criteria will rise from $23,660 to $47,476. Anyone making less than that or who doesn’t meet the other criteria for exemption will need to be paid overtime.
Generally, most of the criteria hasn’t changed so the big issue for non-profits is the salary threshold. Last month, American Theatre did a pretty good job of covering how the new rules will impact theaters specifically. There have been articles about non-profits in general, but few that discussed how arts organizations were planning to address the change.
The reason I say this new requirement is going to be tough is because some of the comments of the interviewees made me cringe. One person mentioned the benefit of staffing their organization with young 20-somethings to take advantage of the fact they would still be living at home and under their parents healthcare. Another respondent estimated the cost of living in their anonymous mid-size Midwest city was $20,000/year which I suspect is misinformed. The lowest costs of living, even for small Midwest cities, I found hovered around $25,000.
While I cringed at some of the tactics people were generating to deal with the projected expense they were going to incur, I didn’t view them as particularly extraordinary. The alternative approaches being considered are absolutely typical of the problem solving process arts organizations engage in. This is the sort of unorthodox creativity you have to employ to pull things off in the non-profit arts.
The problem is that depending on stop-gap measures and pressure of organizational culture will no longer be viable in the face of this new salary threshold and expectations of a work-life balance that new employees are bringing to the workplace. The gulf will literally and figuratively be too wide to straddle.
This is going to be one of those situations that is going to result in a lot of negative news before it gets better. Doubtless there will be cases we will be amazed have lingered only to explode somewhat scandalously a decade down the road (or sooner since the salary threshold for non-exempt moves to $51,000 in 2020).
The situation is likely to force long delayed conversations between arts organizations, their funders, boards, audiences and employees about what is really required to operative effectively.
The only consolation is that this conversation will still be way easier than talking to your kids about sex.
I don’t think I am being especially prescient when I say now would be a good time to develop a cogent response to the statement “Arts need to be self-supporting or close,” and start distributing the talking points to everyone. It is guaranteed that sentiment will be expressed constantly.
At the same time, a serious discussion about business plans and legal structures employed by arts organizations may become unavoidable. We may see groups recreate and reinvent themselves. Especially if non-profits are permitted to retain their assets as they transition into a corporate entity with a different tax structure.
All this being said, the American Theatre piece discusses how organizations are already making efforts to implement constructive measures to prepare for these changes.
Maybe around this time next year when people have been operating under the new rules for 9-10 months, I will suggest to Drew McManus that ArtsHacker do a series on some practices and restructuring efforts that initially seem to be working. The salary changes are going to have too significant an impact on the arts industry not to share advice about what has been successful for the organization and beneficial to employees.
In the meantime, I will work on learning more about the implications of FLSA rules in order to provide tips about how to prepare for the changes.
For example, many organizations may not know that use of comp time to offset “binge-and-purge” schedules around production time is already illegal and is about to become more so for a wider range of employees.
But this kind of comp-hours time-shifting isn’t kosher under FLSA provisions. If a non-overtime-exempt employee works 60 hours one week, say, they can’t offset that by clocking just 20 the next week; they’ll be earning their regular salary for the 20-hour week and time-and-a-half for the hours over 40 in the 60-hour week. This was always the case under the FLSA, but with the new $47, 746 threshold, it will apply to many more employees than before.
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