What the new Fair Labor Standards Act regulations could mean for local journalism orgs

On Monday, changes to the Fair Labor Standards Act went into effect, increasing the salary threshold for protection in the United States. The changes impacted an estimated 4.3 million workers, according to the Economic Policy Institute. Monday was the first of two deadlines, increasing the standard minimum level for salaried, exempt workers from $684 per week to $844 per week. (The new changes also could mean new, controversial definitions for freelance journalists.) A second deadline on Jan. 1 will further raise the salary threshold to $1,128 a week, or $58,665 per year.

The North Carolina Center for Nonprofits published an explainer piece for this regulation for those interested in learning more about the basics.

Those in local journalism are known to work long hours and pay that hasn’t kept up with inflation. The Center for Innovation and Sustainability in Local Media and other organizations have published research on journalism job conditions, including more protections and better treatment for journalists such as higher pay. According to The Center’s 2024 Stayers and Leavers report, the median salary of more than 600 respondents was $60,000, adjusted for inflation. In the 2022 diversity audit of NC newsrooms, 43 percent of respondents reported making less than $50,000 per year.

CISLM Project Manager Sarah Vassello spoke with North Carolina Center for Nonprofit’s Vice President for Public Policy and Advocacy David Heinen about these changes, the classification for journalists and more. This Q&A has been edited for length and clarity.

Center for Innovation and Sustainability in Local Media: In your own words, can you give me a broad overview of the changes to the FLSA?

David Heinen: Essentially the Fair Labor Standards Act is the federal law that requires employers to pay the minimum wage of $7.25 an hour and then also requires employers to pay overtime pay for workers who work more than 40 hours in a week, so time and a half pay for each hour of the 40 hours a week, unless they’re exempt. Generally, employees are exempt if three things are true about them:

(Editor’s Note: The Fair Labor Standards Act Advisor tool will help you determine employee categorization)

What the new rule is doing is increasing the salary threshold considerably since it’s a two-step process. Right now, people who meet the duties test are paid on a salary basis (and) are exempt from overtime pay if they’re paid at least $35,568 a year. Starting July 1st, the new rule increases that threshold to $43,888 a year. Then in January 2025, so in about six months, that threshold goes up to $58,656 a year.

What we’ve heard from a lot about nonprofits in North Carolina is that they have exempt staff who are professional or administrative or executive staff, including some executive directors of nonprofits who are exempt now who regularly work more than 40 hours a week compared to salary but the salary is less than the $58,656 a year (threshold), so that’s kind of where the issue comes in.

It’s true for for-profit or nonprofit employees. So, for journalism, whether it’s a nonprofit publication like North Carolina Health News, or public radio, or a growing number of media outlets that are nonprofit, their employees are subject to this. But also, for-profit, traditional newspapers, commercial television or radio shows are subject to it.

Most journalists going into this, if they’re doing any type of reporting rather than kind of reciting facts, if they’re actually doing reporting, they’re considered creative professionals so they definitely need a duties test.

What we’ve heard from a lot of nonprofits is just that it’s tricky. They kind of get it, you know — (it’s) just the way that the federal government can raise wages for a lot of workers and I think, for a lot of nonprofits, it’s a really good thing. But when they look at their own budgets, they realize, all right, this is going to cost us more money to pay for overtime pay or to help people’s salaries (and) we don’t have the funding to do that.

CISLM: We’ve talked to labor unions about this as well, this idea of, we want to increase salaries but it’s going to cost more money — have you heard of people talking about restructuring or layoffs? I know that was part of your explainer piece, the potential next steps that folks are taking.

DH: I think that it really varies depending on the organization. For the most part, what we’ve heard from the nonprofits is that the January 1 bump is really going to be the one where they have to make some changes. Essentially the inflation adjustment that takes effect (July 1) is still lower than what the salary is for most of their exact employees, so I think organizations are still kind of assessing what they’re going to do.

What a lot of organizations are doing right now is trying to figure out, for the exempt employees whose salaries are below what the new threshold will be, (is) figuring out how many hours a week they’re working now because, since they’re paid on a salary basis unless a funder requires them to track time, they’re not necessarily tracking time. So they may feel like people are working 50 hours a week, 30 hours a week, but they don’t know that for sure because there hasn’t been time tracking. A lot of organizations are starting to ask their employees to at least informally, or maybe formally, track the number of hours that work so they get a sense of what the impact (is) going to be.

It really varies. I’ve heard from organizations that have one exempt staff who is a little bit below the threshold, maybe $55,000 a year, and they’re going to just bump up the salary to just above the threshold or right at the threshold so that they remain exempt. For some that makes sense, but then for organizations that have multiple staff who are below the threshold, particularly if one is making $45,000, one’s making $56,000 — they’re probably not going to bump them both up to that level because it would be inequitable to one person to get, essentially, a $1,000 a year raise and give somebody else a $12,000 a year raise just to make them both exact.

Some organizations are looking at converting people to non-exempt. Some are saying they’ll pay a salary but they’ll have them track time, or at least track when they work more than 40 hours a week so they can pay them overtime, time and a half with their hourly rate.

Some are trying to put in policies that say that their staff can only work 40 hours a week and then need permission to work more than that. Again, if somebody still works 45 hours a week, they still have to be paid overtime, there’s a policy that still says that, but at least kind of making them more aware of that and limit it that way.

But other organizations are kind of shifting things around. They’ve got some staff now who are exempt, recognizing that maybe they can take out a little bit more work since they’re not going to get paid for overtime and somebody who will be non-exempt would do a little bit less so that they’re not working on this 40 hours a week.

CISLM: I’m interested in the idea of more people tracking their hours. I have to track my hours at UNC and I think that it kind of changes the way you think about things.

DH: I would agree. I’ve been here at the Center for 17 years so I haven’t had to track time but back when I was practicing law before I was here, I had to track hours for billing. Which, you know, wasn’t the most fun thing to do. But at the same time, it does make you more conscious of how you’re spending your time.

I do think it will be a learning experience for organizations, too, about how many hours their staff are working. We also hear from some nonprofits that have regular work weeks that are less than 40 hours a week and I think a lot of them are pleasantly surprised to find out that — if they have a 35-hour work week (and) the staff works 38 hours that week, they’re not getting paid overtime for that because they’re not over 40 hours.

Another thing that some organizations are thinking about — and I think this has been somewhat of a trend in the nonprofit sector — is thinking about whether it makes sense to be staffed with all full-time employees, (or) whether to have part-time employees who very rarely, if ever, are going to be at 40 hours a week or whether to contract things out to instead of having full-time staff (on) certain projects to a contractor who isn’t going to be eligible for overtime.

CISLM: We have such a labor-friendly Labor Department right now. With the election coming up, do you foresee people enacting this regulation now to get ahead of what could be a different reality after our election?

DH: The Obama and Biden administrations, and the Trump administration, have had very different ways of interpreting not only the overtime rule but even determining who is an employer versus an independent contractor. So the Trump administration changed up the rules to make them more employer-friendly and make more people classified as contractors rather than employees, so they wouldn’t get benefits, they wouldn’t be subject to the Fair Labor Standards Act. The Biden administration back in March issued a final rule on the worker classification that goes back to the more traditional test and gets away from what the Trump administration had.

It’s not just labor laws. I think the Biden administration has come out with a lot of regulations over the past couple of months, kind of in anticipation. But the reality is, while regulations are not something that goes to Congress and it’s kind of a workaround for things — I mean, you can do things in a less regulatory manner than you can through legislation, but it does take a couple of years for a federal regulation to take effect. So it’s not something that could be undone (on) the first day of a new president’s term. It takes a few years to go through that whole process so it does have some protection.

I think that my take on it is that this rule and some other rules that were kind of being finalized with the end of the Obama administration didn’t take effect because of the changing administration, and I think the Biden administration learned from that history with the transition into those in January 2017 and was trying to get rules into effect by the end of this year — or, you know, before January 20, 2025 — so that if there is a new administration that those rules will be in effect. A lot of times, once the rule takes effect, it’s harder to undo it practically because it gets into organizations’ personnel policies and what you’re paying people. It’s hard to unwind practically, even if two or three years later, (if) a different administration changes the rule to be less worker-friendly.

CISLM: Is there anything else about these changes that you would like to share?

DH: We’ve heard from a lot of organizations. We’ve done a webinar and a few other training, probably at 500 or 600 people already who’ve come to trainings on this in North Carolina. Our sense is that nonprofits are affected a little more than for-profit businesses, just because nonprofit salaries are a little bit lower. North Carolina nonprofits, in particular, are disproportionately affected by it because, particularly in rural parts of the state, salaries are a little bit lower here than on average in the country. I do think that there is a significant impact on nonprofits.

I was looking at the webinar we’ve done — I didn’t see any nonprofit journalism organizations as part of that, but I would strongly suspect that there’s an impact there.