Proposition 206 passed in Arizona on November 8, 2016. This proposition will impact many nonprofits throughout the state. Additional changes impacting overtime have also been established at the Federal level. This is a key resource on what you need to know to be quickly in compliance, including: 

                    • Federal Overtime Regulations

                    • Passage of Proposition 206 - impacting Minimum Wage and Paid Time Off

This information is collected and maintained by the Arizona Nonprofit Policy Council, a council of the Alliance of Arizona Nonprofits.

NEWS: AHCCCS Working On Plan To Address Prop 206 Impacts - Monday, December 5, 2016

For our members who provide services through AHCCCS contracts (EPD and DDD), we have some positive news to share. We have learned this week that AHCCCS and the Department of Economic Security/DDD are working on a funding plan for the current fiscal year (FY 2017) to help address Prop. 206 impacts. No details have been shared about what this will look like, but we are happy to hear that the agencies and the administration understand the dire situation some will be in on January 1. It is our understanding that this plan for the current fiscal year will be administrative in nature and will not require a special session. There are also no details on a plan for FY 2018, which starts July 1, but we understand they are taking a look at those impacts as well.

As we learn more, we will be sure to share it with you.

NEWS: Federal Judge Blocks Overtime Rule - Wednesday, November 23, 2016 - Click Here for story 

Changes to Federal Overtime Regulations

Arizona Minimum Wage Increase

Who It Will Affect

In order to be subject to minimum wage and overtime requirements and thus qualify for the Act’s protections, employees must be “covered” by the FLSA (Federal Labor Standards Act).
Coverage under the FLSA is usually achieved in one of two ways: (1) the organization is a covered enterprise; or (2) a particular worker is individually covered.

  • Enterprise Coverage: To meet the enterprise coverage test, meaning that all employees working for that enterprise are covered by the FLSA’s protections unless an exemption applies, an entity must have annual revenues, that is, volume of sales made or business done, of at least $500,000.

  • Individual Coverage: Organizations that are not covered on an enterprise basis likely still have some employees who are covered individually and are therefore entitled to the FLSA’s protections. Individual employee coverage is based on the nature of the particular employee’s work activities. An employee who engages in interstate commerce or in the production of goods for interstate commerce is covered by the FLSA. Employees whose work involves or relates to the movement of persons or things across state lines are also considered engaged in interstate commerce. 

The Department of Labor has been asked to further clarify whether or not the new Overtime Rule will affect nonprofit organizations.  Please fully review the following link containing Nonprofit Guidance and consult with your HR professional or employment lawyer as needed:

When It Will Go Into Effect

December 1, 2016

About the Changes

On May 18, 2016, U.S. Labor Department announced overtime final regulations that, when they go into effect on December 1, 2016, will mean that many employees earning less than $913 per week ($47,500 annually) will be entitled to overtime compensation, regardless of whether they are currently classified as executive, administrative, or professional (white-collar) workers. 

The final rule applies to employers in all sectors, but in an effort to address longstanding confusion about how the Fair Labor Standards Act (FLSA) and the overtime regulations apply to nonprofit employers and employees, the Department of Labor (DOL) also published a special overview and guidance for nonprofit organizations.

The final rule also establishes a mechanism for automatically updating the salary and compensation levels every three years, with the first update to take place in 2020.

Resources to Assist Nonprofits with Compliance 

Important Information for Arizona Nonprofits That Receive Funding Through State Contracts

Click Here to download a PDF with instructions on how to contact the Governor's office and your State Legislators.  

NEWS: Federal Judge Blocks Overtime Rule
November 23, 2016 

Late on Tuesday, a federal district judge in Texas issued a preliminary injunction blocking implementation of the Overtime Final Rule, ruling that the U.S. Department of Labor exceeded its authority. Barring a last-minute appeal, the overtime rule will not go into effect as scheduled on December 1 because of this decision.

At issue is the question of which employees qualify for an exemption from the requirement under the federal Fair Labor Standards Act (FLSA) that most employees are entitled to time and a half overtime pay for work in excess of 40 hours in a week. The FLSA exempts from the overtime requirement “any employee employed in a bona fide executive, administrative, or professional capacity,” often called the EAP or “white collar” employees. Current regulations require that employees must possess the duties of executives, administrative workers, or professionals and be paid more than a minimum salary. The overtime rule published by the Labor Department in May, and set to go into effect on December 1, would have more than doubled the existing “salary level test” for exempt white collar employees from $455 per week ($23,660 per year) to $913 per week ($47,476 per year).

Twenty-one Governors and Attorneys General filed suit in federal court challenging the overtime rule on several grounds. Siding with the states, Federal Judge Amos Mazzant held that the white collar exemption is clearly based on the duties that individual employees perform, and that the Labor Department did not have the authority to create a different or higher standard. Specifically, he ruled: “Congress gave the Department the authority to define what type of duties qualify [for the overtime exemption] — it did not give the Department the authority to supplant the duties test and establish a salary test that causes bona fide EAP’s to suddenly lose their exemption ‘irrespective of their job duties and responsibilities.’”

The judge issued a nationwide preliminary injunction. The Department of Labor is expected to appeal the decision, meaning that injunction could be lifted and the overtime rule put in place in a matter of weeks or months. 

The Alliance is monitoring this and will share additional information as it becomes available.  

Click Here for an informative article on this injunction from the Society for Human Resource Management (SHRM). 

Who It Will Affect

Organizations currently paying employees less than $10 per hour as of January 1, 2017

The measure retained Arizona's law regarding tipping, which permitted employers to pay employees who receive tips up to $3.00 less than the minimum wage.

When It Will Go Into Effect

January 1, 2017

About the Changes

The Fair Wages and Healthy Families Initiative (Prop 206), passed by Arizona voters on November 8, 2016, increases minimum wage to $10 in 2017 then gradually to $12 by 2020; provides 40 hours annual “earned paid sick time” for employees of large employers (24 hours for those of small employers); time accrues at one hour earned for every 30 hours worked; time may be used to address circumstances caused by illness of employee or employee’s family, public health emergencies, or domestic violence; prohibits retaliating against employees using the benefit; allows for more generous paid time-off policies; and exempts employees who expressly waive the benefit under collective bargaining agreements.

Additionally, voters in Flagstaff, AZ approved on an additional minimum wage initiative on November 8, titled Prop 414, which increases the minimum wage within the city's boundaries to $15 an hour in 2021 and, thereafter, index the minimum wage to increases in cost-of-living. 

Resources to Assist Nonprofits with Compliance

Important Information for Arizona Nonprofits That Receive Funding Through State Contracts

Click Here to download a PDF with instructions on how to contact the Governor's office and your State Legislators.