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In this week's issue...
After last week’s flurry of bill filings, the NC General Assembly moved at a more deliberate pace this week, taking action on several bills, most of which did not directly affect the nonprofit sector. This week’s update shares details about one new bill related to masks that could potentially affect some nonprofit programs and services. We also share resources on two new federal rules that could have significant impacts on nonprofits’ operations.
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Free Webinar on Improvements to Federal Rules for Nonprofit Grants
Last month, the federal Office of Management and Budget (OMB) released its major rewrite of the Uniform Guidance, the set of common rules governing most federal grantmaking to charitable nonprofits. The reforms correct longstanding challenges in the government grants process that have limited nonprofit effectiveness, discouraged qualified organizations from seeking and performing under federal grants, and wasted billions of dollars and countless hours in needlessly complex application and reporting requirements. Of particular note, the revised Guidance raises the de minimis indirect cost rate that governments using federal funds must pay to every grantee to 15% (up from 10%), removes multiple barriers to accessing federal grant funding, mandates streamlining and simplifying of Notices of Funding Opportunities (requests for proposals), and raises the Single Audit threshold to $1 million (from $750,000). The changes go into effect on October 1, 2024. The National Council of Nonprofits has a helpful new resource highlighting the key provisions affecting charitable nonprofits working with governments at all levels.
To help your nonprofit better understand the new rules, the National Council of Nonprofits is also hosting a free webinar, OMB Uniform Guidance: What the Updates Mean for Nonprofits, on Thursday, May 30 from 3:30-4:30 p.m. Register now.
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NC Senate Bill Would Reinstate Ban on Masks in Public Spaces
On Tuesday, the NC Senate Judiciary Committee discussed a new bill (H.B. 237) that would prohibit people from wearing masks on public property in North Carolina, even if they are wearing the mask to protect their own health or safety or the health and safety of others. The North Carolina criminal code has included the ban on wearing masks in public places for more than 70 years. However, at the height of the COVID-19 pandemic in 2020 when public health officials recommended that people wear facial coverings in public places, the NC General Assembly amended the law to create an exception allowing people to wear masks for public health purposes. The new Senate bill would remove that public health exception.
The Senate Judiciary Committee is scheduled to vote on the bill next Tuesday. If the bill becomes law, nonprofits that provide programs and services – or hold events – in public spaces like schools, government-owned buildings, and public parks and sidewalks, may want to discourage people from wearing masks at these events to ensure compliance with the law. Note that, even if the new law passes, nonprofits would still be able to allow – or even require – people to wear masks at their own facilities and at events, programs, and services that take place on private property.
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U.S. House Approves Legislation to Add Citizenship Question to Census
On Wednesday, the U.S. House of Representatives approved a bill (H.R. 7109) that would require the 2030 Census and future censuses to include a question on citizenship and immigration status. Specifically, the question would require the respondent to indicate whether each member of the household is: “(A) a citizen of the United States; (B) a national of the United States but not a citizen of the United States; (C) an alien lawfully residing in the United States; or (D) an alien unlawfully residing in the United States.” The information would be disaggregated for each state, which would then be used to exclude noncitizens from reapportionment. Excluding residents who are not citizens from apportionment could affect the number of members of Congress from North Carolina and other states.
The Center and other nonprofits have expressed concerns about a possible citizenship question on the Census since its inclusion would lead to a significant undercount, particularly in Latino communities. In 2019, the National Council of Nonprofits (NCN) submitted an amicus brief in opposition to a previous attempt to include a citizenship question on the 2020 Census, which would have led to an inaccurate count and undermined the ability of nonprofits to provide services to their communities. This week, NCN sent a letter to every House member explaining why nonprofits oppose the bill.
The House passed the bill in a party-line vote. It is unlikely that the U.S. Senate will take up the bill.
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Reminder: New DOL Overtime Rule Raises Salary Threshold to $58,656 in 2025
Last month, the U.S. Labor Department (DOL) announced its final rule on the salary threshold for overtime pay under the Fair Labor Standards Act (FLSA) that specifies that most employees earning less than $58,656 per year will soon be entitled to overtime compensation, regardless of whether they are currently classified as executive, administrative, or professional (white-collar) workers.
Under FLSA, employers, including nonprofits, must pay employees one-and-one-half times their regular rate of pay for all time worked in excess of 40 hours in any work week. However, workers are exempt from this overtime pay requirement if they:
- Are paid at least the minimum salary level under DOL regulations (currently set at $684 per week or $35,568 per year);
- Are paid on a salary basis; and
- Exercise job duties that are classified as exempt under FLSA (which means administrative, executive, or professional job duties for most nonprofit positions).
The new rule raises the salary threshold in a two-step process over the next eight months:
- The salary threshold goes up from the current level of $35,568 per year to $43,888 per year ($844 per week) on July 1, 2024. This is essentially adjusting the salary threshold from the 2019 rule for inflation since it maintains the current methodology of setting the threshold at the 20th percentile of weekly earnings of full-time non-hourly workers in the lowest-wage Census Region (currently the South).
- The salary threshold then goes up to $58,656 per year ($1,128 per week) on January 1, 2025, which is the 35th percentile of weekly earnings of full-time non-hourly workers in the lowest-wage Census Region (currently the South).
Under the new rule, the salary threshold will be automatically adjusted for inflation every three years, beginning on July 1, 2027 to reset it at the then-current 35th percentile of weekly earnings of full-time non-hourly workers in the lowest-wage Census Region (currently the South), which is the same methodology used to set the salary threshold on January 1, 2025.
DOL estimates that the final rule will result in about 4.34 million currently exempt employees becoming non-exempt. Of these workers, DOL estimates that more than 460,000 work in the nonprofit sector. DOL also estimates that nonprofits are more likely than for-profit businesses to feel the impact of the overtime rule, with about 18.9% of nonprofit employees being reclassified as non-exempt (as opposed to 13.6% of for-profit employees). Since nonprofit wages in North Carolina are below the national average, it is likely a higher percentage of nonprofit employees in North Carolina will be reclassified as non-exempt.
It is likely that business groups will challenge the final rule in federal court in the coming months. The outcome of this potential litigation is uncertain, so it is important for your nonprofit to start preparing now so you can make the necessary operational changes to adapt to the increased salary thresholds on July 1 and January 1. To help your nonprofit get ready for the higher salary thresholds, the Center has prepared an analysis of the final overtime rule and its likely impact on North Carolina nonprofits, concluding with 15 compliance options and eight next steps for nonprofits to take now to be ready to adapt to the significantly higher salary threshold in eight months.
We also are offering a free webinar on the overtime rule this morning from 10:00-11:30 a.m. (which may be in the past tense by the time you are reading this). We’ll be sending a recording of the webinar – plus plenty of additional materials on FLSA and the overtime rule – next week to everyone who has registered (even if you registered after the webinar was completed).
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More Than 400,000 North Carolinians Have Health Coverage Through Medicaid Expansion
According to the most recent data from the NC Department of Health and Human Services (DHHS), more than 447,000 North Carolinians have enrolled in health care through Medicaid expansion since it became available in December, with about 1,000 more people enrolling every day. DHHS estimates that more than 200,000 additional North Carolinians may be eligible for coverage under Medicaid expansion. Almost all potential Medicaid expansion enrollees receive services from nonprofits, so it is important for nonprofit organizations to spread the word about Medicaid expansion eligibility and the application process.
The DHHS website includes basic information on eligibility for Medicaid coverage, details of costs and coverage, and free materials to help nonprofits provide clear and accurate information about Medicaid and Medicaid expansion to their clients and communities. Please share this information widely, especially with clients who may now be eligible to apply.
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