The Importance of Remaining Employee-Focused in Times of Financial Uncertainty
Thursday, October 06, 2016
How Nonprofits Can Avoid Cutting Benefits Under New Wage and Overtime Rules
Jim White, Executive Director, Nonprofit Association of Oregon
Recent changes to overtime pay under the Fair Labor Standards Act and the ongoing debates around minimum wage laws have a significant impact on the programming and hiring (including retention) practices of all nonprofits. Even before new regulations come into play, successfully serving, supporting, and helping our communities grow is a financial struggle for many of our colleagues. And now, up against ever-tightening budgets and more money being diverted to overhead costs, nonprofit leaders are likely feeling stuck between a rock and a hard place. Nonprofits are having to choose between investing in valuable human resources and cutting compensation to support programming costs.
Cutting employee benefits in the face of increased wages and in response to legislation such as the FLSA, is an alarming solution. Reducing or eliminating benefits should not be a first line of defense and is not a component of a good business model. Nonprofit leaders, especially, should consider the well-being of their staff. Ensuring employees have the most effective and affordable tools needed to manage their healthcare, which ultimately leads to more employee engagement and productivity, is a better business practice.
And while these legislative changes will be beneficial to nonprofit workers, there is hard work ahead for nonprofits to implement these changes. On the positive side, the Affordable Care Act (ACA) has opened the doors to transformation in the healthcare industry, paving the way for innovative approaches that reinvent the way nonprofit organizations can offer health insurance to their employees. Nonprofit leaders are encouraged to explore these new options as they allow for more affordable and better quality benefits at less cost to the organization. Ultimately it is the responsibility of CEOs, CFOs and HR managers to thoroughly research and vet all of the options on the table before making a decision that impacts the health and security of employees.
For example, in Oregon the Nonprofit Association of Oregon (NAO) has a partnership with Nonstop Administration and Insurance Services, a mission-driven benefits consultant that offers large organizations the opportunity to access partially self-funded insurance, a model previously unavailable to nonprofits due to financial and administrative obstacles. Nonstop’s revolutionary approach to healthcare for organizations with 50+ members on benefits includes zero out-of-pocket expenditures for employees (meaning no copays or deductible costs), while also reducing the annual premium spend and removing any financial or operational barriers. NAO believes this type of disruption to the status quo of traditional healthcare is one of the best ways for nonprofits to compete in a highly competitive marketplace.
The first step for nonprofits that want to explore healthcare alternatives is to find a trusted partner who is knowledgeable about the health insurance industry and will actively support the organization in its efforts. We recommend nonprofit leaders talk with their current broker, open up honest conversations with their board about healthcare options, and seek recommendations from other nonprofit organizations that are already doing the hard work of vetting valued and reliable partners.
Nonprofits cannot sit idly by while traditional healthcare approaches bleed our budgets and reduce our ability to be competitive with for-profit businesses. Our organizations play a significant role in keeping our communities safe and healthy – but we should not forget that nonprofit employees are also part of the very communities we seek to serve.
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