guidestarblog_header.png

It’s Time to Get Ready for the Changes to the Overtime Pay Rules


On May 18, 2016, the Department of Labor (DOL) announced final regulations
governing the salary level required for the white-collar exemption from the minimum wage and overtime protections of the Fair Labor Standards Act (FLSA).  Effective December 1, 2016, the threshold at which workers are exempt from overtime rules of FLSA will increase from $455 per week ($23,660 annually) to $913 per week ($47,476 annually). 


FASB Modifies Not-for-Profit Accounting Rules

FASB [Financial Accounting Standards Board] issued a new accounting standard Thursday [August 18, 2016] that is designed to help not-for-profits tell their stories through their financial statements.

Not-for-profit financial statements have been prepared under FASB's current guidance since 1993. The new standard changes presentation and disclosure requirements with the intention of helping not-for-profits provide more relevant information about their resources—and the changes in those resources—to donors, grantors, creditors, and other financial statement users.


Why the new overtime rules are good for nonprofits and thus for our community



If you work in nonprofit in the US, you have heard that new federal overtime laws/rules are coming. They affect how we categorize the professionals in our sector—“Exempt” or “Non-Exempt”—and how we pay them, whether through set salaries or through hourly wages that include overtime for hours worked over 40. If reading that sentence makes you want to hyperventilate into a paper bag for a few minutes, you’re not alone. Many people are freaking out about these new laws and how to comply with them, because they take effect this coming December!


Resources for Nonprofits on the New Overtime Rule

new overtime rule will go into effect on December 1, 2016. Under it, an increased number of salaried employees must receive overtime pay for work exceeding 40 hours per week.


Six Steps to Engage Your Board Using a Performance Dashboard


For busy nonprofit business leaders and board members,
a seemingly endless stream of reports, meetings, emails, phone calls and text messages can create a strain on their time, limiting their ability to focus on critical business information and interactions.


IRS Changes 990-N Filing Procedures


Form 990-N filers must now submit their returns through a new website.


Busted: Nonprofits Will Have to Pay the Photography Piper

 

Reprinted from Venable LLP

The following discussion is provided for informational purposes only and is not intended to serve as legal advice. For advice on licensing images for use by your organization, consult your attorney.

A nonprofit that is strapped for cash needs an image for its website. Its Web designer does a quick online search, a simple cut and paste, and voilà—photographs for the website, free and easy. The nonprofit has heard that since it is nonprofit and tax-exempt, its uses are not commercial, and thus are "fair use." But not so fast—nonprofits are subject to copyright law just like any other person or entity and do not get a fair use pass simply by virtue of being a nonprofit. They must show, like anyone else, that their use is a fair use under the established tests—a very narrow and limited exception to copyright infringement.

For the last six months, I have been getting no less than three telephone calls or e-mails a week from clients, all of whom run legitimate businesses or nonprofits with robust websites and online publications, and all of whom have gotten letters from photographers (mostly their representatives) seeking licensing fees for photos that have been posted without permission. Many of these photos have been on these websites without incident for years.

For a long time now, nonprofit organizations have generally felt it appropriate to go onto various image search engines, find a photo for a newsletter, website, or other publication, and then cut and paste it into their publication or website. This trend did not generally apply to hard copy publications, because when you cut and paste something from the Internet, the quality is not sufficient to reproduce in hard copy, as it pixilates and becomes distorted. However, because of the limited resolution of computer monitors, a cut-and-pasted image looks perfectly fine when copied to a website. As a result, based on ignorance of copyright law, believing in the myth of "it is on the Internet so I can use it," mistakenly believing that their nonprofit, tax-exempt status provides a blanket exclusion from copyright infringement, or simply thinking the chances of getting caught were so minimal that it was worth the risk, hundreds of thousands of images have probably been cut and pasted without license and put on nonprofit websites and online publications.

One of the reasons this was so easy to get away with in the past was there was no effective way for photographers to find unlicensed uses of their work. When you went onto the various search engines' image sections what, in fact, they were doing was searching for text surrounding images and offering up all sorts of related and unrelated images. A search of "Ronald Reagan" would result in pictures of Ronald Reagan, the Ronald Reagan Building, Ronald Reagan National Airport, Ronald Reagan Highway, etc. Recently, photographers, wire services, and photo agencies large and small have either acquired new technology or have engaged search companies who have image searching technology. These types of entities are now searching for images themselves. If you would like to see an example of how this works, you can go to TinEye and upload an image (it's free), and you will see instantly how it scours the open Internet, finds every use of the image, and gives you the website that is attached to it.

These new technologies make it very simple to identify an image's use and then cross-check the website owner's name with the names of licensees. If there is no match, a letter is sent with a license fee/penalty demand. This is all now done in an automated fashion, which, while making the process economically viable, can cause certain problems. Particularly, it will not identify a licensee website if it does not contain the name of the actual licensee, and it certainly does not perform any fair use analysis of the works. Each of the automated demand letters that I have seen gives contact information, where a licensee or one who believes their use is valid can contact the copyright owner. The letters are being generated and going out, it would appear, without human intervention or any substantive review.

Unlicensed users are most often violating several copyrights of the underlying photographers. They are copying the works in the cut-and-paste process, making additional copies by placing them on their servers, and then violating the right of public display when they post them on their website or in their publications. Some of my clients have told me that they got the images off "royalty-free" websites or thought they were subject to some kind of "public domain license." Unfortunately, so many of these "royalty-free" license sites are not actually royalty-free, and people just read the headlines and not the terms and conditions. Often the terms of use severely limit the royalty-free aspect of the use permitted, and have fees for commercial uses. The lesson there is not to be misled by a site that claims to be royalty-free until you actually read and understand the fine print.

Creative Common Licenses, even when they cover photographs, may have requirements that the photo not be used in commercial context, or require attribution, copyright notices, and the like. These terms are often violated when the pictures are reposted on websites, fail to comply with the license requirements, negate any licenses that might have been available, and become infringing uses.

The letters that I have seen generally have been asked for licensing fees in the hundreds of dollars. A few have reached $1,000, though that has been the exception. In this price range, it often makes more sense to pay the fee than to contact an attorney. The reality is having your attorney review the demand letter and discuss the situation with you is going to cost more than the demand.

The fees being charged are always more than the original license fee. If the photo agency were to simply ask for its standard license fee after they caught an infringer, there would be no incentive for anyone to ever license the work. They would simply use it without a license. Hopefully, they would not be found out. And if they were to be caught, they would just pay the license fee at that time. Therefore, we generally find the demands to be anywhere from 2 to 10 times the normal license fee that would have been charged if the image had been properly licensed from the outset.

However, these demands represent much less than your nonprofit's possible exposure. Under copyright law, if a work has not been registered prior to the infringement, a copyright owner is entitled to its losses or the infringer's profits. Its losses would be the licensing fee. The infringer's profits could be the money it saved by not acquiring a license, which is the same as the licensing fee; however, one could also make various arguments for seeking indirect profits based on the benefits accrued as a result of the use of the infringing item. This is not always easy to prove, because it cannot be speculative, but it is a possibility. But if a copyright had been registered prior to the infringement (which is what most professional photographers do), the copyright owner is first entitled to recoup its attorney's fees. The owner then has the option of collecting the actual damages described above, or statutory damages, which range from $750 to $30,000 for a regular infringement. If it can be demonstrated that the infringement was willful, than the damages can be anywhere from $750 to $150,000. This is a huge range, and any resulting award is totally subjective and depends on how the judge and jury feel about the respective parties. The copyright owner is entitled at the end of a trial to choose between the higher of the two awards.

There is an interesting court case from several years ago in the Ninth Circuit (Perfect10 v. Amazon) which provides for a work-around where the photographs used are not actually copied from the underlying site and pasted onto the new site or copied onto the server. Rather, a framing technique is used where even though it appears on your website, what you are actually viewing is the underlying work on the original site. If you right-click on the image, go to "properties" and look at the URL, you will see the URL for the original image. If it had been copied outright, you would see the URL for the infringing website. The court found no infringement based on this type of framing.

The takeaway, of course, is that if it is on the Internet, it is not necessarily free; the time of perceived free rides is over, due to the new tracking technologies. Before any photograph is used by your nonprofit, it should be properly licensed. Licensing fees are generally reasonable and there are many images that are available. If one image is too expensive, you can almost always find another that is suitable and which your organization can afford.

Save yourself grief, and attorney's fees. Don't cut and paste—license!

The preceding is a guest post by Joshua Kaufman, a partner at Venable LLP, where he heads the firm's Copyright and Licensing Group.

 


Federal Appeals Court Affirms Mandatory Filing of Unredacted Donor List by Charities Registered for Solicitations in California

 

Reprinted from Venable LLP

On May 1, 2015, the U.S. Court of Appeals for the Ninth Circuit issued an opinion in Center for Competitive Politics v. Harris, upholding a California regulation requiring charities that are registered to solicit contributions to file an unredacted copy of IRS Form 990 Schedule B. Schedule B of the Form 990—which is required to be filed with the IRS but which is not subject to public disclosure—requires a listing of certain donors and donation amounts to tax-exempt 501(c)(3) organizations.


One Small Step for Government, One Giant Leap for Nonprofits

 

When Neil Armstrong set foot on the moon 45 years ago, his first words captured how the simple act of taking a small step opened a new era in the history of mankind. Another seemingly small step taken by the federal Office of Management and Budget (OMB) recently opened a new era in the government-nonprofit contracting relationship and provided the first tangible evidence that focused advocacy can overcome the "Overhead Myth." The changes contained in OMB's new rules, known as the Uniform Guidance, may not be the same as "one giant leap for all mankind," but OMB controller Dave Mader wasn't overstating it when he observed that "this historic reform will transform the landscape ... for generations to come."


IRS Issues Final Regulations on New Requirements for Tax-Exempt Hospitals

Reprinted from EO Update