Questions abound regarding the recently released Department of Labor regulations for overtime pay. Here are answers to some of the more frequently asked questions on this important, albeit confusing, topic.
I keep hearing something about new overtime regulations. What is this all about? All of this is related to the Fair Labor Standards Act (FLSA), the federal law that dictates minimum wage and overtime be paid to certain employees. Some employees are exempt from these requirements due to the duties they perform and the salaries they are paid. The federal Department of Labor, which administers the FLSA, recently released new regulations increasing the salary threshold that must be met in order for an employee to be considered exempt from the overtime pay requirement. That threshold has been raised from an annual salary of $23,660 to $47,476. This increase becomes effective December 1, 2016.
Are churches required to comply with these new regulations? Unfortunately, the vast majority of churches are not exempt from complying with the FLSA and, subsequently, these new overtime regulations. Some churches may be of the size that they do not engage in interstate commerce (i.e, do not purchase goods from across state lines, do not make interstate phone calls, etc.) and, as a result, they would be exempt from the FLSA. These churches, however, are few and far between.
Are ministerial staff members impacted? This is the good news. Some employees are always considered exempt from the FLSA. This group includes ministers employed by churches and religious organizations. It also includes staff members who may not be ordained or even have the job title of “minister,” but who still perform duties of a ministerial or spiritual nature.
What steps should a church take to comply with these regulations? First, churches should review the salaries that are being paid to any non-ministerial staff members who are currently being treated as exempt. Secondly, for any employees who are being paid an annual salary of less than $47,476, a decision must be made as to whether or not the church is willing to increase the salary to at least the new salary threshold amount. If so, the staff member may continue to be paid on a consistent salary basis with no adjustments due to hours worked. If, however, the church is not willing or cannot afford to increase the salary to at least $47,476, the staff member must be converted to a non-exempt status. Work hours must be tracked and overtime paid at the rate of one-and-a-half times the regular hourly rate. The church may continue to pay the employee on a salary basis, however, once hours worked in a given work week reach 40, then the salary must be converted to an hourly rate and the overtime hours paid as previously stated.
If we have questions or need assistance, who should we call? Well, unfortunately Ghostbusters can’t help with this one (just kidding), but the Kentucky Baptist Convention is here to help churches. So, churches can call me toll free at (866) 489-3371, and I will be glad to discuss these issues. Please know I am not an attorney, but I can provide general information and guidance. If more assistance is needed, I can refer you to a competent employment law attorney who will provide any legal counsel you may require.
Jim Donnell, KBC Associate Executive Director