The Fair Labor Standards Act (FLSA) is a federal law that protects employees by establishing standards for minimum wage, overtime, recordkeeping, and youth employment. Most employees of organizations of all kinds, including churches, are classified as
which means that
their employer is not exempt from
adhering to these standards with respect to their pay. Some employees, however, can be classified as
releasing the employer from the need to follow the FLSA rules for those workers. In determining whether an employee is exempt, an employer looks at both their salary and their responsibilities.
Since 2004, the minimum salary at which an employee can be considered exempt has been set at $455 per week, or $23,660 annually for a full-year worker. Receiving this salary does not automatically make an employee exempt
it also depends on their responsibilities.
The U.S. Department of Labor has announced a proposal
to raise this threshold to $679 per week ($35,308 annually). A comment period has begun, and the DOL is expected to finalize the new rules in late 2019 or early 2020.
The classification of employees as exempt or nonexempt is more complicated in congregations because of the
a special exemption for those who have "essential religious duties." The ministerial exception is a consequence of federal court rulings based on the First Amendment. It is separate from the FLSA proper, and the determination of which employees are covered by it is based only on their duties. Because there is no salary component, a change in the FLSA exemption salary threshold will not impact employees classified as exempt under the ministerial exception.
Does your congregation employ anyone who earns at least $455 per week, but less than $679? Unless they fall under the ministerial exception, you'll need to adjust their salary or reclassify them as nonexempt if the rules go through as proposed; there will be associated changes in time-tracking and recordkeeping. As a reminder, for all nonexempt employees, you must keep records of total hours worked each workday and each workweek, and pay time-and-a-half for hours over 40 in a workweek.
It is very important to properly classify your staff under the Fair Labor Standards Act, and to follow the appropriate pay and recordkeeping rules for each classification. We know it can be hard to implement the FLSA confidently, The Office of Church Staff Finances has
a page of resources about the Fair Labor Standards Act
to help you, and we'll do an educational campaign if/when changes are finalized.
Finally, remember that just as some states set a minimum wage that is higher than the federal minimum, some states also have stricter overtime requirements.