The Fair Labor Standards Act, or the FLSA, establishes requirements for minimum wage and overtime pay. It also imposes various restrictions on record keeping and the employment of minors. The FLSA affects most public and private employers and is enforced by the Wage and Hour Division of the Department of Labor (DOL).
On May 18, 2016, the Department of Labor (DOL) issued new rules and guidelines for employers regarding who can be paid a salary (exempt-white collar workers) and who must be compensated for overtime over 40 hours per week (non-exempt). These rules become effective Dec. 1, 2016. See update below.
What does it mean to be exempt? An exempt employee is one that is not protected by the overtime and minimum hourly wage requirements of the FLSA. Practically speaking, this means that an employer does not have to pay an exempt employee overtime for hours worked over 40 in a workweek. It does, however, mean that the employee must be paid a salary and that salary may not be reduced when fewer hours than normal are worked (except in limited circumstances).
When determining if an employee is exempt, there are several factors to consider. It is not enough to look at a job title to find if an employee is exempt — you must look at the job description, the actual duties and tasks that make up the majority of an employee's job, and the method of wage payment.
In digging deeper into the FLSA rules churches may wonder about the Enterprise coverage test. This test must be looked at from the church level and also the individual level. The Enterprise coverage says a non-profit organization is not covered under FLSA if they have revenue under $500,000 but most of our churches cannot utilize this rule because of the individual test. An employee making a phone call to another state (ordering materials from out of state) or transporting property and or people to another state causes the individual to be covered by FLSA.
The below chart has been made available along with other resources to assist in determining the requirements of FLSA in regards to church employees. Click on the image to download a PDF of the chart and an explanation of the steps. If you have further questions please contact the Topeka conference office at 877-972-9111.
The following are resources that can help you understand the new labor laws and what it means for your church employees.
Many of you have been working to understand what implications, if any, the proposed Dec. 1, 2016, Fair Labor Standards Act changes would have on your church or organization. On Tuesday, Nov. 22, 2016, a Texas federal judge issued an injunction blocking the implementation of the proposed changes. For the time being, that means all the existing parameters of the FLSA remain in effect. As a recap, these are the highlights:
Determine an employee’s exempt or not-exempt status by examining the duties in their position description. If they make at least $23,600 AND meet the “executive,” “administrative” or “professional” exemption guidelines, overtime need not be paid for hours worked over 40.
Clergy remain exempt under the ministerial exemption.
We cannot know when or how the case will be resolved, but it seems certain it will be appealed. Accordingly, any work you’ve already undertaken to ensure compliance with both the existing and proposed FLSA rules is time well spent. In fact, you may still elect to implement any changes planned in response to the new compensation threshold for non-exempt status. If you have previously committed to and communicated changes to an employee, carefully think through whether it makes sense to reverse your plans. (If you discovered you weren’t complying with FLSA in the first place, you don’t want to revert to non-compliance now.)
We will continue to monitor progress and assist with interpreting current FLSA provisions. Questions can be emailed to Gary Beach (email@example.com) or Niki Buesing (firstname.lastname@example.org) or by calling the Topeka office at 1-877-972-9111.