UPDATE: November 29, 2016
A federal judge in Texas issued an injunction last week blocking the December 1 implementation of a new salary threshold that would have made millions of more workers, including nonministerial church employees who meet certain criteria, eligible for overtime pay.
The injunction puts the threshold change on hold until its legality can be determined by the judge. Some speculate the new threshold likely won’t survive, but the outcome remains uncertain. The current threshold for the “white-collar exemption” of $455 per week, or $23,660 per year, remains in effect in the meantime.
Non-credentialed employees: All employees (see exceptions below) who work over 40 hours a week are to be paid overtime. Previously, this did not include executive, administrative or professional persons paid by a salary and those who were making over a certain threshold. The new ruling now includes all of these categories and significantly raises the threshold to $47,476, including bonuses and commissions. What this means is that every employee paid less than $47,476, regardless of whether they are hourly or salaried, are eligible for overtime.
Congregations have three options with regard to this law:
- Limit non-credentialed employees’ hours to 40 hours per week.
- Increase their employees’ pay to the $47,476/year threshold, to be exempt from paying overtime.
- Pay employees time and half for hours worked in excess of 40 hours per week. For those who are salaried, the employer needs to calculate what the hourly rate would be.
Special Notes: All employees (salaried or hourly) who are paid less than the threshold should be required by their employer to track their time, to be able to verify the number of hours worked over 40 per week. Church employees cannot get around this ruling by volunteering some of their time, unless they are volunteering for duties that are not part of their regular job. Some employers offer their employees time-off in a later pay period as compensation for the hours worked over 40 per week. This is not allowed by the new law. Any time worked over 40 hours per week, must be paid in that pay period as overtime.
Ministerial Exemption: If you have credentialed persons employed at your church, this new ruling does not affect them. Credentialed persons include pastors, ministers, chaplains, LEADership ministers, etc.; anyone who has received their credentialing from Franconia Conference is included in this category. They are covered under what is called the Ministerial Exemption and are, therefore, not subject to Federal Labor regulations. This will continue to be the case until the government changes the ministerial exemption clause. Employees who are not credentialed do not qualify for the ministerial exemption.
BREAKING NEWS: This is a constantly changing issue. The most recent information indicates that two separate lawsuits have been brought against the US Department of Labor, challenging this ruling. While it is unlikely that these lawsuits will change the ruling, they may delay its effective date. We will try to keep you informed as new information becomes available.
If you have questions concerning this ruling or other congregational financial matters, feel free to contact the Franconia Conference Director of Finance, Conrad Martin, at firstname.lastname@example.org.