Urgent FLSA Department of Labor Updates for Your Ministry!
- Jun 6, 2024
- 5 min read
Updated: Dec 5, 2024
Updated December 5, 2024.
A federal court recently struck down a new Department of Labor regulation that increased the salary threshold for overtime exemptions, which could have affected ministry employers and employees alike. In this webinar, GCFA’s HR Department explains the ruling, the Fair Labor and Standards Act, and general best practices for you and your staff, helping keep your ministry compliant and safe. This is Part II of a series; Part I of this webinar series, below, discussed what the original rule was and how it could have affected ministries.
Department Of Labor Updates Effective July 1, 2024.
Starting July 1, 2024, a new labor law from the U.S. Department of Labor will drastically alter overtime pay eligibility for salaried workers. The new rule raises the wage threshold for overtime exemption, which might affect your ministry. Ministries must prepare for these changes by evaluating their payroll procedures and modifying the wages of employees who fall below the new levels.
FAQ: The Fair Labor Standards Act (FLSA) and Recent Updates
NOTE: This FAQ is NOT comprehensive and DOES NOT constitute legal advice. It is intended solely to provide preliminary guidance for frequently asked questions. This FAQ is based only on federal law (Fair Labor Standards Act), which may be superseded by state law, depending upon the state of employment. Because much of the application of the FLSA is fact-specific, you should consult with your attorney before taking any action with respect to specific employment circumstances.
Exempt vs. Non-Exempt Employees
1. Does a position have to meet all three tests (salary threshold test, salary basis test, and job duties test) to be exempt from overtime under the “white collar exemptions?”
Generally, yes, the position must meet all three criteria to be exempt from overtime. Employees are considered non-exempt and entitled to overtime pay if they do not meet all three of these. See Department of Labor Fact Sheet #17A and Department of Labor Fact Sheet #17G
2. What is the difference between non-exempt and exempt employees?
Non-exempt employees are entitled to overtime pay for any hours worked over 40 hours in a workweek and must track and be paid for all hours worked. Exempt employees, on the other hand, are not entitled to overtime pay and must be paid on a salary basis.
Overtime Rules
3. Is the overtime rule applicable over 40 hours a week, regardless of the employee being full-time or part-time?
Yes, overtime is calculated based on hours worked over 40 in a work week.
4. Our standard workweek is 36 hours. Do we have to pay overtime for hours worked beyond this?
Overtime pay is only required for hours worked over 40 in a week. Hours worked less than 40 are considered regular time. Some states may have different requirements, ensure you are reviewing your state laws as well.
5. Is the overtime rate 1.5 times the minimum wage or 1.5 times the employee’s regular pay rate?
The overtime rate is 1.5 times the employee’s regular rate of pay, which may be affected by non-discretionary bonuses or other incentives.
Salary Threshold and Flexible Work Weeks
6. How does the salary threshold for exempt staff work if an employee only works a 25-hour workweek?
The same exempt salary threshold applies regardless of the number of hours worked. Currently this is $648 per week. This increases to $844 per week on July 1, 2024, and to $1,128 per week on January 1, 2025. A non-exempt employee working less than 40 hours in a work week would not be eligible for overtime, but the employer would still be responsible for complying with federal timekeeping requirements.
7. Can we institute a flex work week by changing work hours/schedules?
Your set payroll work week for calculating overtime should not fluctuate. However, you may occasionally flex an employee’s schedule within a workweek to limit overtime (e.g., during annual conference a non-exempt employee has worked 40 hours by end of day Thursday, so you allow an unpaid day off Friday). However, you cannot use unpaid time off to compensate for overtime already earned.
8. Can you reduce the number of hours an employee works if you cannot raise their salary to the new threshold for a 40-hour workweek?
Yes, you can review their workload and job duties and reclassify them as non-exempt. Ensure you properly inform the employee that they are now non-exempt and are required to track hours and are eligible for overtime.
Part-Time and Salary Threshold
9. Can the salary threshold be pro-rated for part-time employees?
No, the salary threshold is not pro-rated. Part-time employees must meet the full threshold to be exempt from overtime. If they don’t meet the threshold, they must be classified as non-exempt and track their hours.
Housing Allowances and Seasonal Work
10. How do housing allowances factor into compensation?
If housing allowances are part of the paycheck, they count towards the salary. If provided as housing (e.g., parsonage), it does not count towards the salary threshold.
11. Does housing provided to camping staff count towards the salary threshold?
No, it does not count towards the salary threshold for exempt classification.
12. Can an exempt employee for a summer camp switch to non-exempt status during the winter?
Yes, you can change their status if their job duties, full-time status, and salary change. Ensure compliance with overtime rules during non-exempt periods.
For more information on seasonal establishments, see Department of Labor Fact Sheet #18
Specific Scenarios
13. How should leaders on mission trips be compensated?
If they fall under the ministerial exception, pay them their salary. If they are hourly, evaluate work hours and pay overtime as required. Record travel and work hours accurately. For more information on paid time, see Department of Labor Fact Sheet #22
14. Do Directors of Ministry or organists who don’t work full-time but meet the job duties test for exemption?
Each position must meet the job duties test and the salary threshold to be considered exempt. Assess each role individually.
Additional Information
15. How should time be tracked?
You can choose any method that works for you as long as it completely and accurately records hours worked. This could be through systems like Paychex, ADP or manual logging. See Department of Labor Fact Sheet #21
16. Are part-time employees required to receive PTO or vacation time?
FLSA does not mandate PTO or vacation time. Check state laws and your organization’s policies to decide on part-time benefits.
17. Can an employee under the threshold choose flex time into the next workweek?
No, non-exempt employees must be paid overtime for any hours worked over 40 a week, which cannot be flexed into the next week. See Department of Labor - Overtime Pay
18. Is there recommended verbiage for when salaried employees must use time off?
Policies should clearly outline how exempt and non-exempt staff use their time off. For example, exempt staff may use PTO in whole or half-day increments, while hourly staff use it in smaller increments. Ensure your policies reflect fair practices and differentiate between exempt and non-exempt staff.
Final Notes: How to Determine Ministerial Exception
Generally, whether an employee falls within this exception depends on their role with respect to conveying the organization’s message and carrying out the organization’s mission. Leadership should evaluate positions individually based on job duties and their role within the organization.
Have more questions? Reach out to your Conference Office or consult an employment attorney to ensure compliance with the latest labor laws.
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