Content written by Rev. Mike Hunter, CCA
This post is not intended to communicate legal advice. A qualified attorney should be consulted for any legal opinions.
In May of 2016, the Department of Labor issued final regulations updating the salary level required for exemption to ensure that the intended overtime protections are fully implemented.
The regulations include the following changes of most interest to church leaders:
- The salary test has increased to $913 per week or $47,476 annually, effective December 2016, with 3-year cost of living adjustments (COLAs) now in place
- Many, if not most, church employees are covered by the new overtime rules regarding minimum wage and overtime. Few non-clergy, non-executive staff would be ruled exempt.
How to reduce the impact on church budgets
- Reduce working hours. Careful documentation of all working hours will now be required as substantiation. Manage workforce to stay within budget hours.
- Reduce compensation. Consider lowering the salary for employees who consistently work more than 40 hours per week throughout the year, taking into account the overtime pay they will receive. While this may sound harsh at first, when done in a thoughtful way and communicated clearly, the overall take-home pay to the employee could remain the same – or more – as before the salary adjustment.
- Prohibit overtime. Many employers are now using language in job descriptions and contract of call that specifically mention overtime is prohibited for these positions.
- Increase salaries to $47,476 and thus fall into the eligible for salaried category.
- Review eligibility of all exempt employees. Seek professional guidance.
- Limit a worker’s hours to 40/week, and hire part-time workers to perform remaining work.
- You cannot: average hours, offer comp time or volunteer for your compensated position at the church.
- Lastly, churches are not exempt.