Q: We have full-time exempt employees whose working days are Sundays through Thursdays because the church is closed on Fridays and Saturdays. These employees frequently play in the praise and worship band, meaning they attend rehearsals middays on Tuesdays during working hours and they get paid from the worship budget for playing on Sundays.
Is it a problem when an exempt employee gets paid from two different line items like this?
A: This is a good question. Questions about dual roles come up frequently in church settings. Exempt church employees can get paid for a separate nonexempt role, but the church needs to closely evaluate the duties for the roles and any implications for overtime. Here is a good decision matrix:
Nonexempt and Nonexempt. Minimum wage and overtime apply using a blended hourly rate.
Exempt and Exempt. No issues with overtime or minimum wage.
Exempt and Nonexempt. The situation is delicate because the government does not want employers to avoid overtime by simply combining an exempt position with a nonexempt position. We look at how much time is spent in each position. While 2004 regulations removed any bright-line test, the older test is still used as a guideline:
- The older test is that the employee must be performing “exempt” duties at least 80 percent of their total work time. Exempt duties are those duties that allow the position to be classified as exempt. If the nonexempt duties require more than 20 percent of their work time, they are nonexempt for all hours worked.
- Under the 2004 regulations, the test is a “primary duty test.” The key question to evaluate: What is the employee’s principal, main, major, or most important duty, considering the position is treated as one? If the employee’s primary duty qualifies for exempt classification, then the employee is exempt. Primary is defined as the main, major, or most important duty. To determine the primary duty, the US Department of Labor (DOL) will also examine the time spent in each job, the degree of supervision, the relative compensation allocated to each position, and the relative importance of the two positions to the employer.
Under the older test, if the exempt employee performed exempt duties for 40 hours per week and worked for the praise and worship band 10 hours per week, the employee is likely nonexempt. But if the employee performed exempt duties for 50 hours per week and worked for the band 8 hours per week, the employee is likely exempt. Since these hours likely fluctuate, the DOL uses an annual average.
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Under the newer test based on the 2004 regulations, the main, major, or most important duty will be the focus. Let’s say the employee is classified as exempt under the administrative classification because the employee is the church’s chief financial officer (CFO). The employee also plays an instrument in the worship band, which has six instrumental players. Since the CFO’s administrative duties are the main, most important duty, the CFO is likely classified as exempt.
If the exempt employee does not turn in time sheets, the employee and the DOL get to estimate the time worked if the employee is reclassified as nonexempt.
I assumed two jobs here based on the question, but the principles work regardless of the number of jobs held.
Related: Wondering how to handle compensation when a pastor leaves unexpectedly? Read our guidance on paying a pastor after resignation to understand key legal and payroll considerations.