The New Overtime Rule Proposal: What Churches Should Note
The New Overtime Rule Proposal: What Churches Should Note

On March 7, the US Department of Labor (DOL) “issued its long-awaited replacement of the Obama administration’s controversial overtime rule, raising the minimum salary threshold required for workers to qualify for the Fair Labor Standards Act's ‘white collar’ exemptions to $35,308 per year,” reported The new weekly minimum salary will work out to be $679. Employees who are categorized with white-collar exemptions, and normally would not receive overtime pay, will become eligible for overtime pay if they earn less than the new threshold amount.

The rule, part of the federal Fair Labor Standards Act, is scheduled to take effect on Jan. 1, 2020. It will not include any exemption for religious employers. Church leaders will need to take note about the proposal and anticipate possible budgetary and payroll changes they will need to make for qualifying staff members.

On page 10 of the 219-page proposal, the DOL also said it intends to propose updating the salary threshold levels every four years through a notice-and-comment rulemaking process. The last threshold update occurred in 2004.

The plan proposed by the Trump administration is far less aggressive than the $47,467 annual threshold (or $913 per week) proposed by the DOL under Obama. In 2017, a federal district judge in Texas struck down the increase wanted by the Obama White House.

“Our economy has more job openings than job seekers and more Americans are joining the labor force," Labor Secretary Alexander Acosta said in a news release. "... [Thursday’s] proposal would bring common sense, consistency, and higher wages to working Americans."

One important note, per The Kiplinger Letter: “Many states have already set higher thresholds, which supersede the federal standard.” Churches should research their state laws to make certain they do not need to comply with a higher threshold in their respective state.

For more background on how the rule likely will work, attorney Richard Hammar’s prior analysis with the Obama administration’s proposal provides further details.

Church Law & Tax will follow developments on this topic closely in the weeks ahead. Be sure to subscribe to the free Church Law & Tax Update e-newsletter to keep up.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is published with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations."

Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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