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Managing Your Church Blog, March, 2019
The New Overtime Rule Proposal: What Churches Should Note
The New Overtime Rule Proposal: What Churches Should Note

Editor’s note: On September 24, 2019, the US Department of Labor announced the final version of its rule. Of note for churches and church leaders: the adopted “standard salary level” is $684 per week, or $35,568 per year, for a full-year worker. This is slightly higher than the original rule proposed in March.

Editor’s note: For an in-depth treatment of this topic, see Richard Hammar’s analysis in “A Closer Look at New Overtime Rules Taking Effect in 2020.”

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 original 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 (Editor’s Note: As of Aug. 14, 2019, the link to the proposal is no longer available. The agency now publicly says it will only commit to periodic reviews for potential updates to the threshold.)

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.