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The Right Way to Handle Wage Classifications
The Right Way to Handle Wage Classifications
Properly applying the Fair Labor Standards Act to church employees.
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Many church leaders propose that the Fair Labor Standards Act (FLSA) does not apply to churches. That may have once been true, but the church of today is not the church of yesterday. Advanced activities easily make the law applicable to most churches, either on an organizational level (meaning the FLSA applies to the church operations as a whole) or on an individual level (based on an employee's duties).

Furthermore, every state maintains its own version of the FLSA, either layering additional rules on top of federal rules or applying similar rules where the federal rules don't apply. The law most favorable to an employee, whether at the state or federal level, always applies.

Key point. The FLSA establishes a minimum wage of $7.25 an hour, maintains a 40-hour work week, and sets a salary test for exempt positions at $455 per week. The Wage and Hour Division of the US Department of Labor (DOL) is responsible for enforcing this law.

Under the FLSA and DOL rules, there are three primary classifications for church employees:

  • Employees meeting the "ministerial exception"
  • Exempt employees
  • Nonexempt employees

Vital information about each classification is offered in this article.

The ministerial exception

Established more through judicial application than through any statute, employment law embraces a concept known as the "ministerial exception." The concept revolves around the idea that the government does not have authority to intervene in the relationship between a church and its ministers. As ruled in McClure v. Salvation Army, 460 F.2d 553 (5th Cir. 1972), matters between a church and its ministers, including salary, are of ecclesiastical concern only, and any governmental intervention violates the First Amendment protections guaranteeing separation of church and state.

Who qualifies as a "minister" for this exception is different from who qualifies as a "minister" for other payroll tax rules enforced by the Internal Revenue Service. According to employment law, a minister is an employee who performs essential religious duties as a required element of the employee's job.

Unlike the concept of "minister" for the Internal Revenue Code, the employee is not required to have ministerial credentials. Without this requirement, the group of employees eligible for the ministerial exception is wider for FLSA/DOL classification purposes.

Key point. Job descriptions for all employees are important, but especially for those whose work qualifies for the ministerial exception. Employee classifications, and the wage implications related to them, may be won or lost based on job descriptions.
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