The Fair Labor Standards Act and the New Minimum Wage

What churches need to know about paying non-exempt employees.

According to results in the new 2009 Compensation Handbook for Church Staff, the average church employs three full-time and three part-time nonordained staff. That means nearly all churches need to have a working knowledge of the Fair Labor Standards Act (FLSA), especially with the new staggered increases in minimum wages that are in effect for hourly workers.

Who’s affected by the FLSA?

The Fair Labor Standards Act (FLSA) is the federal law that contains the minimum wage and overtime pay requirements. More than eighty million American workers are protected (or “covered”) by the FLSA, which is enforced by the Wage and Hour Division of the U.S. Department of Labor.

The Fair Minimum Wage Act of 2007 included phased increases to the federal minimum wage, starting on July 24, 2007. Here are the planned increases:

  • For work performed prior to July 24, 2007, the federal minimum wage is $5.15 per hour.
  • For work performed from July 24, 2007 to July 23, 2008, the federal minimum wage is $5.85 per hour.
  • For work performed from July 24, 2008 to July 23, 2009, the federal minimum wage is $6.55 per hour.
  • For work performed on or after July 24, 2009, the federal minimum wage is $7.25 per hour.

The new rate, which took effect on July 24 of this year, is $6.55 per hour. In one year, on July 24, 2009, this rate will increase again to $7.25 per hour. (See page 5 for more compensation information.)

Many states also have minimum wage laws. If an employee is subject to both the state and federal minimum wage laws, the employee is entitled to the higher of the two minimum wages.

KEY POINT. Churches should be paying at least the current minimum wage to all non-exempt employees.

The minimum wage and overtime pay protections of the FLSA will apply to church employees if their work regularly involves them in interstate commerce. The definition of commerce is very broad, and includes such tasks as typing letters that are sent out of state in the mail, making telephone calls to persons located in other states, and traveling to other states in their work. Most church employees will meet this broad definition, and are therefore subject to the protections of the FLSA.

There are certain exceptions that are recognized by the FLSA. For example, administrative, executive, and professional workers are not covered. Generally, these are persons who perform duties specified by the Act, and who are paid on a salary basis of at least $455 per week. In addition, Department of Labor regulations specify that “clergy and religious workers are not covered by the FLSA.” This language indicates that the official position of the DOL is that clergy are not subject to the minimum wage and overtime pay requirements of the FLSA regardless of the amount of their compensation.

KEY POINT. For detailed information regarding exemptions for professional, executive, and administrative employees, see Richard Hammar’s Pastor, Church & Law, Vol. 3: Employment Law (section 8-08).

Posters help keep church staff informed

There are several poster requirements that are imposed by federal law. In this issue, we’ll focus on the FLSA overtime pay and minimum wage requirement poster.

minimum wage and overtime pay

Every employer that employs workers subject to the federal minimum wage and overtime pay requirements is required by law to post “a notice explaining the Act … in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy.” You can obtain a free copy of a poster from any local office of the United States Department of Labor (Wage and Hours Division), or by visiting the DOL website (

The official poster is very generic, and simply notes the current minimum wage, and informs employees that they have a right to “overtime pay at least 1 and 1/2 times your regular rate of pay for all hours worked over 40 in a workweek.” The official poster does not address the unique status of ministers under the law. Therefore, use of the official FLSA poster by churches may lead to confusion and a misinterpretation of the law unless properly modified.

Example. A youth pastor employed full-time by a church is paid an annual salary of $20,000. Since he is paid less than $455 per week is he entitled to overtime pay? Department of Labor regulations specify that “clergy and religious workers are not covered by the FLSA.” This language indicates that the official position of the DOL is that clergy are not subject to the mini- mum wage and overtime pay requirements of the FLSA regardless of the amount of their compensation. The DOL regulations provide a basis for concluding that the FLSA minimum wage and overtime pay requirements do not apply to ministers. This clarification is not mentioned in the official FLSA poster. To the contrary, if the youth pastor read the official FLSA poster, he would assume that the church was legally required to provide him with overtime pay at a rate of one-and-a-half times his regular compensation for hours worked in excess of 40 during the same week.

While federal and state governments do not issue citations or penalties for not posting a FSLA minimum wage and overtime poster, failure to display a required poster may have consequences besides a fine or penalty. To illustrate, in order for an employee to sue an employer for violating federal discrimination laws, the employee generally must file a “charge” or complaint with the Equal Employment Opportunity Commission

(EEOC) within 180 days from the date of the alleged violation (this deadline may be extended to 300 days if the complaint is covered by a state or local nondiscrimination laws). However, several courts have ruled that an employer’s failure to display required workplace posters may extend the time that employees have to file discrimination claims, thereby exposing an employer to potential liability for a protracted period of time. This is a good reason to comply with applicable poster requirements, even if the monetary penalty that can be imposed for noncompliance is minimal.

KEY POINT. No reported court ruling addresses the imposition of fines or other penalties on a church for failure to display a required workplace poster. This does not suggest that churches should disregard poster requirements. Instead, it demonstrates that innocent failures to comply with poster requirements will not necessarily result in fines, penalties, or prison sentences, especially if a church begins to comply with those requirements.

commercially available posters

Posters that claim to comply with federal employment laws are available from a number of vendors. Before purchasing one of them, note the following considerations:

  • Many of these posters are expensive. Some cost as much as $150 or more for doing nothing more than reproducing the free Department of Labor posters on one large, laminated chart.
  • Do not purchase a poster from any vendor that engages in fear tactics or intimidation.
  • No commercially available poster that we have seen mentions the special exceptions and rules that apply to churches and clergy as noted in this section. In addition, they often contain information about laws that do not apply to churches. As a result, such posters will often create confusion among church staff members.

Example. A church has five employees. The church treasurer receives an unsolicited ad warning of substantial fines and penalties for failure to display a workplace poster. The church pays $100 for the poster. The poster presents the same material that is available for free in Department of Labor posters. It includes the Equal Employment Opportunity Is the Law and Family Medical and Leave Act posters, neither of which applies to a church with only five employees.

state law

Many states have their own poster requirements in addition to those mandated by federal law. For example, many states require that employers subject to the following laws post notices described by state law: (1) a state civil rights law; (2) a state minimum wage law; (3) unemployment compensation; and (4) workers compensation. Many states make these posters available free of charge. Also, note that the official posters often do not address the special rules or exemptions that may apply to churches and clergy. We recommend that church leaders contact a local attorney for an explanation of the poster requirements that apply under state or local law.

Tip. Some churches display the applicable federal and state posters (obtained for free from government websites), and also post a conspicuous notice above or below the posters that cautions employees that the posters do not necessarily reflect the unique legal rules and exceptions that apply to churches and clergy.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold 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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