Recent changes to US Department of Labor’s minimum salary exemption mean churches are grappling with new FLSA worker classifications, and resetting budgets based on those new classifications.
New minimums phase-in
The new regulations establish the minimum salary at the 35th percentile of full-time salaried workers in the lowest wage Census region, which is $1,128.
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Phased-in approach
Because the new minimum represents a significant increase over the previous minimum of $684, the DOL opted for a phased-in approach.
- Phase 1: $844 per week (equivalent to $43,888 per year) on July 1, 2024.
- Phase 2: $1,128 per week (equivalent to $58,656 per year) on January 1, 2025.
After that, the minimum salary will change every three years on July 1, starting in 2027.
Note: The minimum salary for exempt status applies for part-time employees. In simpler terms, the minimum salary for exempt status applies whether an employee works one hour or 40 hours.
Breaking down the new FLSA worker classifications
In the below video, Church Law & Tax contributor Dustin Gaines quickly reviews:
- the significance of the FLSA changes for churches
- employment compensation parameters
- FLSA’s three part test for exempt workers
- new salary thresholds
- employer options for employees that are no longer exempt under the new rules
- whether and how the Ministerial Exception applies
Church Law & Tax recently partnered with ChurchSalary to host a free, information-packed webinar on church compensation trends heading into 2025. Give it a watch and listen to learn what churches are saying about how the new FLSA worker classifications are affecting their budget cycles, and expert insights from some of today’s leading voices in the church compensation space.
