Pastor, Church & Law

§ 8.08.04

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Key Point 8-08.04. The United States Department of Labor has issued several opinion letters addressing coverage of church employees under the Fair Labor Standards Act.

The United States Department of Labor has issued three "opinion letters" that directly address the application of the FLSA to church employees. These opinion letters are summarized below:

Opinion Letter FLSA2005-12NA (September 23, 2005)

A church employed a person in a full-time salaried position who also works a second job for the church as an hourly employee. It was the church's position that no employee of the church was engaged in interstate or commercial activities, and that the church did not receive financial support through any commercial ventures.

The Opinion Letter concluded that the church was not subject to "enterprise" coverage under the FLSA:

Enterprise coverage does not apply to a private, nonprofit enterprise where the eleemosynary, religious or educational activities of the nonprofit enterprise are not in substantial competition with other businesses, unless it is operated in conjunction with a hospital, a residential care facility, a school or a commercial enterprise operated for a business purpose. … It appears that the local church you represent satisfies none of these tests and, thus, is not covered on an enterprise basis. Further … enterprise coverage is not applicable to employees engaged exclusively in the operation of a church or synagogue since their activities are not performed for a business purpose within the meaning of FLSA.

The Opinion Letter noted that employees of enterprises not covered under the FLSA may still be individually covered by the FLSA "in any workweek in which they are engaged in interstate commerce, the production of goods for commerce or activities closely related and directly essential to the production of goods for commerce. Examples of such interstate commerce activities include making/receiving interstate telephone calls, shipping materials to another state and transporting persons or property to another state."

The Opinion Letter further clarified:

As a practical matter, the Wage and Hour Division will not assert that an employee who on isolated occasions spends an insubstantial amount of time performing individually covered work is individually covered by the FLSA. As stated in Field Operations Handbook 11a01, individual coverage will not be asserted for employees who occasionally devote insubstantial amounts of time to:

• Receiving/making interstate phone calls;
• Receiving/sending interstate mail or electronic communications;
• Making bookkeeping entries related to interstate commerce.

The church asked the Department of Labor how to calculate overtime for an employee simultaneously holding a salaried position and an hourly position. The duties of the employee's salaried position were food preparation, while the duties of the hourly position were janitorial. The work of both positions was conducted in the church building. The Opinion Letter concludes:

Employees of a church are individually covered under FLSA where they regularly and recurrently use the telephone, telegraph, or the mails for interstate communication or receive, prepare, or send written material across state lines. … Generally, custodians would not be covered under FLSA on an individual basis unless they regularly clean offices of the church where goods are regularly produced for shipment across state lines. A cook in a church would not be covered on an individual basis unless the employee is ordering, receiving or preparing goods that are moving or will move in interstate commerce. Therefore, because the employee in question does not engage in these interstate activities, the employee would not be individually subject to the FLSA. In light of all of the above information, it is our opinion that the church and the culinary and janitorial employees within it are not covered by the FLSA.

Key Point. This Opinion Letter specifically referenced the following two Opinion Letters dated November 4, 1983. and July 23, 1975. This demonstrates that the Department of Labor still considers these earlier Opinion Letters to be correct interpretations of the FLSA.

Opinion Letter, November 4, 1983

A synagogue asked the Department of Labor for an opinion regarding the application of the FLSA to custodians and a cook. The custodians' duties included setup work for meetings, keeping the premises cleaned and repaired, and cutting the grass and serving food for various functions. The synagogue also employed a cook who prepared food following certain religious services and activities. The other employees of the synagogue were a rabbi, secretary, and part-time religious school teachers.

The Department of Labor concluded that it was not presented with enough information to enable it to make a ruling on the application of the FLSA to the synagogue staff. However, it did provide the following information to assist the synagogue in reaching an informed decision:

FLSA applies to employees individually engaged in interstate commerce or in the production of goods for interstate commerce and to all employees in certain enterprises which are so engaged. Employees of a church or synagogue are individually covered under FLSA where they regularly and recurrently use the telephone, telegraph, or the mails for interstate communication or receive, prepare, or send written material across state lines. Individual coverage will not be asserted, however, for office and clerical employees of a church or synagogue who only occasionally or sporadically devote negligible amounts of time to writing interstate letters or otherwise handle interstate mail or make bookkeeping entries related to interstate transactions. Generally, custodians would not be covered under FLSA on an individual basis unless the employees regularly clean offices of the church or synagogue where goods are regularly produced for shipment across state lines. A cook in a church or synagogue would not be covered on an individual basis unless the employee is ordering, receiving or preparing goods that are moving or will move in interstate commerce.

Whether or not enterprise coverage applies to the operations of a nonprofit religious organization, such as a church or synagogue, depends on several factors. Generally, enterprise coverage is not applicable to employees engaged exclusively in the operation of a church or synagogue since their activities are not performed for a "business purpose" within the meaning of FLSA. However, where the nonprofit religious organization employs employees in connection with the operation of the type of institutions described in sections 3(r) and 3(s) of the FLSA [pertaining to hospitals, elementary and secondary schools, preschools, residential care institutions, and institutions of higher education, all of which are presumed to be "enterprises" whose employees are all covered by FLSA regardless of annual gross income] they will be covered on an enterprise basis, since such activities have, by statute, been declared to be performed for a business purpose.

Additionally, activities of a religious organization may be performed for a "business purpose" where, for example, they engaged in ordinary commercial activities, such as operating a printing and publishing plant. In such cases, employees employed in these business activities may be individually covered under FLSA if they are engaged in commerce or the production of goods for commerce, or on an enterprise basis … if the business has employees engaged in commerce or in the production of goods for commerce or employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person, and the enterprise has an annual dollar volume of sales made or business done of not less than [$500,000] exclusive of excise taxes at the retail level which are separately stated. Contributions, pledges, donations, and other funds raised through activities such as raffles and games that are in furtherance of the educational, eleemosynary and religious activities of a nonprofit organization are not included in computing the annual dollar volume of business done of the enterprise.

Individuals who volunteer their services, usually on a part-time basis, to a church or synagogue not as employees or in contemplation of pay are not considered to be employees within the meaning of FLSA. For example, persons who volunteer their services as lectors, cantors, ushers or choir members would not be considered employees. Likewise, persons who volunteer to answer telephones, serve as doorkeepers, or perform general clerical or administrative functions would not be employees. However, in situations where the understanding is that the person will work for wages there will be an employment relationship. On the other hand, a bookkeeper could not be treated as an unpaid volunteer bookkeeper for the employing institution in the same workweek in which he or she is also an employee.

Persons such as priests, ministers, monks, nuns, lay brothers, deacons and other members of religious orders or communities who serve pursuant to their religious obligations in the schools, hospitals, and other institutions operated by their church or religious order or community shall not be considered to be "employees."

This Department of Labor Opinion Letter contains a number of important clarifications. Consider the following:

• Individual coverage. Church employees are individually covered under FLSA, even if their employing church is not an "enterprise," if they "regularly and recurrently use the telephone, telegraph, or the mails for interstate communication or receive, prepare, or send written material across state lines."
• Occasional or sporadic tasks. Individual coverage will not be asserted "for office and clerical employees of a church who only occasionally or sporadically devote negligible amounts of time to writing interstate letters or otherwise handle interstate mail or make bookkeeping entries related to interstate transactions."
• Custodians. Church custodians are not covered under FLSA on an individual basis unless they "regularly clean offices of the church where goods are regularly produced for shipment across state lines."
• Cooks. A cook employed by a church is not covered on an individual basis unless he or she is "ordering, receiving or preparing goods that are moving or will move in interstate commerce."
• Enterprise coverage. The FLSA defines an enterprise as "the related activities performed … by any person or persons for a common business purpose." The United States Supreme Court has noted that this definition excludes most religious and charitable organizations to the extent that they are not operating for profit and are not pursuing a "business purpose." However, some religious organizations will satisfy the definition of an enterprise if they have annual sales revenue of $500,000 or more. The Opinion Letter cites a printing plant as one example. However, contributions, pledges, donations, and other funds raised through activities such as raffles and games that are in furtherance of a church's exempt purposes are not included in computing the annual dollar volume of business done by the enterprise.
• Church-operated hospitals and schools. The FLSA specifies that hospitals, elementary and secondary schools, preschools, residential care institutions, and institutions of higher education are presumed to be "enterprises" whose employees are all covered by FLSA regardless of annual gross income, since such employment is specifically designated by the FLSA as being for a business purpose. However, persons such as priests, ministers, monks, nuns, lay brothers, deacons and other members of religious orders or communities who serve pursuant to their religious obligations in the schools, hospitals, and other institutions operated by their church or religious order or community shall not be considered to be "employees."
• Volunteers. Individuals who volunteer their services, usually on a part-time basis, to a church "not as employees or in contemplation of pay are not considered to be employees within the meaning of FLSA." For example, persons who volunteer their services as lectors, cantors, ushers or choir members would not be considered employees. Likewise, persons who volunteer to answer telephones, serve as doorkeepers, or perform general clerical or administrative functions would not be employees. However, in situations where the understanding is that the person will work for wages there will be an employment relationship.
• Can employees be treated as volunteers? The Opinion Letter concludes that "a bookkeeper could not be treated as an unpaid volunteer bookkeeper for the employing institution in the same work week in which he or she is also an employee."

Opinion Letter, July 23, 1975

This Opinion Letter addressed the question of "the application of the provisions of the Fair Labor Standards Act to a secretary employed by a local church." The Opinion Letter concludes:

This Act applies to employees individually engaged in or producing goods for interstate commerce and to employees of certain enterprises so engaged.

Church employees would be individually covered under the Act where they regularly and recurrently use the telephone, telegraph or mails for interstate communications or receive, prepare or send material across state lines. We would not, however, assert individual coverage for office or clerical employees of a church, such as the secretary, who only occasionally or sporadically devote negligible amounts of time to such interstate transactions. Additionally, coverage would not be applicable to church employees, such as a janitor, engaged exclusively in the operation of the church since their activities are not performed for a business purpose.