Pastor, Church & Law

§ 8.08.03

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Key Point 8-08.03. Several federal courts have addressed the coverage of church employees under the Fair Labor Standards Act.

The Fair Labor Standards Act does not specifically exempt religious organizations from its provisions, and many courts have ruled that the Act covers the employees of such organizations.

One court held that the Act applied to the employees of a religious denomination's publishing plant even though the plant was organized "to glorify God, publish the full Gospel to every nation, and promote the Christian religion by spreading religious knowledge."[32] Mitchell v. Pilgrim Holiness Church Corp., 210 F.2d 879 (7th Cir. 1944). The court observed that the amount of goods sent outside the state where they are produced does not have to be large in order to subject the producer to the provisions of the Act, since the shipment in commerce of "any" goods produced by employees employed in violation of the Act's overtime and minimum wage requirements is prohibited. The plant's interstate shipments were more than sufficient, concluded the court, to involve its employees in interstate commerce. In rejecting the plant's claim that it was engaged in religion and that religion is not commerce, the court observed:

If we grant that religion itself is not commerce, it still does not follow that a corporation organized for religious purposes may not engage in "commerce" as defined in the Fair Labor Standards Act, that is, by engaging in "trade, commerce, transportation, transmission, or communication among the several states." By engaging in the printing business, as this defendant did, we think it was clearly engaged in "commerce" with the meaning of the Act.[33] Id. at 882.

The court also rejected the plant's claim that its First Amendment right to freely exercise its religion would be violated by subjecting it to the provisions of the Act. The court noted that First Amendment rights are not without limit but may be restricted by the state if it has a sufficiently compelling interest. The objectives underlying the Fair Labor Standards Act, concluded the court, were sufficiently compelling to override a religious organization's First Amendment rights under the circumstances of the present case.

In a related case, another court observed that "organizations affecting commerce may not escape coverage of social legislation by showing that they were created for fraternal or religious purposes."[34] McClure v. Salvation Army, 460 F.2d 553, 557 (5th Cir. 1972).

In 1985, the United States Supreme Court unanimously ruled that the Fair Labor Standards Acts applied to some 300 "associates" who performed commercial work for a religious organization in exchange for lodging, food, transportation, and medical care.[35] Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985). The foundation engaged in several commercial enterprises, including advertising, landscaping, service stations, restaurants, manufacture and sale of candy and clothing, record keeping, construction, plumbing, sand and gravel, electrical contracting, hog farms, feed and farm supplies, real estate development, and freight hauling. Most of the associates who performed such activities were former "derelicts, drug addicts, and criminals" who had been evangelized by the foundation.

The Court observed that the Act would apply to the foundation's commercial activities if two conditions were satisfied: (1) the activities comprised an enterprise engaged in commerce, and (2) the associates were "employees." The Court concluded that both conditions were satisfied, and therefore the foundation's associates were entitled to the protections of the Act. In finding the foundation's commercial activities to be an enterprise engaged in commerce, the Court observed that "[t]he statute contains no express or implied exception for commercial activities conducted by religious or other nonprofit organizations, and the agency charged with its enforcement has consistently interpreted the statute to reach such businesses." The Court rejected the foundation's assertion that its exemption from federal income taxation constituted governmental recognition of its status as a nonprofit religious and educational organization rather than a commercial one.

As to the second condition, the Court concluded that the foundation's associates were employees despite the foundation's characterization of them as "volunteers" who worked without any expectation of compensation in any form. The Court acknowledged that an individual who "without promise or expectation of compensation, but solely for his personal purpose or pleasure, [works] in activities carried on by other persons either for their pleasure or profit" is not an employee. However, it noted that the Act defines wages to include in kind benefits such as food, lodging, and medical care, and that the associates clearly were compensated employees under this definition. In response to the testimony of several associates that they expected no compensation for their labors and that they considered their work to be "ministry," the Court held that "economic reality" rather than the views of the associates was determinative, and that under this test the associates were employees since they "must have expected to receive in kind benefits —and expected them in exchange for their services."

The Court rejected the foundation's claim that payment of wages to its associates would violate their right to freely exercise their religion. The Court noted that "[i]t is virtually self evident that the free exercise of religion clause does not require an exemption from a governmental program unless, at a minimum, inclusion in the program actually burdens the claimant's freedom to exercise religious rights." Since the foundation in fact compensated the associates by providing them with noncash benefits including food and lodging, the Court saw no merit in the associates' assertion that receipt of compensation would violate their religious rights.

The Court emphasized that if a religious organization could engage in a commercial activity in direct competition with ordinary commercial enterprises and remain exempt from the provisions of the Act, it would be free to pay substandard wages and thereby would realize an unfair advantage over its commercial competitors that would jeopardize the right of potentially large numbers of workers to receive minimum wage jobs. The Court also noted that there was no reason "to fear that … coverage of the foundation's business activities will lead to coverage of volunteers who drive the elderly to church, serve church suppers, or help remodel a church home for the needy," since none of these activities is commercial in nature and those who perform such services ordinarily do so without any expectation of either cash or in kind compensation.

A few courts have concluded that the Salvation Army, though a religious organization, is an employer engaged in an industry affecting commerce.[36] See, e.g., McClure v. Salvation Army, 460 F.2d 553 (5th Cir. 1972). However, one federal court ruled that a transient lodge operated by the Salvation Army was not subject to the Act, even though the Salvation Army as a whole was engaged in commerce.[37] Wagner v. Salvation Army, 660 F. Supp. 466 (E.D. Tenn. 1986). The court based this conclusion on the fact that the transient home was not a commercial operation, and the transients were required to perform only incidental services (e.g., making their beds, raking leaves).

Case study. A federal court in North Carolina ruled that a church operated vocational training program was in violation of federal child labor law.[38] Reich v. Shiloh True Light Church of Christ, 895 F. Supp. 799 (W.D.N.C. 1995). The church used children as young as 11 years of age to work as laborers on a variety of construction projects. The children performed several tasks including remodeling, carpentry, concrete and masonry work, framing, and hanging sheet rock. Children under 16 years of age were not paid for their services, although they generally worked 8 hours each day. The church attempted to avoid the minimum wage, overtime pay, and child labor provisions of the Fair Labor Standards Act by claiming that the children under age 16 were "vocational trainees" or students rather than employees (the Act applies only to employees). The federal Department of Labor asserted that the children were employees, and that the church had violated the Act. A federal court agreed. The court began its opinion by stressing that the Act applies to all employees employed by an enterprise engaged in commerce, and that the term "employee" is very broadly defined as anyone who is "suffered or permitted to work." The court noted that "a broader or more comprehensive" definition would be difficult to articulate. It also pointed out that the "economic realities" of a position must be considered in deciding whether or not a worker is an employee. The court conceded that in some cases a trainee will not be an employee; but the test to be applied in such cases is whether the trainee or the employer is the "primary beneficiary" of the trainee's labor. If the employer is the primary beneficiary, then the trainee is an employee. The court ruled that this test was met. It conceded that "there is nothing in the federal statutes … that prevents church members from arranging for some instruction of their children in vocational pursuits." How ever, "When the means adopted to serve that end consist of employing children in commercial enterprises that compete with other enterprises fully subject to the labor laws … the religious beliefs of the church members cannot immunize the employers from enforcement of the federal statutes. … The sectarian purposes of the church members may be served by other means, but their service can not be sought by putting children to productive work at power saw tables and on brick masons' scaffolding, in violation of the nation's labor laws. Were we confronted merely with violations involving older children or merely with excess hours in non hazardous environments, this might have been a different case. In the case before us, however, the interest of the United States in prohibiting the employment of children in industrial environments must prevail."

Two federal court rulings contain an extensive analysis of the application of the Fair Labor Standards Act to religious organizations. These cases are helpful in understanding this important question, and they are summarized below.

Case 1. Bowrin v. Catholic Guardian Society, 417 F.Supp.2d 449 (S.D.N.Y. 2006)

A church affiliated nonprofit organization operated residential programs for mentally disabled persons and foster children. Nine employees (the "plaintiffs") sued their employer in federal court claiming that it had failed to pay them overtime compensation for hours worked in excess of 40 per week.

The court noted that an employer is subject to the FLSA's overtime pay requirements in either of the following two situations: (1) the employee individually is "engaged in commerce or in the production of goods for commerce," or (2) the employer is an enterprise "engaged in commerce or in the production of goods for commerce," regardless of whether the individual employee was so engaged. The court noted that under the FLSA's individual coverage provision, any employee "engaged in commerce or in the production of goods for commerce" is covered by the Act whether or not his or her employer is an enterprise engaged in commerce.

The plaintiffs conceded that they had not been "engaged in the production of goods for commerce," and so "the issue of individual coverage turns on whether the plaintiffs were or are engaged in commerce."

Department of Labor regulations specify that employees are engaged in commerce "when they are performing work involving or related to the movement of persons or things (whether tangibles or intangibles, and including information and intelligence)" between states.[39] 29 C.F.R. § 779.103. As a result, an employee is engaged in commerce "when regularly using the mails and telephone for interstate communication, or when regularly traveling across state lines while working." However, Department of Labor regulations also specify:

This does not mean that any use by an employee of the mails and other channels of communication is sufficient to establish coverage. But if the employee, as a regular and recurrent part of his duties, uses such instrumentalities in obtaining or communicating information or in sending or receiving written reports or messages, or orders for goods or services, or plans or other documents across state lines, he comes within the scope of the act as an employee directly engaged in the work of "communication" between the state and places outside the state.

The court concluded, based on this language, that when an employee's interstate activities "are de minimis, or not regular or recurring, as a practical matter neither courts nor the Department of Labor consider the employee covered under the FLSA." It cited the following examples:

• Sporadic or occasional shipments of insubstantial amounts of goods are insufficient to bring an employee within the coverage of the FLSA.[40] Remmers v. Egor, 332 F.2d 103 (2d Cir. 1964).
• Four trips out of state by one employee on work related activities over the course of 19 months were "sporadic to say the least," while frequent trips out of state and consistent use of the mails to send correspondence out of state was sufficient for another employee to be covered by the FLSA.[41] Isaacson v. Penn Cmty. Servs., 1970 WL 794 (D.S.C. 1970).
• An employee's use of the phone and mails to accomplish 14 to 30 major purchases from out of state vendors between 1992 and 1997 were considered sufficient to find coverage under the FLSA.[42] Boekemeier v. Fourth Universalist Society, 86 F.Supp.2d 280 (S.D.N.Y.2000).

The court conceded that "there is not a clear standard for determining when an individual employee's interstate activities tip the scale and becomes substantial for purposes of determining coverage." It noted that an official publication of the Department of Labor, Wage and Hour Division (WHD), states that the WHD does not assert individual coverage where an employee spends "insubstantial amount of time" "on isolated occasions" performing covered work.[43] Field Operations Handbook § 11a01(a).The publication acknowledges that "it is not possible to establish precise guidelines to be followed" on the question of whether individually covered work is insubstantial and isolated. However, it goes on to clarify that

in view of the remedial purposes of the FLSA, the application of this [de minimis or "insubstantial amount"] rule is limited to circumstances where the time consumed by an employee in doing such covered work is obviously trivial, and the incidence of this covered work is so infrequent and out of pattern that it would be unrealistic to assert individual coverage solely on such grounds. This must be decided on the facts in a particular case.

Department of Labor regulations provide the following clarification regarding out of state travel:

Employees who are regularly engaged in traveling across state lines in the performance of their duties (as distinguished from merely going to and from their homes or lodgings in commuting to a work place) are engaged in commerce and covered by the act. On the other hand, it is equally plain that an employee who, in isolated or sporadic instances, happens to cross a state line in the course of his employment, which is otherwise intrastate in character, is not, for that sole reason, covered by the FLSA. Doubtful questions arising in the area between the two extremes must be resolved on the basis of the facts in each individual case.[44] 29 C.F.R. § 776.12 (emphasis supplied).

the nine plaintiffs

The court noted that "whether the plaintiffs are covered for work done … will require an analysis of their alleged interstate activities to determine (1) whether those activities are of the type covered by the Act, and (2) whether these are performed frequently enough to give rise to coverage under the Act." It observed:

The court agrees with the employer's position that distributing personal mail and phone cards to residents in the home, and picking up personal calls for residents that originate out of state, do not constitute the type of use of the mails or channels of interstate commerce sufficient to trigger coverage under the Act. As discussed above, the Department of Labor does not consider "any use by an employee of the mails and other channels of communication" to implicate individual coverage. 29 C.F.R. § 776.10 (emphasis added). Rather, individual coverage may exist when that "use" is "regular and recurrent" and performed to obtain or communicate information, or to order goods or services across state lines. Although neither the substance nor volume criteria triggering individual coverage under the FLSA are well defined, typically it is the use of the interstate mails and placement of out of state phone calls occurring in the course of conducting an organization's clerical or administrative business that appear to trigger individual coverage, if "regular and recurrent" and a "substantial part" of the employee's work. Field Operations Handbook § 11n01. It is undisputed that plaintiffs' handling of mail and receipt of telephone calls occurred only in the context of distributing mail and relaying calls and messages to residents. Employees cannot be considered to be "using" the mails simply because they physically touch letters that have arrived from out of state for residents in the homes. Nor does answering calls that happen to originate from out of state constitute "use" of the channels of interstate commerce. As a matter of common sense, these types of activities do not require an employee to be "directly engaged in the work of 'communication' between the state and places outside the state." 29 C.F.R. § 776.10.

However, the court did find the employees' trips to other states for shopping and recreation with residents of the homes to be interstate activities "that may bring an employee within the scope of individual coverage," since "traveling across state lines in connection with one's duties clearly implicates coverage under the Act" so long as the travel is neither infrequent nor de minimis.

The court concluded that two of the nine plaintiffs were covered under the FLSA because the home in which they worked qualified as an "enterprise." The court then addressed the individual coverage of the remaining seven employees.

liquidated damages

The court ruled that the employer was required to pay "liquidated damages" in addition to unpaid overtime compensation. According to the FLSA, employers that fail to pay overtime compensation may be obligated to pay not only the unpaid overtime compensation but also "an additional equal amount as liquidated damages." However, an employer will not be required to pay liquidated damages if it can demonstrate that it had "reasonable grounds" for believing that it was not obligated to pay overtime compensation. The court cautioned that this defense required evidence "of at least an honest intention to ascertain what the Act requires and to comply with it. The employer must show more than that it did not purposefully violate the provisions of the FLSA to establish that it acted in good faith." The court ruled that the employer was not entitled to this defense, and accordingly assessed liquidated damages in addition to back overtime pay.

statute of limitations

An employer who has violated the FLSA must pay unpaid wages for two years from the filing of a lawsuit, unless the employer has "willfully" violated the Act, in which case unpaid wages are due for three years. The court concluded that the special three year rule did not apply in this case since there was no evidence that the employer "knew it was violating the FLSA." While the employer may not have "taken sufficient steps to ensure compliance with the FLSA," it did "make some effort to ascertain whether it was entitled to an exemption."

application of the FLSA to religious employers

The court rejected the employer's suggestion that it was exempt from FLSA since it was a religious organization. It noted that Department of Labor, Wage and Hour Division, "clearly recognizes that individual employees of nonprofit organizations who do not engage in substantial competition with other businesses may be covered on an individual basis." It quoted from a Department of Labor publication: "Employees of educational, eleemosynary, or nonprofit organizations may be covered on an individual basis. … Employees, such as office and clerical personnel, whose work involves the regular use of the interstate mails, telegraph, telephone, and similar instrumentalities for communication across state lines are actually engaged in interstate commerce."[45] Field Operations Handbook § 11n01.

Case 2. Boekemeier v. Fourth Universalist Society, 86 F.Supp.2d 280 (S.D.N.Y. 2000)

A church in New York City supplemented its income by leasing its facilities and property on a short and longterm basis to individuals and organizations. In soliciting customers to rent its facilities, the church performed monthly mass mailings, issued press releases and placed advertisements in magazines and on the Internet. About half of the groups that rented space from the church for special events were from a state other than New York.

The church's total income for each fiscal year from 1993 to 1996 surpassed $500,000. This income came from the following categories:

(1) rental income

(2) contributions (contributions that qualify as tax deductible charitable contributions)

(3) investment income (revenue derived from dividends and interest received as a result of investments made by the church)

(4) special events income (revenue derived from the coin operated soda machine on the church's premises, any fundraising events conducted by the church, and any letter writing campaigns or other special fund raising efforts conducted by the staff of the church)

(5) miscellaneous income (credits from merchants, adjustments to reflect outstanding checks which never were negotiated, and income derived from meals served at the church)

(6) gain on sale of investments (revenue from the sale of securities owned by the church)

(7) social action committee income (contributions received by the church's social action committee)

(8) insurance proceeds derived from any claim made on a church insurance policy

The church placed the money it received from its rental activities, contributions, and other sources of income into a single, unrestricted fund, and from that fund paid its employees' salaries and other expenses.

the plaintiff

A man ("Ralph") began employment with the church in 1990 as an "Assistant Building Engineer." His job responsibilities included custodial and maintenance work, assisting the church's short and long term tenants, and purchasing equipment and cleaning and maintenance supplies.

Ralph purchased custodial supplies and other equipment from five out of state vendors. The majority of such purchases were for custodial supplies, but on separate occasions Ralph also purchased a refrigerator, electronics equipment, and a computer from these vendors. Ralph also claimed to have purchased materials from a supplier of plumbing parts from California.

Ralph and the church agreed that he made between one and four purchases of custodial supplies from out of state vendors in 1992; between three and six such purchases in 1993; between three and four such purchases in 1994; between one and four such purchases in 1995; between two and six such purchases in 1996; and between four and six such purchases in 1997. In other words, Ralph made a total of between fourteen and thirty such out of state purchases between 1992 and 1997.

Also as part of his regular duties, on an average of twice per month, Ralph showed church facilities to potential short term tenants for special events like weddings and meetings. He further worked directly with some shortterm tenants to set up for their special events, both in advance and at the time of their rentals, and at times suggested how such tenants might accomplish what they were trying to do. In addition, Ralph generally was available during special events to help in case any problems arose and to clean up after the event. For example, Ralph performed custodial and maintenance tasks for a preparatory school that met on church premises during the entire time that he was employed by the church. He also performed custodial and "setup" tasks for the National Broadcasting Company ("NBC") in connection with its use of the church as a "control center" during the broadcast of the 1997 Macy's Thanksgiving Day Parade.

Throughout his employment, Ralph was paid an annual salary that did not vary according to the number of hours he worked. His days and hours of work changed several times during the course of his employment, but he had regularly scheduled hours and was expected to and did work additional hours. At all such times, Ralph received "compensatory time" for working excess hours rather than receiving any additional monetary compensation. The allocation of compensatory time to Ralph was governed by a "compensatory time policy" set forth in the church's personnel manual. The personnel manual provided that employees of the church were entitled to straight compensatory time for work in excess of 35 hours per week if the employee obtained the prior approval of the Director of Management and Marketing or the senior minister. An employee could be credited for compensatory time without prior approval if the employee's supervisor approved the overtime and either an emergency existed or the supervisor submitted a written explanation of why additional hours were needed. The personnel manual made no mention of how compensation time would be treated at an employee's termination.

The church kept no records of the number of hours Ralph worked, and as a matter of church policy, no full-time employees completed time sheets. However, Ralph maintained personal records showing time worked on weekends and at special events. The church presented no evidence to contradict the information contained in Ralph's records.

While Ralph did not always follow church policy in obtaining compensatory time, he did inform the church's Director of Management and Marketing of the amount of compensatory time that they owed during his employment, and the church never denied credit for any such time.

Ralph claimed that the church board knew that church employees were "potentially" covered by the overtime pay requirements of the Fair Labor Standards Act. As proof, he pointed to an excerpt in the board's minutes under the heading "Concerns of the Board," which expressed concern over "overtime and compensatory time as it applies to hourly staff and to management." In addition, in 1996 the church treasurer warned a staff member that the church needed to "limit" its income producing activities so as not to exceed $500,000 per year.

Ralph sued the church and the church board members individually, claiming that they had violated the Fair Labor Standards Act by not paying him overtime compensation while he was employed by the church.

enterprise coverage

The court began its opinion by noting that in order to prove Ralph was entitled to overtime wages, he "must demonstrate either that the church was an enterprise subject to the requirements of the FLSA or, alternatively, that Ralph was himself engaged in commerce as the FLSA defines these terms."

As noted above, employees who are "employed by an enterprise engaged in commerce or in the production of goods for commerce" that has "annual gross sales" or "business done" of $500,000 or more are entitled to overtime pay and the minimum wage unless specifically exempted. The church conceded that it would meet the definition of an "enterprise" engaged in commerce if it met the $500,000 annual gross sales or "business done" requirement. The court agreed with this conclusion, noting that "Ralph's handling of janitorial goods that have moved in commerce and the church's employment of several individuals involved in an extensive advertising campaign to solicit interstate special event renters are more than sufficient to invoke enterprise coverage should the church meet the [Act's] gross dollar volume requirement."

In order for Ralph to be entitled to overtime pay on the basis of the church's status as an enterprise engaged in commerce, the church must have annual gross sales or "business done" of at least $500,000. Did the church's revenue, described above, meet this requirement? The court noted that the "church's gross income for each fiscal year between 1994 and 1996 exceeded $500,000." However, it pointed out that

enterprise coverage will apply … only to the extent the business done by the relevant enterprise exceeds $500,000 for any of these years. Given its nonprofit charitable status, the church generally would not be considered an enterprise under the Act. However, the Act is applicable to its activities insofar as they "serve the general public in competition with ordinary commercial enterprises." Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985). As the church's rental activities are in direct competition with other short and long term commercial landlords and special event locations, they are clearly commercial under the standard articulated by [the Supreme Court in the Alamo decision].

The church argued that only the funds from its rental activity should be calculated into the gross business done of the enterprise because it serves as the sole commercial business in which the church is engaged. And, since its rental income did not exceed the $500,000 threshold in any year, it did not meet the enterprise test, and Ralph was not entitled to overtime pay.

Ralph, on the other hand, argued that aside from moneys received from contributions, all of the church's sources of income should be included in the calculation of its gross annual sales. Ralph noted that the church commingled all of its income in one fund, and that money from this fund was used by the church to support all of its operations, including the payment of employees and expenses related to its rental activities.

The court interpreted the $500,000 requirement to include only the following categories of church income:

(1) income from the operation of a "business," such as rental income;

(2) income from special events, such as revenue from a coin operated soda machine on the church's premises, fundraising events conducted by the church, and letterwriting campaigns or other special fundraising efforts conducted by the staff of the church; and

(3) other sources of income that are "sufficiently related to the church's business income" to warrant inclusion in the gross volume amount.

individual coverage

Even if a worker's employer does not meet the "enterprise" test, the worker may be covered by the FLSA's minimum wage and overtime protections if he or she is "engaged in commerce" or "engaged in the production of goods for commerce." Ralph agreed that he did not participate in the production of goods for commerce, so individual coverage depended on the extent to which he was "engaged in commerce."

The court noted that for an employee to be engaged in commerce, "a substantial part of the employee's work must be related to interstate commerce." Further, the test "is not whether the employee's activities affect or indirectly relate to interstate commerce but whether they are actually in or so closely related to the movement of the commerce as to be a part of it."

The court noted that Ralph's purchases "were made from five different vendors, and included not only custodial supplies but also other important items to the church like a computer, electronic equipment and a refrigerator. Additionally … Ralph made between 14 and 30 such purchases over the course of his employment. Moreover … the church's Director of Management and Marketing has estimated that Ralph made 'dozens' of purchases from only one of these vendors, and that it was a 'normal part' of his duties to place orders with such vendors." The court concluded that "such recurrent and frequent purchases of goods from out of state vendors are more than sufficient to trigger the protection of the FLSA."

damages

The court noted that under the Fair Labor Standards Act an employee is due "back wages" for two years from the filing of his action, unless the employer "willfully" violates the Act, in which case back wages are due for three years. A violation is "willful" only if the employer "shows a reckless disregard for the provisions of the Act." The court noted that "willfulness cannot be found on the basis of mere negligence or on a completely good faith but incorrect assumption that a pay plan complied with the FLSA in all respects."

In addition, the Act provides that an employer that has violated overtime pay or minimum wage provisions shall be liable not only for back wages but also "an additional amount as liquidated damages" unless "the employer shows … that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the [Act]."

Ralph insisted that the church's violation of the overtime pay protections of the Fair Labor Standards Act was willful and that its violation was not in good faith, making Ralph eligible for both a three year damage limitations period and liquidated damages. In support of these contentions, Ralph noted that the church board's minutes contain the statement "overtime and compensatory time as it applies to hourly staff and to management" under the heading "Concerns of the Board." In addition, Ralph contended that the church's Director of Management and Marketing was warned by the church treasurer that the church needed to limit its incomeproducing activities to not more than $500,000 per year. The church disagreed. The court concluded that the church might have acted willfully, but that further proof was needed. It ordered this issue to be determined by a jury.

The court then addressed the proper method for calculating Ralph's damages. The church claimed that Ralph was entitled to overtime compensation only for the weeks he actually performed work in interstate commerce. Ralph countered that he was entitled to overtime compensation for every week of overtime he worked because defendants did not keep records detailing the type of work that he performed. The court agreed with Ralph and ruled that he was entitled to overtime pay whenever he worked overtime since his employer failed to keep records of the time he spent specifically working in interstate commerce. It observed, "An employer who has not kept the records required by [the Act] cannot be heard to complain that there is no evidence of the precise amount of time worked in interstate commerce, including overtime so worked." The court also referred to a Department of Labor opinion stating that if an employer wishes to pay overtime to an employee only for duties performed in interstate commerce, "the employer's records must clearly show this delineation in duties performed and wages paid." U.S. Department of Labor, Wage and Hour Division, Opinion WH-230 (1993).