Key Point 8-08.6. Ministers who are employed to perform ministerial services, and who are paid a salary that meets or exceeds the “salary test,” are professional employees exempt from the provisions of the Fair Labor Standards Act. Ministers not compensated on a salary basis, or who earn a salary below the salary test, may not be covered by the Act. Department of Labor regulations suggest that the Act does not apply to any ministers, and a few federal courts have ruled that the so called ministerial exception prevents the application of the Act to ministers.
How does the FLSA treat ministers? Professional employees are exempt from FLSA, and this would include ministers so long as they meet the minimum salary test ($684/week). What about ministers who earn less than $684/week, or who are not paid on a salary basis? They technically do not meet the definition of an exempt professional employee, but can churches be compelled to pay these ministers overtime pay consistently with the First Amendment guaranty of religious freedom? This is an unresolved question. Note the following considerations:
(1) The official “economic report” accompanying the final DOL overtime regulations contains the following statements:
- “Most employees earning less than $684 per week ($35,568 annually) who are exempt under the existing regulations will be entitled to overtime pay under the final regulations (there are some workers, such as teachers, doctors, lawyers, and clergy, who are statutorily exempt or whose exempt status is not affected by the increased salary requiRement in the final rule).”
- “Clergy and religious workers are not covered by the FLSA.”
- “The Department excluded [in making its coverage predictions] the 14.9 million workers not covered by the FLSA, such as the self employed and unpaid volunteers, and the clergy and religious workers.”
- “Of the 499 occupation codes in the CPS [current population survey] … two are assigned to clergy and religious workers (codes 176 and 177) who are not covered by the FLSA. …”
In addition, Table 3-1 in the final regulations lists “clergy and religious workers” as one of six categories of “Occupations Exempt from FLSA’s Overtime Provisions.” This same conclusion is repeated in this same report.
This language suggests that the official position of the Department of Labor is that clergy are not subject to the minimum wage and overtime pay requirements of the FLSA no matter how little they earn.
(2) Two federal courts have specifically ruled that the FLSA does not apply to ministers due to the so called “ministerial exception.” These cases are summarized below. It should be noted that these cases are binding precedent only in the states of Maryland, North Carolina, South Carolina, Virginia, Washington, and West Virginia. They are persuasive, but not binding, precedent in other states. Therefore, in other states this issue has not definitely been resolved by the courts. However, the final Department of Labor regulations (quoted above) provide some basis for concluding that the FLSA minimum wage and overtime pay requirements do not apply to ministers. Church leaders wanting a definitive answer in a particular case should consult with an attorney.
Case 1. Alcazar v. Corporation of Catholic Archbishop of Seattle, 2006 WL 3791370 (W.D. Wash. 2006)
A federal court in Washington ruled that the “ministerial exception” prevented it from resolving several claims brought by seminary students against a religious organization, including violation of a state minimum wage law.
The court noted that the First Amendment guaranty of religious freedom has created a “ministerial exception” to employment laws, and that this exception prohibits a court from “inquiring into the decisions of a religious organization concerning the hiring, firing, promotion, rate of pay, placement or any other employment related decision concerning ministers and other non secular church employees.”
The court dismissed the seminarian’s claim that his religious employer had violated a state minimum wage law. It concluded:
This claim concerns decisions regarding the rate of pay for non secular church employees and must also be dismissed under the ministerial exception. The … ministerial exception applies to both state and federal claims, and prohibits a court from inquiring into the decisions of a religious organization concerning the hiring, firing, promotion, rate of pay, placement or any other employment related decision concerning ministers and other non secular church employees. This most certainly includes questions concerning the amount of compensation owed a visiting seminarian student.51 Citing Bollard v. California Province of the Society of Jesus, 196 F.3d 940 (9th Cir. 1999).
Case 2. Shaliehsabou v. Hebrew Home of Greater Washington, 363 F.3d 299 (4th Cir. 2004)
For several years an Orthodox Jewish man (David) worked at a predominantly Jewish nursing home as a “kosher inspector.” His primary duty was to guard against any violation of Jewish dietary laws. The nursing home is a nonprofit corporation whose mission, according to its bylaws, is to serve “aged of the Jewish faith in accordance with the precepts of Jewish law and customs, including the observance of dietary laws.” While the nursing home accepts persons of all faiths, about 95% of its residents are Jewish. All members of its board of directors are Jewish. The facility maintains a synagogue on its premises and holds twice daily religious services conducted by an ordained rabbi who serves as a fulltime employee. Each resident’s room contains a “mezuzah” (a parchment scroll inscribed with the biblical passages).
Consistent with its mission to serve the spiritual needs of its residents, the nursing home provides its residents with kosher meals prepared in accordance with the Jewish dietary laws. To ensure that the food services department complied with these laws, the nursing home asked a council of local rabbis to recommend a person to serve as a kosher inspector at its facility. The council determined that a kosher inspector must have a knowledge of the basic Jewish dietary laws; must be a “Sabbath observer” and a “fully observant Jew”; and must have a knowledge of the dietary laws through experience and study at an Orthodox Jewish seminary. Compliance with the dietary laws, the council concluded, was “an integral and essential part of Jewish identity.” The council recommended David as the nursing home’s kosher inspector, and he was hired. David had been a devout Orthodox Jew his entire life and had obtained a Bachelor of Talmudic Law from a rabbinical college. He declared himself as “clergy” on his federal tax returns, and also claimed a parsonage exemption from his salary.
David’s primary duties as kosher inspector included inspecting deliveries, opening and closing the refrigerators to insure the integrity of the kosher status of the kitchen, insuring that all meat and dairy products were stored and kept separate during food preparation, and lighting all ovens and heating equipment in accordance with the requirements of Jewish law. He also cleansed kitchen utensils and other items if they became non kosher, and instructed kitchen staff on complying with the dietary laws and to report any violations.
David was paid for at least 80 hours of work each biweekly period. Although he occasionally received additional hourly compensation for hours worked over 80 per biweekly period, he claimed that he was not compensated for all of the overtime hours he worked. When he worked less than 80 hours during a biweekly period, hours were deducted from his “accrued leave” time to make sure that his total hours for the biweekly period equaled 80. If he exceeded his leave time, he would be docked pay for absences, including absences of less than one day.
David quit his job, and later sued the nursing home in a federal district court claiming that it had violated the federal Fair Labor Standards Act (FLSA), and a corresponding state law, by failing to pay him overtime wages. The district court ruled that David’s claims were barred by a “ministerial exception” to the FLSA, and it dismissed the case. The court also ruled that even if David was not covered by the ministerial exception, he was exempt from the overtime pay requirements since he was a professional employee. David appealed. He claimed that the “ministerial exception” only applied to civil rights and employment laws, and not to the FLSA. He also asserted that he was not an exempt professional employee because he was paid an hourly wage rather than a salary.
the “ministerial exception“
Several state and federal laws prohibit various forms of discrimination in employment. For example, Title VII of the federal Civil Rights Act of 1964 prohibits discrimination in employment on the basis of race, color, national origin, sex, or religion. Employers engaged in interstate commerce and having at least 15 employees are subject to this law, including churches. However, for many years the courts have recognized a limited exception in the case of ministers. According to this exception (known as the “ministerial exception”) the civil courts are barred by the First Amendment guaranty of religious freedom from resolving discrimination claims brought by ministers against a church. As one court has noted in a case involving a dismissed minister’s claim of unlawful discrimination:
This case involves the fundamental question of who will preach from the pulpit of a church, and who will occupy the church parsonage. The bare statement of the question should make obvious the lack of jurisdiction of a civil court. The answer to that question must come from the church.52 Simpson v. Wells Lamont Corporation, 494 F.2d 490 (5th Cir. 1974).
Key point. In a unanimous 2012 ruling, the United States Supreme Court affirmed the so called “ministerial exception” barring civil court review of employment disputes between churches and ministers.53 Hosanna –Tabor Evangelical Lutheran Church and School v. E.E.O.C., 132 S.Ct. 694 (2012).The ministerial exception has been applied to a wide range of employment disputes by state and federal courts over the past half century, but had never before been addressed by the Supreme Court. This historic ruling is fully addressed in section 2-04.1 of this text.
The ministerial exception has been applied by the courts to several other discrimination laws, including those banning discrimination in employment on the basis of age and disability. But what about the Fair Labor Standards Act? Does the ministerial exception prevent the civil courts from resolving cases involving the entitlement of ministers to overtime pay? The court noted that in a previous case it concluded that it did.54 Dole v. Shenandoah Baptist Church, 899 F.2d 1389 (4th Cir. 1990).In the Dole case the court noted that the ministerial exception “is derived from the congressional debate [about the FLSA] and delineated in guidelines issued by the Labor Department’s Wage and House Administrator.” The relevant portion of those guidelines provides:
Persons such as nuns, monks, priests, lay brothers, ministers, deacons, and other members of religious orders who serve pursuant to their religious obligations in schools, hospitals, and other institutions operated by their church or religious order shall not be considered to be “employees.”55 Field Operations Handbook, Wage and Hour Division, U.S. Department of Labor § 10b03 (1967).
The court noted that in the Title VII context it applied a “primary duties” test to determine whether an individual falls within the ministerial exception. This test focuses on the function of the position and whether the position is important to the spiritual and pastoral mission of the church, and not whether the individual holding that position is formally ordained. As a general rule, “if the employee’s primary duties consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship, he or she should be considered clergy.” The court concluded:
Although the Title VII ministerial exception is based on constitutional principles and not on “congressional debate” and Labor Department guidelines as is the FLSA exception, we implicitly have held that the ministerial exceptions under the two Acts are coextensive in scope. For example, we have relied on Title VII ministerial exception cases in Dole, and we have cited both Dole and Title VII cases together in support of the proposition that “the ministerial exception operates to exempt from the coverage of various employment laws the employment relationships between religious institutions and their ministers.” Accordingly, our precedent suggests that when determining who is a [minister] for purposes of the ministerial exception to the FLSA, we apply the same primary duties test that we apply for purposes of the Title VII ministerial exception. This common sense approach creates continuity between the FLSA and Title VII, two employment laws of general applicability, and it allows us to avoid answering a difficult constitutional question —i.e., whether the First Amendment would otherwise compel an exception to the FLSA coextensive with that recognized as constitutionally mandated in the Title VII context.
The court noted that using a “primary duties” test to determine the scope of the FLSA’s ministerial exception is “in accord with other statutory exceptions to the FLSA.” It pointed out that the FLSA’s minimum wage and overtime requirements do not apply to “any employee employed in a bona fide executive, administrative, or professional capacity.” The regulations “look to the primary duties of a salaried position to determine whether an employee is a bona fide executive, administrator or professional. Courts are thus familiar and comfortable with examining the primary duties of an employee when determining the scope of exceptions under the FLSA. In sum, by determining whether a position is ministerial by referencing the primary duties of the position, the FLSA’s ministerial exception is coextensive with that recognized under Title VII and parallels the inquiry made for other exceptions to the FLSA.”
The court concluded that “the ministerial exception to the FLSA applies only where the employer is a religious institution and the employee’s primary duties are ministerial in nature. The exception does not apply to the religious employees of secular employers or to the secular employees of religious employers.”
The court then addressed David’s contention that his primary duties were not ministerial, and that the nursing home was not a religious institution. In rejecting David’s claim that his duties were not ministerial, the court noted that “in the Jewish faith, non compliance with dietary laws is a sin. Jews view their dietary laws as divine commandments, and compliance therewith is as important to the spiritual well being of its adherents as music and song are to the mission of the Catholic church. In short, failure to apply the ministerial exception in this case would denigrate the importance of keeping kosher to Orthodox Judaism.”
The court then addressed David’s contention that the ministerial exception should not apply to him because he was not employed by a religious institution. The court noted that the ministerial exception has been applied to religiously affiliated schools, hospitals, and corporations, and it concluded that “a religiously affiliated entity is a religious institution for purposes of the ministerial exception whenever that entity’s mission is marked by clear or obvious religious characteristics.” Applying that standard here, the court concluded that the nursing home was a religious institution. The court acknowledged that the home existed primarily to provide elder care and not religious services, but it concluded that “an entity can provide secular services and still have substantial religious character. The home is religiously affiliated, and its by laws define it as a religious and charitable nonprofit corporation and declare that its mission is to provide elder care to aged of the Jewish faith in accordance with the precepts of Jewish law and customs.” Pursuant to that mission, the home maintained a rabbi on its staff, employed a kosher inspector to ensure compliance with the Jewish dietary laws, and placed a mezuzah on every resident’s doorpost.”
The court noted that the FLSA exempted professional, administrative, and executive employees from its protections, and that these exceptions are limited to salaried employees. However, because it concluded that David’s claims were barred by the ministerial exception, it did not address his status as an exempt professional employee.
This case was a ruling by the federal appeals court for the fourth federal circuit. The decisions of this court are binding only on courts within that circuit, which include the states of Maryland, North Carolina, South Carolina, Virginia, and West Virginia. While the ruling is not binding in any other state, the fact remains that this is one of the few cases to address the application of the ministerial exception to the Fair Labor Standards Act, and so it may be given special consideration by other courts addressing the same question.56 See also Tarasi v. Jugis, 692 S.E.2d 194 (N.C. App. 2010).
The following examples illustrate the application of FLSA to ministers.
- A youth pastor is employed full-time by a church, is paid an annual salary of $20,000, and in addition is permitted to live in the church parsonage without having to pay rent. The annual rental value of the parsonage is $12,000. Is the annual rental value of the parsonage considered in deciding if the youth pastor is paid on a salary basis of at least $684 per week ($35,568 per year)? The answer is no. (Editor’s Note: This analysis is based upon changes to overtime rules that took effect in 2020.)
- Same facts as the previous case study. Since the youth pastor is paid an annual salary of less than $35,568, is he entitled to overtime pay? The final regulations specify that “there are some workers, such as … clergy, who are statutorily exempt or whose exempt status is not affected by the increased salary requirement in the final rule,” and 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. Further, two federal courts have ruled that the so called ministerial exception prohibits the DOL from applying the FLSA to ministers. These cases are binding only in states comprising the fourth federal circuit (Maryland, North Carolina, South Carolina, Virginia, and West Virginia), and a portion of Washington. They are persuasive, but not binding, precedent in other states. Therefore, this issue has not definitely been resolved by courts in other jurisdictions. However, even other jurisdictions the DOL regulations provide a basis for concluding that the FLSA minimum wage and overtime pay requirements do not apply to ministers.
- A youth pastor is employed full-time by a church in Virginia, and is paid an annual salary of $20,000, and in addition is paid an annual housing allowance of $12,000 that he uses to rent a home for his family. Is a housing allowance considered in deciding if the youth pastor is paid on a salary basis of at least $684 per week ($35,568 per year)? The final regulations do not address this issue directly, but they do state that the value of “board” and “housing furnished for dwelling purposes” are not included. These terms may be interpreted broadly to include compensation that is provided to a minister to provide housing in lieu of a parsonage, meaning that the youth pastor in this case study would not meet the $35,568 threshold for exempt status. This conclusion seems to be consistent with the purpose of the law to make the minimum wage and overtime pay protections of the Fair Labor Standards Act available to as many employees as possible. However, even if the salary requirement for exempt professional status is met, it is unlikely that the youth pastor would be entitled to overtime pay, for the same reasons mentioned in the previous case studies.
- A church pays its pastor on an hourly basis of $15 per hour. Is the pastor entitled to overtime pay? In general, persons paid on an hourly basis cannot be exempt employees under the FLSA, and must receive overtime pay for hours worked in excess of 40 in any week. However, as noted above, the final DOL regulations state the ministers “are not covered by the FLSA.” Further, two federal courts have ruled that the ministerial exception prohibits the DOL from applying the FLSA to ministers.
- A church pays its senior pastor an annual salary of $45,000. The pastor frequently works 60 hours or more per week, and asks the church treasurer if he is entitled to overtime pay. The answer is no. Even if the FLSA applies to ministers (which according to the DOL it does not), the pastor would satisfy the “professional employee” exemption under the FLSA since he performs professional duties and is compensated at a rate in excess of $35,568 per year.