The US Department of Labor (DOL) is proposing to update and revise the regulations issued under the Fair Labor Standards Act (FLSA) implementing the “white collar” exemption from minimum wage and overtime pay requirements for executive, administrative, professional, and computer employees.
This new proposal, set to take effect on Jan. 1, 2020, affects churches because the FLSA does not exempt churches from overtime pay and minimum wage requirements. The DOL proposal will raise the minimum salary threshold to $35,308 per year, or $679 per week—a nearly 50 percent increase from the current threshold.
Any church employees who are categorized with white-collar exemptions, and normally would not receive overtime pay, will become eligible for overtime pay if they earn less than the new threshold amount. Such a shift will directly—and potentially significantly—affect church budgets. Church leaders will need to review how their employees are categorized while carefully considering what the rules do and do not mean for clergy.
Since 1940, the DOL’s regulations have generally required each of three tests to be met for one of the FLSA’s exemptions to apply:
- The “salary basis test.” The employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed;
- The “salary level test.” The amount of salary paid must meet a minimum specified amount; and