Department of Labor’s new overtime rule for churches is here!

For decades now, salaried employees earning more than $23,660 a year were largely exempt from overtime under a group of exemptions known as the “white collar” exemptions.

As long expected, the Department of Labor today announced a new threshold: $913 per week, or $47,476 per year. The new numbers apply to workweeks starting December 1, 2016. Here is a .pdf copy of the DOL’s lengthy version of the rule.

If an employee works more than 40 hours in a week, and his or her salary does not meet the salary threshold, they will need to be paid time-and-a-half for their overtime hours — even if they are ‘executive’ or ‘managerial’ employees.

Churches are not automatically exempt from these rules! So the new salary requirements will apply to many clerical staff, bookkeepers, and childcare workers. Many office managers, program directors, and facilities maintenance personnel will be included, too. And the Department of Labor does not let employees ‘volunteer’ for additional work, even in nonprofit institutions.

This will lead to difficult discussions about events that extend past the normal work week. What happens when a part-time music minister goes on week-long mission-trip? Is a $45,000-a-year youth minister ever off the clock at youth camp?

The combination of higher thresholds, greater penalties, and strong enforcement can lead to other unexpected impacts. For example: some companies have stopped giving cell phones to non-exempt employees. Why? Lawyers showed a pattern of off-hours work by text and e-mail; work that should have been compensated as overtime. Other companies have made a working lunch a firing offense — the employer can’t risk a lawsuit over uncompensated lunch breaks.

If you have not reviewed your church’s job descriptions, exemption classifications, and policies recently, you should do so ASAP. The penalties for making the wrong classification will be greater than ever.

​We are providing this information to ministries on our mailing list. Feel free to share with others. ​Contact us if you have questions about this other other legal issues as they apply to your ministry.