From the Fiscal Office: New Department of Labor Overtime Rules

September 17, 2016
On May 18, 2016, the Department of Labor (DOL) announced its changes to the Fair Labor Standards Act (FLSA) “white collar” overtime exemption rules. The final rule strengthens protection for workers by increasing the standard salary level for qualification for overtime exemption from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). There were no changes to the professional duties test to determine if individuals earning at least the standard level qualify for exemption. Practical implications of these rules are:

Generally churches and other non-profits meet the Enterprise coverage standard if they have more than $500,000 per year in revenue from commercial activity OR operate a preschool, school, hospital, or older adult or disability care facility.  Charitable donations do not count towards the $500,000.  So on this basis most Alabama West Florida Conference churches would not meet the Enterprise standard.  If your church is a small church with just one employee (the pastor), or only one full-time employee (the pastor) plus one or more part time employees, none of whom ever works more than 40 hours in a week -- this likely will not impact you.

HOWEVER, the DOL stipulates that even if an organization is not covered under the enterprise standard, it may still have individual employees who are covered.  A church may be covered if an employee engages in any interstate or foreign commerce, including selling or packaging goods made in another state, regularly sending mail, using email, buying from Cokesbury or Amazon, making telephone calls or other communication, or traveling to other states. 
If your church has hourly or salaried employees who make less than $913 per week (i.e., $47,476 per year), you need to decide if your church is covered under the FLSA rules.  Are you covered under the enterprise rule?  Do you have any employees who may be covered individually?
If you determine that your church or employee may be covered under FLSA Overtime rules, employees will need to keep a record of hours worked every week (even if they never work more than 40 hours a week).You will need the time sheet to demonstrate that no overtime was due.

If your or your employee are covered, and your church has salaried or hourly employees who make less than $913 per week (i.e., $47,476 per year) and who occasionally work more than 40 hours in a pay period, you will want to budget for overtime.  Consider whether or not you will use the standard method or the fluctuating work week method.  If you choose the fluctuating work week method, put that in writing to your employees prior to Dec. 1.

Resources Available to Help Churches Navigate This Issue:
-General Council on Finance and Administration White Paper:
-General Council on Finance and Administration Webinar (allow time for video to Load) 
-A Frequently Asked Questions website from the DOL listing almost 50 questions about the changes and the applicability of those changes to employers. -

Answers to questions like these, and many more, can be found here
-What determines if an employee falls within one of the white collar exemptions?
-How will employers implement the updated salary level requirement established in this Final Rule?
-I’m paid a salary. Am I exempt from overtime pay?
-Will newly overtime-eligible employees have to record their hours on a daily basis or “punch a time clock”?
-A Fact Sheet from the DOL giving details of the impact of the new rules on non-profit organizations like churches. Fact sheets from the DOL to help employers determine exemption based on job duties tests for executives, administrative, professional, sales and computer employees.