Required Overtime Pay in the Church! OMG!

Yes, the dreaded overtime pay is coming to the church.  On May 18, 2016 the Department of Labor announced an update to overtime regulations which take effect on December 1, 2016.  The update sets the standard salary for full time salaried workers at $913 per week or $47,476 for a full-year worker.  The standard salary had not changed since 2004 when it was $455 per week or $23,660 for a full-year worker.

The church will now need to compare this new salary threshold with hours worked by employees and salaries being paid to see how this new salary affects the church budget.  Remember any employee who works over 40 hours must be paid time and a half. The church has tried to avoid the overtime regulations in the past by giving the employees a ‘title’ for executives were exempt from overtime regulations.  This does not work unless the individual has at least three employees under them.  When some disgruntled employees left the church and filed for overtime with the Department of Labor, the Department of Labor recognized the ‘title’ to be a sham and awarded the employee with overtime for all work in excess of 40 hours.  The church needs to understand that now that ‘titled’ individual will need to be paid at least $47,746 if the individual is to be viewed as an executive so he can work over 40 hours without having to be paid overtime.

At one time the Department of Labor allowed an employer to offer compensation time rather than paying overtime.  If an employee happened to work 45 hours in week one, the employee could let the employee work just 35 hours during week two so the average was still 40 hours for the two week period and no overtime was due.  However, the Department of Labor does not want to allow compensation time so the employer must pay the overtime rather than reducing the work hours in another week.

The Department of Labor has not granted any exceptions for individuals who work for churches.  Churches will have to now contend with the overtime rules.  How will the church control the overtime rules affect upon the church?  (1) reduce employees to less than 40 hours so they cannot by accident go over the 40 hours into the overtime period, (2) limit overtime to a certain amount so you can have some budgetary control over the time and one half pay, and (3) provide the $933 per week or $47,476 per year to your key ‘executive’ employees.

There is no doubt that this rule will have a negative impact on churches and other nonprofits from employees’opportunity for advancement to their morale in not being able to put in the time necessary to fulfill their calling.  This rule clearly will disproportionately affect the churches and other nonprofit service organizations.

Georgia’s Senators Johnny Isakson and David Perdue have co-sponsored the Protecting Workplace Advancement and Opportunity Act in an effort to stop the Department of Labor’s mandate from taking place.  However, in order for this law to stop the overtime mandate, this legislation will have to pass Congress before December 1, 2016 and be signed by the President.  No guarantee that either will happen.

Therefore, it is incumbent upon the church to begin planning for the implementation of the Department of Labor’s rules.  December 1 will be upon us before we know it.

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