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Get Ready for Overtime Rule Changes: The Impact on Your Team

Upcoming changes to overtime pay regulations could significantly impact your church or nonprofit's budget and operations. Understanding the rules, especially the complexities of the ministerial exception, is crucial to protecting your organization.

Understanding Overtime Pay Requirements

Over time, regulations could soon undergo major alterations. The minimum salary exempt employees currently need to earn is $684 per week ($35,568 per year). This could potentially increase to $1,059 per week ($55,068 per year). Employers will be required to pay individuals who make less than $55,068 per year over time.

The Ministerial Exception

Churches and some faith-based nonprofits may qualify for a ministerial exception. This means some roles primarily focused on ministry functions may be exempt from overtime rules. It's critical to understand how this applies to your staff. Here is a framework for understanding the exception.

1. Primary Duties Assessment:

  • Does the position's core function involve leading or teaching Scripture or providing spiritual counseling and guidance?

  • Does the job require specialized religious knowledge or training?

  • Is this role essential to fulfilling the organization's religious mission not its administrative function?

2. Recognition and Presentation:

  • Does the organization officially recognize the role as ministerial through titles, ordination, or specific commissioning?

  • Does the employee hold themselves out as a minister or religious leader within the organization and beyond?

3. Employer and Employee Agreement:

  • Is there a mutual understanding that the employee's primary role is to perform religious functions?

No Guarantees:

Even if many but not all of the above elements apply, a court still may not rule in your favor should a legal dispute arise.

Prepare Now for Overtime Rule Changes

If you have employees earning below the potential new salary threshold but who currently are classified as exempt, you'll need to consider:

  • Salary increases to ensure continuous exemption: Be mindful of budget limitations and the sustainability of salary adjustments.

  • Reclassifying them to hourly or non-exempt: This requires implementing reliable time-tracking and accurate overtime pay calculations.

  • Exploring alternative staffing models: Could project-based contracts with independent contractors make sense for some tasks?

Don't Stress, We're Here to Help

Navigating overtime regulations can be overwhelming, especially coupled with the complexities of the ministerial exemption. Our team can analyze your payroll practices, offer guidance on classification, and help you develop a plan that protects your budget and ensures ongoing compliance.


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