Overtime rules are changing, and the changes impact churches. Make sure you understand the changes and if your church is impacted.
Key Update: New Federal Compensation Thresholds
The U.S. Department of Labor (DOL) oversees all the rules around employment, including the Fair Labor Standards Act (FLSA).
As of July 1, 2024, the DOL has revised the federal compensation threshold nationwide. The new threshold is set at $43,888. This means that salaried employees earning less than this amount will need to be compensated for any overtime hours worked. Furthermore, another increase is coming: as of January 1, 2025, the threshold will rise to $58,656.
What Does This Mean for You?
You might be wondering how these changes affect you and your church staff. Here are a few points to consider:
1. Overtime Pay: Employees who earn less than the compensation threshold will now be eligible for overtime pay. This means careful tracking of hours worked is essential to ensure compliance and fair compensation.
2. Overtime Exemptions: Did you know that overtime exemptions are based on more than just salary? Factors such as job duties and responsibilities also play a crucial role. To understand these factors better, check out Fact Sheet #17A.
3. Ministerial Exception: There is a ministerial exception that applies to employees who perform religious duties and play a vital role in carrying out the organization’s religious mission. This exception has been upheld in various court cases and might be relevant to your situation.
Resources to Help You Navigate These Changes
While we cannot offer advice, we have a few resources and suggestions that could be helpful:
- Track Hours for Non-Exempt Employees: It is vital to ensure that your non-exempt employees are accurately tracking their hours. This accountability protects both the employer and the employee. If you are having trouble distinguishing between exempt and nonexempt employees, services like Gusto can help.
- Webinar by ECFA: Our friends at the Evangelical Council for Financial Accountability (ECFA) have recorded an insightful webinar addressing this specific update to the law. We highly recommend checking it out.
- Consult an Attorney: For personalized advice on how to proceed with these threshold increases, we recommend speaking with an attorney who specializes in labor law.
Further Support and Assistance
If you are looking for more insights on payroll for churches, we have a Complete Guide available for you.
Need help with payroll? Parable is here to assist. We are a team of mission-minded professionals who understand the challenges of church financial stewardship. Our accountants, bookkeepers, and consultants ensure every paycheck is correct and every tax dollar gets where it needs to go. Book a call with one of our experts today to start a conversation about your church’s payroll needs.
Stay informed, stay compliant, and ensure your church staff is fairly compensated according to the latest regulations.