Background
The US Department of Labor’s Fair Labor Standards Act (FLSA) sets the structure for determining which positions are exempt vs non-exempt from FLSA overtime requirement regulations. Exempt positions are most commonly thought of as salaried, vs Non-Exempt which are hourly and are subject to overtime pay requirements.
A key requirement for Exempt classification is a minimum earnings threshold. Effective 7/1/24 the requirement is $43,888. Employees earning less than this amount do not meet the requirement and must be classified as Non-Exempt (hourly), and are eligible for overtime pay. This threshold will be increasing to $58,656 effective 1/1/25 and will remain in place for three years.
Churches as employers are not excluded from FLSA requirements and are expected to comply with the regulations and classify employees accordingly.
Ministerial Exception
In simplest terms, the Ministerial Exception states that practicing, licensed, ordained ministers and clergy are exempt from the FLSA earnings requirements. While there is no language within the regulations stating this there are established court precedents supporting this position. This should not be viewed as applying to other church employees.
Church Employees
There is no clear structure for the Ministerial Exception to apply to any other church employees other than practicing ministers as noted above. It is not recommended that any church attempt to apply this exception to non-ministerial employees as this could result in incorrect employee classifications and risk compliance violations.
Conclusions
Licensed ordained ministerial employees actively practicing within your church as part of their official job duties are considered to be exempt from the FLSA earnings requirements and may be paid accordingly. All other church employees should be correctly classified as Exempt or Non-Exempt based on their individual annual earnings.
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Our focus is on educating our churches and pastors to help them make well informed decisions about these very important topics.
Mark Bradley
BMA Financial - Insurance Services
501.499.4205
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