Overtime rule: Why churches still must comply


By Nate Berneking

Early last week, a Federal District Court in Texas halted the application of new overtime regulations. Employers, including local churches, have vigorously discussed the new regulations and the overarching related statute, the Fair Labor Standards Act (FLSA). In addition, some state attorneys general pursued a court order to postpone enforcement. The order issued by the judge in Texas is referred to as a “preliminary injunction” and granted that request. It is not necessarily the final outcome. 
Actually, when it comes to churches, the judge’s order doesn’t change much. The postponed rules simply raised the salary thresholds necessary for employers to treat certain classes of employees as exempt from the FLSA. The vast majority of employees, regardless of their salaries, are not ever to be treated as exempt, and that was true before the new rules were ever issued.
There may be a few instances, especially in larger churches, in which employees may now be treated as exempt. But, those employees must fall into a very small number of categories and make at least $23,660 a year (the original threshold). For example, an office manager with a job description that includes overseeing a budget, supervising staff and/or determining his or her own tasks may be treated as an exempt “administrative employee,” at least assuming he or she earns more than $23,660 annually. Likewise, a financial secretary, earning at least $23,660, who maintains a license as a Certified Public Accountant, may be treated as an exempt “professional employee.” But, exempt employees must fit into one of the handful of exempt categories defined by the FLSA.  Most church employees do not because of their job descriptions.
These church employees (i.e. administrative assistants, choir directors, musicians, pre-school teachers, business administrators, nursery workers, and probably non-clergy youth directors) were never exempt, regardless of how much compensation they receive. The postponed rules did not change this. The new rules have simply provided a catalyst for pastors and churches to realize they were failing to comply with the law and needed to take corrective measures. Those measures should continue, regardless of the court’s ruling. 
Finally, the new ruling does nothing to change the First Amendment exemption assumed to apply to credentialed clergy. And, many church leaders may wonder whether the First Amendment might not apply to exempt other employees. First, leaders must realize that very few courts have explored this question.  One Federal Circuit Court of Appeals determined that teachers in a church were not exempt under the first amendment, though the same court at least suggested that clergy probably were. The Department of Labor itself has decided not to seek enforcement of the FLSA with respect to clergy.  However, questions remain when it comes to non-clergy employees conducting explicitly religious or pastoral activities. These sorts of employees include youth directors, directors of children’s ministries and worship leaders.  The fact is, the law isn’t clear.  The FLSA is said to apply to all employees without a specific exemption.  The First Amendment notwithstanding, these employees do not have a specific exemption unless churches can treat them as managerial “administrative employees” and then, they must make at least $23,660 annually.  Therefore, treating them as nonexempt (i.e. paying them at least minimum wage and time and a half for hours over 40) is the safest course.  A legal argument can certainly be made that the First Amendment applies, but if an employee seeks enforcement, the local church would be burdened with making such argument in court and incurring attorney fees in the process.  In fact, the safest possible approach when it comes to the FLSA is always to treat any employee without a clear exemption as non-exempt and entitled to minimum wage and overtime pay.  
Churches who continue to have questions about the FLSA should refer to the recorded Conference webinar.  Following that, further questions may be directed to Rev. Nate Berneking or Angela Thomas.  The General Council on Finance & Administration also provides resources to local churches seeking to comply at www.umc.org/gcfa.