01 May LAW UPDATE: Federal Minimum Salary Level
LAW UPDATE The Department of Labor (DOL) has updated regulations issued under the federal Fair Labor Standards Act (FLSA) that impact pay rates, employee classification, and overtime eligibility within the next two months. THINK FAST!
For non-pastoral*, salaried church employees, pay may have just gotten more complicated. You may need to make plans now to change your church staff’s compensation to comply with the new requirements.
What does this mean?
- An increase in the federal minimum salary level (Currently $684/week and $35,568 per year. This minimum ends June 30, 2024.)
- An increase in the standard salary level and highly compensated employee total annual compensation threshold.
- The Wage and Hour Division will post an official rule on the Federal Register on April 26, 2024.
- NOTE: Be sure to check your state laws! Some have higher salary thresholds.
What are the increases and when?
$844/week and $43,888/year by July 1, 2024
$1,128/week and $58,656/year by January 1, 2025
Beginning July 1, 2027, thresholds will update every three years by applying up-to-date wage data.
Who does this impact?
Nonpastoral staff being paid a salary of less than $58,656.
The Fair Labor Standards Act (FLSA) categorizes employees as exempt or non-exempt. To receive a salary (exempt) instead of being paid hourly (non-exempt) a position’s pay AND duties must pass specific tests.
If the role is not being paid $58,656 it will soon fail the test and the employee must then be paid hourly and deemed eligible to earn overtime of at least 1.5 times their hourly rate.
What do I do?
Communicate to your staff that DOL changes mean pay is being reviewed.
Ensure non-pastoral salaried employees pass the duties tests to qualify as exempt. Do not make a determination based on the exemption titles of Executive, Administrative, Professional/Creative, and Computer. Read the duties requirements.
If the role passes the duties test, but fails the pay test according to new thresholds, determine if a pay increase is appropriate or if the position needs to be reclassified.
For positions reclassified as non-exempt, convert from salary to an hourly rate. Begin tracking and paying those employees based on actual hours worked per week, including overtime as applicable.
Ensure all benefit/leave eligibility details are still accurate in your handbook in light of any updated classifications.
Speak with your HR Advisor or schedule a consulting call for additional assistance.
* Pastoral staff do not need to meet salary thresholds due to ministerial exception.
Original content by HR Ministry Solutions. This information is provided with the understanding that Payroll Partners is not rendering legal, human resources, or other professional advice or service. Professional advice on specific issues should be sought from a lawyer, HR consultant or other professional.
