29 Jan FAIR LABOR STANDARDS ACT: How Recent Changes Could Affect Your Church
Back in April 2024, the US Department of Labor published a rule requiring all employers (including churches) to increase the minimum salary threshold for exempt workers in both July 2024 and January 2025, with regularly scheduled increases after that. However, in mid-November 2024, after the first increase had occurred and just before the second one went into effect, a federal court in Texas vacated the 2024 ruling, taking the minimum salary threshold back to 2019 levels.
Beyond the minimum salary threshold, there are other things to consider as to whether or not an employee should be considered exempt, including the ministerial exception; however, this roll-back to 2019 levels is significant for many reasons, beyond the numbers.
Staff Culture and Morale
If you have already communicated budgeted salary increases for 2025, going back to a prior salary amount could be detrimental to staff morale. Communicate with your team, explaining you will honor the salary increase, regardless of current minimum thresholds. If they met the other exempt criteria before, their job duties should still align. Adjusting salaries should be based on performance, salary bands for the job being performed and many other things, not just the exempt threshold.
Job Descriptions
This is a good time to review all job descriptions and ensure each employee is properly classified as exempt or nonexempt (from overtime). If the ministerial exception applies to an employee, make sure that is clear on the job description as well.
Track Time Consistently
Tracking time isn’t just useful for payroll and overtime purposes. If someone consistently works overtime or has trouble completing their work within 40 hours a week, it may be time to hire another employee. If someone seems to have extra time on their hands, it may be time to assign them some new tasks that fit their gifts and talents, especially if there is someone else on the team working too much.
Things Could Change Again
With a new president, members of Congress, and other federal leaders, this threshold could change again, so it’s definitely something to watch in the new year. Laws or portions of laws change regularly, so it’s important to stay connected to a group like The Church Network, who does regular educational updates, to help those who lead and operate churches.
Another thing to keep in mind as you evaluate the effect this federal change will have on your ministry is that a few states already have a threshold that exceeds that of the FLSA. Be sure to know the laws in your state.
The Church Network invites you to attend a webinar on this topic, on December 12, led by attorney Frank Sommerville. If you can’t make it live, you can still register, and you will be sent a copy of the recording the following day.
As you lead your church, ensuring that employees are being paid fairly, legally, and with respect is part of being a good manager of God’s resources — the human ones and the financial ones.
Original content by the Church Executive. 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.