There is no one-size-fits-all strategy to comply with these new overtime regulations. Every church will have different needs, but among the options are:
- Maintaining current salary levels and paying overtime
- Bumping salaries over the threshold to prevent paying overtime
- Changing staffing levels to reduce overtime needs
Preparing for change
If you get started well ahead of the December 1 implementation date, you should have time to thoroughly analyze your options, open a dialogue with employees, and develop new policies and processes. Consider these actions before, during, and after the transition:
- Review all currently exempt positions to see if any will be impacted
- Create or reinforce a well-defined work week, pay cycles, and policies
- Begin requiring all employees to complete time sheets, even if they are not eligible for overtime
- Ensure that written job descriptions and duties reflect the duties tests, and make plans to review duties annually
- Establish training for employees on recordkeeping and time recording
- Analyze all labor cost implications
- Study the potential costs of transitioning some employee benefits from exempt to non-exempt employees
- Examine unintended consequences of change, such as increasing salaries and adding duties, or eliminating part-time positions
- Consider moving your compensation review and adjustment period from January to November or early December this year
- Conduct individual and group meetings to review what will be changing, the reasons for the change, and the impact
- Open lines of communication with employees; be upfront, open, and honest about the reasons for change and how it impacts them personally
Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.
This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.
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