On November 22, 2016, U.S. District Judge Amos Mazzant granted a preliminary injunction on the new overtime rules that were to take effect December 1, 2016.
U.S. District Judge Amos Mazzant III ruled in favor of the plaintiffs who argued that the new OT rules would have caused an an increase in government costs in their states and would require businesses to pay millions in additional salaries. Some business have argued that the new OT rules would have eventually led to staff reductions.
As of right now, the new law is currently on hold and will not go into law on December 1, 2016.
How this affects your church?
The only change in this new law was increasing the minimum salary requirements from $23,660 to $47,476. All other exemptions to the OT rules remain in effect.
If your church has already made the changes for the new overtime regulations, you can either leave the changes in place or put the changes on hold until more clarification is provided.
Here is the overtime rules as it stands as it affects clergy and non-clergy:
Clergy are exempt from overtime. The FLSA definition of clergy is a lot broader that the IRS definition.
Examples of employees who may be ministers for FLSA purposes but not IRS purposes may be :
–Field ministry staff, who conduct Bible study, lead prayer, disciple others, conduct evangelistic outreach.
–Teacher in Christian school, engaged in religious and non-religious instruction, called
–Missionary staff, involved in church-planting
–Minister of music, who leads church choirs
Ministries that exempt staff on this broader FLSA definition of clergy, are advised to articulate clearly in their personnel documents and procedures, including application materials, hiring process, job descriptions, employee handbooks, policies and other employment literature, that the employees are considered ministers and serve as ministers.
Please follow the below steps to determine whether or not your non-clergy staff is exempt from overtime:
- Is the employee involved in inter-state commerce? Inter-state commerce is a very broad term. Examples of employees who are involved in interstate commerce include those who: produce goods (such as a worker assembling components in a factory or a secretary typing letters in an office) that will be sent out of state, make telephone calls to persons located in other States, handle records of interstate transactions, travel to other States on their jobs, make purchases out-of-state(in person & online) or do janitorial work in buildings where goods are produced for shipment outside the State.
If the answer to this question in No, then your employee is most likely EXEMPT FROM OT PAY. If Yes, Please proceed to the next bullet…
- Is the employee paid hourly or does the pay vary based on the amount of time worked?
If the answer to this question in Yes, then your employee is most likely NOT EXEMPT FROM OT PAY. If Yes, Please proceed to the next bullet…
- Does the employee make $455/Week($23,660/Year)?
**This is the rule affected by the November 22 injunction**
If the answer to this question in NO, then your employee is most likely NOT EXEMPT FROM OT PAY. If Yes, Please proceed to the next bullet…
- Does the employee’s job description meet the definition of any of the 3 following positions?
- Executive (Management Duties of 2 or more people, authority to hire, fire or make hiring and firing recommendations that are given serious consideration)
- Administrative (Office/Non-Manual Labor, Ability to make significant monetary and or policy decisions at the church) Example: HR managers or employees that are able to sign contract on behald of the church
- Professional (advanced knowledge based of prolonged coursework or study or requires invention, origininality or artistic talent) Example: doctor, lawyer, engineer, minister, accountant (not bookkeeper or clerks
If the answer to this question in YES, then your employee is most likely EXEMPT FROM OT PAY.
Clergy Financial Resources is an national accounting and payroll organization serving churches and clergy in 50 states. We have a very strong commitment to the religious community, and an established reputation for quality products and year-around services specializing in fully computerized federal and state tax preparation of individual returns.
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.
For more information or if you need additional assistance, please use the contact information below.
Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (763) 425-8778
Fax: (888) 876-5101