New overtime rules for salaried employees may impact churches

WASHINGTON – The US Department of Labor has adopted a new rule effective July 1, 2024, that increases the salary thresholds required to exempt a salaried executive, administrative or professional employee from federal overtime pay requirements.

Pastors and some ministers may continue to be exempt from overtime rules, but the new rule may still impact a church’s payroll for non-ministerial program and support staff. Churches and other non-profit organizations may now be required to pay overtime to employees who were formerly exempt from overtime, or they may be required to significantly increase salaries in order to maintain “exempt” status from overtime pay rules–unless pending court challenges block the rule.

You can read the administration’s press release announcing the new rule here and the text of the new rule here.

Effective July 1, 2024, the salary threshold will increase from $35,568 to $43,888 annually, based on the methodology used by the prior administration in the 2019 overtime rule update. The rule’s new methodology will take effect on January 1, 2025, at which point the threshold will increase again, to $58,656.

Possible Action Steps

1. Budgeting and Staffing: Churches and ministries may need to re-evaluate their budgets and staffing models. Some salaried employees who were formerly not paid overtime may now be eligible for overtime pay, which could increase payroll costs.
2. Review Salaries and Job Descriptions: Compare current salaries and job descriptions against the new thresholds and duties tests.
3. Employee Classifications: Review the classification of employees to ensure they meet the criteria for exempt status under the new rules. Misclassification can lead to legal issues and financial penalties.
4. Time Recordkeeping: Consider keeping time records of hours worked by all salaried employees who are close to the new salary thresholds. This is essential for compliance and for addressing any disputes that may arise.
5. Consult Legal or HR Experts: Engage with legal or human resources professionals to ensure your organization is fully compliant with the new rules.

Where to Get More Information

For detailed information and resources, visit the following websites:

• U.S. Department of Labor
• National Council of Nonprofits
• Society for Human Resource Management

Be aware that litigation is still pending that could make changes in the rule or its effective dates. You may periodically check some legal sites or accounting websites for updates.

By staying informed and proactive, Missouri Baptist churches and ministries can navigate these changes smoothly and continue their important work without interruption.

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This story first appeared in The Pathway. Mike Whitehead is general counsel for the Missouri Baptist Convention. This article is not legal advice, but is provided for education and information only.