The U.S. 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.
Read the administration’s press release announcing the new rule here and the text of the new rule here.
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 Jan. 1, 2025, at which point the threshold will increase again to $58,656.
See below how churches and ministries can respond:
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 record-keeping: 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 (SHRM)
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, Baptist churches and ministries can navigate these changes smoothly and continue their important work without interruption.
EDITOR’S NOTE — This story was written by Michael Whitehead and originally published by The Pathway.
