On April 23, 2024, the Department of Labor announced a significant update to the rules governing overtime pay eligibility. This new rule will affect countless employees, including those in church ministries, by changing the criteria for overtime pay exemptions.
Key Changes to Overtime Eligibility
Previously, employees needed to meet three criteria to be exempt from overtime: a fixed salary above $35,568 annually, specific job duties, and a salary basis test. The recent update not only increases the salary threshold to $43,888 starting July 1, 2024, but it will jump again to $58,656 on January 1, 2025. This adjustment means many currently exempt employees will soon qualify for overtime pay.
Impact on Church Ministry Operations
This change requires immediate attention from employers to ensure all employees are correctly classified by July 2024. For those already classified as non-exempt, nothing changes; they continue to receive overtime. However, exempt employees may need reclassification if they no longer meet the new criteria, affecting both their pay structure and the financial planning of the ministry.
For church ministries, managing this transition effectively means reassessing each employee’s status under the new rules. If you suspect changes to your staff's exemptions, it's crucial to consult with legal experts to re-evaluate job descriptions and compensation accordingly.
Special Considerations for K-12 Teachers
It's important to note that K-12 teachers in your ministry may not be affected by these changes. They generally remain exempt from the salary threshold rules for overtime, regardless of their pay level.
This rule change presents a significant shift in how ministries must handle employee classifications and payroll. By staying informed and proactive, ministries can navigate these updates effectively, ensuring compliance and minimizing financial disruption.
For Your Current FLSA-Exempt Employees:
You will need to determine if these changes impact some or all your current employees. If these changes seem to impact your employee classifications or compensation determinations, please send the list of employees, job descriptions, and pay rate/salary to our office to info@ncll.org, and we will do an analysis to provide you with some options on how you can proceed forward.
Regarding K-12 teachers (if this is applicable to your ministry): Most teachers are an exception to the overtime/salary threshold rule. They are automatically exempt under the FLSA regardless of their salary level, so their salaries would not be impacted.
