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  • I am frequently asked about the rules associated with ministries paying part-time staff a salary and whether or not this is allowed. The answer is “yes it’s allowed”, but VERY tricky. The Fair Labor Standards Act (FLSA) just modified the minimum wage that salaried employees must be paid without being subject to overtime rules, which is $913 a week ($47,476 a year). Let’s talk about how this applies to part-time staff who are paid a salary and how to protect your ministry from mis-classing certain staff as exempt from wage and hour laws.

    Federal wage and hour laws provide an exemption for clergy and other key staff within your ministry through a “Ministerial Exemption” and “White-Collar Exemption”. Clergy will generally always be exempt from federal wage and hour laws, but it is important to ensure that clergy are properly identified. In order to be considered clergy; a minister must be able to:

    1. Administer sacraments;
    2. Conduct religious worship;
    3. Have management responsibilities in a local church or religious denomination;
    4. Is ordained, commissioned or licensed; and
    5. Is considered to be a religious leader by his or her church or denomination

    Meeting this criteria exempts staff from being subject to federal wage and hour laws. However; the majority of ministry staff will not meet this criteria, so that is where the “White-Collar Exemption” applies.

    The White-Collar Exemption has three tests that must all be passed in order to qualify; salary level test, salary basis test, and duties test. Here is a summary of each test:

    Salary Level Test: Employee must earn $913 a week ($47,476 a year) or more.
    Salary Basis Test: Employee must be guaranteed a minimum amount of money for the performance of “any” work regardless of quality or quantity. For instance; a salary employee is paid a set amount whether a minimum amount of hours was worked or not and not contingent upon the quality of the work.
    Duties Test: specific job duties must be performed;

    1. Executives – perform management duties, regularly supervise at least two employees (not volunteers) and have influence over hiring, firing, discipline or promotion of supervised employees. Examples: senior pastor, executive pastor.
    2. Administrators – perform non-manual or office work related to the management of a ministry and use “discretion and independent judgement” with respect to matters of significance. Examples: business administrators, daycare directors and school principals.
    3. Professionals – use advanced knowledge in the “field of science or learning and customarily acquainted by a prolonged course of specialized intellectual instruction”. Examples: clergy, teachers.
    4. Creative Professionals – performance of work that requires invention, imagination, originality or artistic talent. Examples: musicians.

    It is important to note that if ministry staff do not fit either the Clergy Exemption or White-Collar Exemption that hourly wage and overtime rules apply – whether they are considered a “salary” position on a part-time or full-time basis.

    References:

    US Dept. of Labor: Wage and Hour Division – https://www.dol.gov/whd/overtime/fs17a_overview.htm
    Church Law & Tax Guide – http://store.churchlawtodaystore.com/20chcltaxgu.html

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