The ramifications for churches, synagogues, and nonprofits of the Department of Labor announcement in May concerning the payment of overtime for employees have been significant. None of these, despite their nonprofit status, are exempt from the ruling.
According to a statement from Church Finance Today
, aside from employees in ministerial positions (priests, preachers, rabbis), the employees of these organizations who earn less than $47,476 yearly (or $913 weekly) must receive overtime pay starting December 1, 2016, according to the DOL's new regulations. As of now, those earning less than $23,660 yearly (or $445 a week) are entitled to overtime pay. Hourly employees are always eligible for overtime pay, regardless of their compensation level; salaried employees who earn less than the new threshold may be eligible for overtime pay unless certain additional criteria are met.
“These changes likely mean many churches will face substantial increases in their overtime costs, unless they make substantial changes, since the number of employees eligible to receive overtime pay will dramatically increase. And costs will rise again in the future: the new rules also require automatic increases to the salary threshold every three years beginning in 2020,” read the statement.
In the August issue of Church Finance Today, Richard Hammar explains the DOL's actions and how the Fair Labor Standards Act relates to this, how this affects churches, and the possible steps churches can take to minimize the effects of these changes on their budgets. A "FLSA Classification Decision Tree for Churches and Other Religious Organizations" is also featured.