Q: Is our ministry employee exempt from the Fair Labor Standards Act (FLSA) as an "executive" employee?

A: Salary level, salary basis, and job duties will be taken into consideration to decide if the executive exemption from the Fair Labor Standards Act applies.

To determine if the executive exemption applies, the U.S. Department of Labor’s Wage and Hour Division (DOL) will look at three issues: salary level, salary basis, and job duties.

Salary Level. As of July 1, 2024, your executive must earn at least $844 per week or $43,888 per year for a full-year worker to qualify for the exemption. Compensation may be paid biweekly, semimonthly, or monthly, but it must equal or exceed $844 a week. Check with your state's labor office to see if your state has rules that govern pay frequency.

For highly compensated employees to remain exempt, the rule increases their salary from $107,432 to $132,964.

Note: The DOL rule published in April 2024 introduces a new methodology that will set the standard salary level at the 35th percentile of weekly earnings of full-time salaried workers in the lowest-wage Census Region. As a result:

• On January 1, 2025, an additional increase will raise the salary level to $1,128 per week or $58,656 per year. 

• For highly compensated employees to remain exempt, the July 1 increase raises their salary from $107,432 to $132,964. On January 1, 2025, the new methodology will raise the salary level for this group to $151,164 annually.

• Starting July 1, 2027, salary thresholds will update every three years, by applying up-to-date wage data to determine new salary levels.

Because the consequences of misapplying the executive exemption can be costly, ministries are encouraged to seek a local attorney’s assistance when considering these questions and making a final determination.

Salary Basis. Your executive must earn a salary. This means he or she receives a predetermined amount for any week in which work is performed, regardless of the quality or quantity of the work.

Job Duties. To qualify as an executive, your employee must:

• Primarily manage the ministry or a customarily recognized department or subdivision
• Customarily and regularly direct the work of two or more other full-time-equivalent employees
• Have authority or significant influence in decisions regarding hiring, firing, promoting, or disciplining other employees.

All of these criteria must be met for the executive exemption to apply to an employee. If you think a particular position might qualify for the executive exemption, it may be helpful to ask the following questions:

• Does this employee spend more than half of his work time managing the overall ministry or a specific division of the ministry?
• Does this employee direct the work of two or more other employees on a weekly basis?
• Are this employee’s suggestions and recommendations regarding employment actions involving other employees carefully and regularly considered?

Because the consequences of misapplying the executive exemption can be costly, ministries are encouraged to seek a local attorney’s assistance when considering these questions and making a final determination.

Recommended Resources

If you found this information helpful, you might be interested in these other resources from Brotherhood Mutual:

• Learn how to avoid the most common wage and hour mistakes in our article Overtime: Does Your Ministry Comply?
• Improve your compliance with FLSA requirements by following the suggestions in our article What Pay Records Should Ministries Keep?
• Read about common FLSA exemptions in our article Overtime Rule Changes Effective July 1, 2024.

Important Information: Brotherhood Mutual is pleased to provide Legal Assist as a complimentary resource. Services through Legal Assist aim to provide general legal information to our current and prospective policyholders. While the information provided is intended to be helpful, it does not constitute legal advice and should not be used as a substitute for advice from a licensed attorney in your area. Please note that no attorney/client relationship is established through this process, and no legal advice will be provided. We strongly recommend regular consultations with a local attorney as part of your risk management program.

Updated April 24, 2024

The information we provide is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. Accordingly, no attorney/client relationship is created through this process, and no legal advice will be provided. We strongly encourage you to regularly consult with a local attorney as part of your risk management program.