Overtime: Does Your Ministry Comply?

Individuals within your organization may qualify for overtime wages

Some ministries miscalculate overtime wages, misclassify employees, or fail to pay overtime at all. You don't have to be among them.

Many leaders don't realize that wage and hour laws can apply to churches and religious organizations. To pay employees fairly and avoid being surprised by a lawsuit, it’s important to understand and follow overtime rules.

What Are the Rules?

The Fair Labor Standards Act (FLSA) is a federal law that governs minimum wage and overtime pay. Unless an exemption applies, employers must:

  • Pay at least the federal minimum wage.
  • Pay overtime after someone works 40 hours in a week.
  • Pay overtime worth at least 1 ½ times a worker's regular hourly wage.

Many states and communities have similar and even stricter rules.

What are the Penalties?

Employers who break the federal law could be ordered to pay overtime that would have been due for the past few years. If they skirted the law intentionally, costs could include fines of $10,000 for each violation. Most wage and hour claims are excluded from insurance coverage, so your ministry could be responsible for paying not only a judgment, but also legal expenses.

Are Religious Organizations Exempt?

Some ministries assume that they’re exempt, since the law applies to businesses or individuals that regularly “engage in interstate commerce.” Courts interpret the phrase “interstate commerce” very broadly.

If your church or its employees do any of the following activities regularly, you probably engage in “interstate commerce.”

  • Order teaching materials or other supplies from out of state.
  • Mail newsletters or other information to people out of state.
  • Travel to other states for work purposes.
  • Maintain a Web site from which people from out of state may order items.

Even if the FLSA doesn’t apply to your ministry as a whole, the law may apply to individual employees. It is important to keep in mind that nearly all ministries are covered by the FLSA, based on business or individual employee considerations. It’s a good practice to consult an attorney before concluding that your organization and its employees need not comply with wage and hour rules.

Do Other Exemptions Apply?

There are a number of exemptions to federal overtime requirements. The most common one applies to teachers, clergy, and others who perform executive, administrative, or professional duties. If the basic requirements are met, your ministry doesn’t need to pay overtime wages to these employees. To learn more, read How Overtime Rules Apply to Ministries.

What Counts as Work?

All time employees spend doing job-related activities potentially can count as work time, whether the work is done “on the clock” or not. This includes work done from home, work performed outside of normal working hours, and work done “voluntarily.”

All hours that you “suffer or permit” an employee to work—even if you don’t request it—count as work time. If you know or have a reasonable suspicion that employees are doing the work, you must compensate them. See Distinguishing Employees from Volunteers to learn more.

What About Flex Time?

The law says you can’t give employees future “comp time” instead of overtime pay, but you can adjust schedules within a workweek.

Example: If your bookkeeper works 10 hours on Wednesday, instead of his normal eight, federal law allows you to send him home an hour early on Thursday and Friday, so he works only 40 hours in a week.

Some state laws are more restrictive. In California, you must pay overtime after an employee has worked eight hours in a day. Therefore, you would owe the youth pastor in the preceding example two hours of overtime pay.

Do Pay Periods Count?

While the government allows some flexibility, it doesn’t permit employers to average work time over multiple weeks. A common mistake is to pay an employee straight time if he averages 40 hours a week during a pay period.

Example: The church janitor works 45 hours in the first week of a pay period and 35 in the second. Although the janitor worked only 80 hours in two weeks, the FLSA says you owe him five hours of overtime pay, since he worked more than 40 hours in the first week.

How Can We Avoid Mistakes?

The biggest mistake you can make is assuming that you don’t have to comply with wage laws. Even if one or two of your employees may be exempt from the FLSA, it’s best to assume that most people fall under its jurisdiction.

This means you need to:

  • Learn about federal wage and hour rules.
  • Monitor the hours your employees work.
  • Keep detailed pay records.

You also need to be aware of any state minimum wage laws and overtime rules, since these can be stricter than federal rules. Your state labor office can provide this information.

Resources

Here’s where to find more information about overtime and minimum wage rules: