Position Classifications

Most employers in the U.S. have employees that are protected by the federal Fair Labor Standards Act (FLSA). Among other things, this law sets the minimum wage and overtime rate at which some employees must be paid. The purpose of this policy is to define the various classifications of employment  and, for employers subject to the FLSA, to describe which employees are exempt and non-exempt from the FLSA’s requirements.

Your policy should include only the classifications your organization uses. It’s important to note any employee classifications that aren’t eligible for benefits. If limited benefits are available to part-time or temporary employees, those benefits can be described in a separate policy.

Additionally, if your organization has employees that may earn the right of tenure, you’re highly encouraged to add a provision to this policy that mentions tenured employees as a classification. It would likely be beneficial to also provide information about tenure, such as eligibility, review, and limitations. 

To learn more about Teachers, Daycare Centers, Preschools, and the FLSA, check out the U.S. Department of Labor’s #17S: Educational Establishments and #46: Daycare Centers and Preschools fact sheets.

Lastly, it is important to note that new minimum salary levels communicated by the Department of Labor in 2024 expand overtime protections for millions of workers—including some ministry workers—currently paid a salary. The rule increases the salary thresholds required to exempt a salaried bona fide executive, administrative or professional employee from federal overtime pay requirements.

Additional Resource: Basic Legal Principals - FLSA

SAMPLE POLICY:
POSITION CLASSIFICATIONS

The following definitions have been established to standardize terminology and provide common understanding in our references to employees and non-employees:

Employee - A person who receives wages or salary from (name of organization) and whose work this organization controls and directs.

Independent Contractor – A self-employed individual engaged in their own business who agrees to perform specific services for (name of organization) pursuant to a contractual agreement. Such individuals are obliged to manage their own tax obligations, expenditures, and insurance requirements. They do not qualify for the employee benefits.¹ (Name of organization) Independent’s policy can be obtained by contacting your supervisor.

Volunteer - A person who freely offers their services for charitable or religious objectives without the expectation or receipt of compensation. If a volunteer is employed by the (name of organization), they cannot serve in a capacity that is similar to the work for which they are employed. (Name of organization)’s Volunteer policy can be obtained by contacting your supervisor.

Full-time Employees - Those who regularly work 40 hours or more weekly and who maintain continuous regular employment status. Regular full-time employees are eligible for benefits offered by (name of organization).

Part-time Employees - Those who regularly work less than 40 hours weekly and who maintain continuous regular part-time employee status. Part-time employees may be eligible for certain benefits offered by (name of organization). Part-time employees are generally classified as non-exempt employees.

Temporary Employees - Those whose services are intended to be for a short period of time or of limited duration, or for an indefinite period when there is no intent by (name of organization) to provide regular status. (Name of organization) may either hire temporary employees directly or may use an agency to supply temporary employees.² Temporary employees are not eligible for benefits. If a temporary employee is subsequently hired as a regular full-time or part-time employee, date of hire will be determined by the date on which the employee becomes a regular employee.

Regular Employees - Those whose services are intended to be for an indefinite period and who work regularly scheduled hours on an ongoing basis, either full- or part-time.

Exempt Employees - Those who are exempt from the provisions of the Fair Labor Standards Act. They typically perform executive, administrative, or professional duties within the organization. Exempt employees must be paid on a salary basis (meaning no deductions from weekly pay for quality or quantity of work), and that salary must meet a minimum salary level. Exempt employees are not eligible for and do not receive overtime payment.³

Non-exempt Employees - Those who are not exempt from the provisions of the Fair Labor Standards Act. Non-exempt employees are eligible for overtime payment as set forth in [name of organization’s] overtime policy.

Ministry Positions – Those who are either part-time or full-time employees who assist or lead in conveying (name of organization)’s sincerely held beliefs and mission. This includes roles such as a pastor, minister, and religious instructor, among others involved in ecclesiastical or spiritual duties, which may qualify as a position under the “Ministerial Exception."⁴

Footnotes and Additional Resources on this Topic

1 The FLSA utilizes the totality of the circumstances test, whereby six factors, with no one factor having more weight than another, are used in determining whether a worker should be classified as an employee. Read more at: Worker Classification: 2024 Rule Clarifies Independent Contractor Status

2 Generally, temporary employees hired directly will need to be classified as exempt or non-exempt, and all minimum wage and overtime pay requirements will need to be followed.

3 Exempt employees, with a few exceptions, must meet the salary basis, salary level, and primary duties tests in order to be considered an exempt employee in accordance with the FLSA.

4 The U.S. Supreme Court and the Department of Labor have referenced the ministerial exception as it relates to exempting clergy-type positions or employees who function in a similar religious capacity being exempt from certain employment-related laws. There isn’t a universal checklist or definition when it comes to assessing whether a particular employment role fulfills the core purpose of the exception. Ultimately, whether an employee is considered a minister depends on their role and duties in advancing the church's mission and communicating the church's message.

This is a sample handbook policy only. Your organization is responsible for compliance with all applicable state and local laws. While most employers in their respective states are subject to both federal and state classification and minimum wage laws, state provisions often take precedence due to their more protective nature. This may include how states classify independent contractors, as seen in states like California and Colorado. Accordingly, this document should not be used or adopted by your organization without first being reviewed and approved by a licensed attorney in your area.

Working Together © 2022 Brotherhood Mutual Insurance Company. All rights reserved. www.brotherhoodmutual.com/working-together. Updated 6/18/2024.