From the Office of the Mississippi Conference Treasurer

8/3/2016


Are you prepared for the Salary Changes based on the Department of Labor's Final Rule and Exempt Classifications?
 
The Department of Labor (DOL) has issued new rules and guidelines for employers regarding who can be paid a salary (white collar workers) and who must be compensated for overtime (over 40 hours per week).

On May 18, 2016 the final rules were issued and they become effective December 1, 2016.  There are 3 tests for white collar exemption: Salary Level, Salary Basis, and Duties.  The rule is applied at both the Enterprise Level and the Individual Level.  Therein lies the problem for our local churches.

Let me dispel a myth that the churches are exempt from paying overtime.  You will hear and be told that the Enterprise coverage says that non-profit organizations are not covered unless they have sales made/business done in excess of $500,000.   It does not extend to charitable activities but hospitals and schools (including preschools) are covered if the receipts level is met.  Churches with enterprises that meet the dollar level will cause the churches to be included if the school is not a separate entity which is a question of fact.
 
While the Enterprise Coverage rule could exempt a local church, one MUST also look at the Individual Coverage.  This is what makes our local churches become covered thus requiring payment of time and one half for overtime work.  Simple as making calls (ordering materials from out of state) to another state or transporting property and or people to another state causes the individual to be covered.  Thus if an individual is covered, you must dig deeper to see what the rules are.

There are 5 exemptions that were not changed by the new law:  Executive, Administrative, Professional (Learned or Creative), Computer and Outside Sales.  There is no statutory Ministerial Exemption but there is an exemption based on the First Amendment in the establishment clause and the Free Exercise Clause.  The Ministerial Exemption is based on the formal title/role (the extent it requires specific training, education, etc.), the substance of the position and its function within the church, the use of the title/position and the degree to which the position conveys/perpetuates the church's message/ministry.  Titles do not guarantee exemption.  Duties, education and compliance are the driving factors.

So, what do you need to do if you believe the position is exempt?

  1. Review the job description of each of the employees and education requirements and compare that to the exempt classes.
  2. Review the salary level of the exempt workers
  3. All exempt positions must be paid $913 per week or $47,476 per year -- NO reduction for time spent on the job (3/4, half, ¼ time).
  4. Agree in writing that this is an exempt position. This may be stated in the job description.
  5. Revise and update all job descriptions if needed to be clear and in compliance.
If you do not meet the above requirements in both salary level and duties, then the position is non-exempt.  By December 1, 2016, you must:
  1. Determine the set work week.
  2. Review the job description and the job requirements.
  3. Revise and update all job descriptions if needed to be clear and in compliance.
  4. Pay the worker at least $7.25 per hour for the first worked 40 hours and then time and one half of the hourly rate for all hours worked in the defined work week. (This includes time worked at home or away from the usual place of employment.)
  5. Maintain a time system that shows the hours actually worked and have the employee sign the time sheet/card.
  6. Time cannot be donated or comp time provided.  Both of these are not legal in determining fair pay.
  7. Properly notify employees in a respectful and educating manner.
The General Counsel on Finance and Administration is providing a service that will review each job description and related position to determine if it is exempt or not.  The cost for this service is $60 per review.  It can be accessed through the Conference Treasurer.
While this law is very complex, it applies to every United Methodist Church in the Mississippi Conference. 

Mississippi Conference Treasurer David Stotts said, "As Christians it is our duty to be first to follow the laws of God and of Man.  Paying a person properly fits in both categories."

There will be further help in understanding these rules and many others during the Administry Training being offered in October, November and December.  Go to the Mississippi Conference website to register to attend, or click here