New Overtime Regulations

Published on June 28th, 2016

The U.S. Department of Labor recently released its update on the Fair Labor Standards Act (FLSA) overtime regulations. You have most likely heard something about this and the questions related to it.

Based on the information received, our understanding is as follows:

  • The new rules will be effective December 1, 2016.
  • The update increases the standard salary threshold level from the current $455 per week or $23,660 per year level established in 2004 to $913 per week or $47,476 per year.
  • The threshold will be automatically updated every 3 years with first update January 1, 2020.
  • Neither the FLSA nor department regulations provide a blanket exemption from overtime requirements for non profits.
  • Teachers are exempt if their primary job is teaching, tutoring, instructing or lecturing.
  • The regulations from 2004 included language that excluded clergy and religious workers, but that language is not included in the new regulations so the minister’s status is still unclear at this time. It would seem that the Ordained and Commissioned Workers on the Synodical Roster would continue to fall into the exempt category and hopefully we will be able to confirm that soon.
  • Other church and school salaried employees who are currently under the salary compensation threshold and working more than 40 hours per week will most likely be subject to the FLSA and overtime regulations.  Some consideration needs to be given to responsibilities and compensation for these positions to determine the best option, whether it be to pay the overtime, reduce their hours or increase their salary to the threshold level. (Examples:  Office clerical, custodial, cafeteria workers)
  • Note that the rules for hourly workers have not changed.

We have been in contact with the LCMS Human Resources and Accounting and Tax Departments, Concordia Plan Services and PayChex to inquire about their plans for publishing information that can be shared with LCMS Congregations and Schools employers for clarification and guidance on this matter.

We are told that several people are working on this and they are consulting with legal council to determine how best to address the requirements of this new ruling.  Part of the challenge is the unique employment scenarios that exist from one congregation to the next, so there is no standard single answer that fits everyone.

We have been assured that the LCMS does recognize the impact this may have at the District and Congregational level and they do plan to address it in the best manner to develop more specific related resources for LCMS.

What does this mean?

  • As of right now, we are not in a position to publish anything more official on this topic.
  • We are continuing to pursue this with all of our LCMS contacts and encourage you to be patient as we continue to seek the information and guidance necessary to make good informed decisions.
  • For now we advise that you review the materials and resources below and watch for information updates which will be distributed as soon as they become available.

Additional Resources:

Read the Guide to Navigating Overtime Regulations by Paychex.

Download and read the Overtime Rules for Nonprofits..

Richard Hammar, an attorney, CPA, and author specializing in legal and tax issues for churches and clergy, has recorded a 10-minute video further explaining this major development. He fully reviews the overtime regulations and why churches are affected by them.