Fair Labor Standards Act Changes Memo

November 3, 2016

From: Kathy Odell and Mark King To: All Churches and Staff Parish Relations Committees of the Western North Carolina Conference

FAIR LABOR STANDARDS ACT CHANGES On December 1, 2016, a significant change to the Fair Labor Standards Act (FLSA) goes into effect.  The changes may significantly impact church employees. Effective December 1, the salary minimum threshold for certain exemptions from minimum wage and overtime pay will be raised to $47,476 per year. For a detailed explanation of this change and to determine how your employees will be impacted, please refer to Kathy Odell’s document The Fair Labor Standard New Rule. In 1938, President Franklin Roosevelt and Congress enacted the FLSA to protect employees with the least control over their work week from being exploited. It introduced the minimum wage and in 1940, established the 40-hour work week. Prior to the law, millions of workers who had no control over how much they were required to work also had no recourse to be paid for overtime hours or to be paid a minimum wage. Even before the FLSA, workers’ rights were prominent in our Social Creed, first adopted in 1908 by the Methodist Episcopal Church. Working to eliminate the exploitation of workers continues to be a key social justice theme of The United Methodist Church’s Social Principles.  Paragraphs 163 B and C of the Social Principles embody our commitment today, as do several resolutions adopted and affirmed at successive General Conferences. We provide this background so that we can address the financial implications of the new provisions of the FLSA in a way that honors our past and our principles. We have received numerous inquiries about the new FLSA guidelines. For your consideration, here are definite concerns to address:
  • Timekeeping is not closely monitored.
  • An employee’s exempt or non-exempt status is not readily known. (Exempt employees don’t receive overtime pay; non-exempt employees must be paid for working overtime.)
  • Some think that the minimum salary levels for exempt employees can be pro-rated if they’re part-time.
  • A first instinct is to find a way to reclassify employees from non-exempt to exempt or vice versa, whichever is financially advantageous to the church.
  • Without an analysis of duties, some want to classify professional lay staff so they are exempt under the “ministerial exemption.”
  • Some think merely paying an employee a salary of $47,476 qualifies them as exempt.  This is not true.
  • Some believe the 40-hour requirement is an average of the weeks in a pay period instead of applying it to individual work weeks.
What should you do?
  • Classify employees as exempt or non-exempt, not salary or hourly.
  • Pay attention to how many hours, employees work each week and keep it to 40 or less. Where applicable, be prepared to pay overtime as it is legally required and ethically responsible to do.
  • The law errs on the side of assuming employees are non-exempt. Unless you can confidently demonstrate otherwise, assume your employees are non-exempt. Overreach on classification at your own risk.
  • Engage your SPRC in a review of your church’s practices and policies.
Follow the guidance offered in The Fair Labor Standard New Rule. For more information contact Kathy Odell, our Conference Human Resource Director at kodell@wnccumc.org or Mark King, Conference Treasurer at treasurer@wnccumc.org.