Revised Overtime Rulesplanning ahead // on Thursday May 19, 2016
Under a new Department of Labor (DOL) rule announced by the White House on May 18, 2016, updated regulations on overtime pay will go into effect on December 1, 2016.
If an employee is exempt under the Fair Labor Standards Act (“FLSA”), their employer is not required to pay overtime compensation of one and a half times their regular pay. Currently, to qualify for the white collar exemption to overtime pay, the employee must meet certain tests regarding their executive, administrative or professional job duties and must be paid on a salary basis of not less than $455 per week, or $23,660 per year.
The new regulations raise the salary threshold to $913 per week, or $47,476 annually. This more than doubles the current salary threshold and is estimated to extend overtime pay to an additional 4.2 million workers in the United States.
What this means is that an employee who previously met the criteria for an exemption, but whose salary falls below the new threshold of $913 per week must be paid overtime at one and one-half the regular rate of pay for all hours worked in excess of 40 per work week. For example, an office worker performing bona fide administrative duties who is paid an annual salary of $30,000 is not entitled to overtime pay under the current structure, but will be eligible under the new regulations. The worker must record his or her time work to receive pay for one and a half times their hourly rate for work in excess of 40 hours per week. Note that there is no provision for compensatory (“comp”) time in lieu of overtime pay under federal law.
The applicability of these provisions of the Fair Labor Standards Acts (“FSLA”) to religious organizations is not entirely clear. While church legal authorities generally advise that the FSLA applies to churches, there is authority from the DOL that lists clergy and religious workers as one of six categories of occupations exempt from the FLSA’s overtime provisions. It is anticipated that further guidance will be provided by the time the updated regulations go into effect.
Churches and other religious organizations may wish to consult with their legal and/or financial advisors to discuss the potential impact of the new overtime regulations on their ministry operations and budget effective December 1, 2016.
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