There are many misconceptions and often confusion regarding the legal rights that churches and nonprofits hold. Understanding the benefits and requirements of the law will not only keep you out of hot water but also allow you to utilize the laws that help further your organization's mission and vision.
Rarely does anyone wake up desiring to violate an employment law. What unfortunately occurs is that, when people have a difficult employment situation, they feel like they are either in the right or they are unaware of the laws applicable to the situation. The law is very nuanced and having an attorney in your corner to help navigate situations is the best way to ensure that you and your organization comply. In this series, we will take a deeper look at employment laws.
Fair Labor Standards Act
The FLSA determines minimum wage and overtime pay for employees. The FLSA requires employers engaged in an enterprise to pay covered non-exempt employees at least the federal minimum wage and overtime pay for all hours worked over 40 in a work week.
Under the current FLSA regulations, a covered employer must generally pay executive, administrative, or professional (EAP) employees at least $684 per week (equivalent to $35,568 annually for a full-year employee), which is the standard salary level to be exempt from the FLSA overtime protections. If you thought the threshold was higher, that is because: a federal court recently struck down the regulation that changed the threshold to $844 per week ($43,888 annually).
Even though churches and nonprofits aren't considered "businesses" in the traditional sense, their employees can still be governed by FLSA laws, especially if they are involved in activities that affect business or commerce across state lines. If employees are engaged in interstate commerce, the production of goods for commerce or activities closely related and directly essential to the production of goods for commerce.
This can be as simple as making or receiving phone calls, emails, or other communications from out of state, shipping or receiving items from out of state or even ordering supplies from out of state. Given the broad interpretation of interstate commerce, most nonprofit staff are individually covered by the FLSA.
The FLSA divides employees into two categories - Exempt or Nonexempt. Nonexempt employees are entitled to overtime pay and must be paid overtime if worked more than 40 hours a week. Additionally, the Ministerial Exception may apply and if it does, all ministerial employees for religious organizations are not governed by FLSA.
FLSA - Compliance
Misclassifying workers can get messy very fast. Penalties can be assessed for each violation and an investigation can ensue. Ensuring all positions have clear job descriptions and ministerial functions are highlighted and actually performed can help keep your organization in the clear.
Evaluate the classification of each worker every year to determine if any exception (Ministerial Exception, Executive, Administrative, or Professional) applies.
It is important to note that FLSA claims are employee-initiated. If a disgruntled employee is questioning their classification status, proceed cautiously and begin gathering evidence to support the classification of the employee.
Having a trusted attorney on your side can ensure a safe and compliant work environment. If you do not have a trusted attorney already, we would love to serve you! Fill out our contact us form and a member of our team will reach out to you.
The information provided in this article does not, and is not intended to, constitute legal advice or investment advice; instead, all information, content, and materials available in this article are for general informational purposes only. Information contained in this article may not constitute the most up-to-date legal or other information. This article contains links to other third-party websites. Such links are only for the convenience of the reader, user, or browser; the author does not recommend or endorse the contents of the third-party sites.
Readers of this article should contact their attorney to obtain advice with respect to any particular legal matter.
Anthony & Sparkman, PLLC is a law firm located in both Dallas/Fort Worth and Georgetown, Texas that provides legal counsel to both churches and nonprofits around the world. John Anthony & Michele Sparkman have spent over a decade providing general counsel to churches and nonprofits on issues ranging from incorporation, governance, employment, policies and procedures, taxes, succession planning, real estate development, and much more. For more information visit our website at www.thenonprofitteam.com.
