Navigating the Proposed Department of Labor Overtime Regulation

By: Vanderbloemen

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The recent proposed changes to overtime regulations have caused mission-driven organizations to reexamine their compensation philosophies and practices.  While pastors and some ministers are not subjected to the new overtime rules, executive, administrative, and professional employees appear to be the most impacted.  

The new FLSA overtime rule, originally scheduled for January 1, 2025, called to significantly increase the minimum salary threshold for exempt employees to $58,656.  In other words, current exempt employees earning less than $58,656 would be re-classified as non-exempt and eligible for overtime pay.  Note, to be classified as exempt, employees must meet certain criteria which include the salary minimum and specific job duties. 

However, a federal court has not only temporarily blocked this increase, but has also knocked down the first boost that took the salary floor to $43,888  in July 2024.  As a result, the current minimum salary threshold for exempt employees reverts back to $35,568 per year.

While pending legal challenges, organizations can gain some valuable insight and benefit from reviewing their compensation practices and preparing for potential future changes. We have identified 5 key strategies mission-driven organizations can begin adopting as part of their compensation practice. 

  1. Review Staff Classifications Regularly: Periodically review the job duties and salary levels of all staff members to ensure the criteria for exempt status is being adhered to. 
  2. Prioritize Fair Compensation: Organizations should strive to provide fair and equitable compensation to all staff members. This includes paying overtime wages when required and considering salary adjustments to maintain exempt status for eligible employees. 
  3. Reevaluate Workload and Staffing: The changes in overtime regulations can be an opportunity for mission-driven organizations to evaluate the workload of their staff and determine if additional staffing is needed to maintain productivity and avoid excessive overtime.
  4. Embrace Technology: Utilizing time-tracking and payroll software can help efficiently manage non-exempt employee hours and ensure accurate overtime calculations.
  5. Leverage Ministerial Exception: If applicable, churches should understand the ministerial exception and how it can exempt certain employees from overtime pay requirements.  

For more detailed information and guidance, refer to the following resources.  

 

Due to the ongoing legal challenges surrounding the proposed overtime regulations, the information provided here may be subject to change  This article is not legal advice, but is provided for education and information only.  It is recommended that you consult with an attorney or other qualified professional to discuss your specific circumstances and legal questions.

 

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