Most churches have at least a handful of hourly employees on payroll. In addition to minimum wage regulations, churches with employees must pay attention to overtime laws as well.
The United States Department of Labor enforces the Fair Labor Standards Act (FLSA), which sets basic minimum wage and overtime pay standards. For non- exempt employees, it requires employers to pay at least the federal minimum wage, and overtime pay of one-and-one-half times the regular rate of pay.
What’s the harm in failing to pay overtime? Well, let’s imagine that your church is located in California and three years ago you hired an administrative assistant, Ms. Pat. Ms. Pat works Tuesday through Friday from 8:00 am to 5:30 pm. According to this scenario, Ms. Pat has worked 9.5 hours each day, or 38 hours each week.
Under the FLSA and California law, employers are required to pay overtime premium to non-exempt employees who work over 40 hours in one week. In California, the employer is also responsible for overtime pay for any hours worked over 8 hours in one day.
What does this translate into in terms of dollars and cents?
Ms. Pat has been working for 3 years, or 720 workdays. In California, the Labor Commissioner would allow her to choose whether to request daily overtime compensation or weekly overtime compensation, depending on which one is more advantageous.
Daily Overtime Calculation
|Number of Days||Number of Hours Each Day Over 8||Overtime Rate||Total(#of days x hours each day x overtime rate)|
Weekly Overtime Calculation
|Number of Weeks||Number of Hours Each Week Over 40||Overtime Rate||Total|
In this scenario, Ms. Pat only has a daily overtime claim because her workweek never exceeded 40 hours. You can see, however, that the daily overtime accrual rate is significant. In addition, Ms. Pat may receive up to 30 days’ worth of wages as a waiting time penalty, which amounts to $1,640.00. The church’s total liability is $17,840.00.
Depending on the amount of revenue your church brings in each month, having to pay this amount may be crippling. It is also often the case that when an employer pays one employee improperly, they are also following the same practices with other employees, multiplying the business’ liability.
This example illustrates the importance of correcting any areas in which your employment practices may not be compliant with state and federal labor laws. The $17,840.00 award may be a fraction of your tithes for the month, or it may be 2-3 months’ worth of the church’s operating budget. Either way, the penalty is significant and I’m sure you can think of other, more productive ways to use that money.
Asha Wilkerson is the founder of The Wilkerson Law Office. She is also the author of Employment Law for Church Leaders. Ms. Wilkerson provides skilled advice and counsel to for-profit, non-profit, and faith-based organizations in the areas of business and employment law. The mission of The Wilkerson Law Office, is to preserve the longevity of your business by ensuring that every aspect of your organization is legally sound and operating in compliance with state and federal law.