FLSA Compliance
Hiring the right talent for your ministry is one of the most important steps in supporting its mission. Once you find the perfect match for your culture, how do you retain these staff members and volunteers while remaining in compliance with both state and federal regulations? The Fair Labors Standards Act (FLSA) provides some important guidelines.
What is the FLSA?
The Fair Labor Standards Act (FLSA) is a federal law that establishes employment standards affecting employees in the private sector and in Federal, State, and local governments. Non-profit organizations may also be covered under the act, depending on the type of work employees and volunteers perform for the organization.
The FLSA includes the following categories and legal requirements:
FLSA Minimum Wage: The federal minimum wage remains currently at $7.25 per hour, effective July 24, 2009. As of January 1, 2024, 22 states have increased their minimum wage rate. Where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.
To see if your state is affected, please visit the Department of Labor’s (DOL) State Minimum Wage page.
FLSA Overtime: According to the DOL, employees fall under two different categories – exempt and non-exempt. This classification is dependent on the employee’s job duties, salary, advanced knowledge, professional discretion, and independent judgement in matters of significance in the organization. Exempt employees are typically paid on a salaried basis and are therefore exempt from overtime payment. Nonexempt employees, however, are paid hourly, perform job duties requiring less independent judgement and decision making for the organization, and are paid less than a minimum amount determined by the DOL. To determine your employees’ classification correctly, the DOL recommends that you perform a duties test.
Effective July 1, 2024, salaried workers who earn less than $844 per week will become eligible for overtime pay under the final rule.
Nonexempt employees must receive overtime pay for hours worked over 40 per workweek at a rate of one and one-half times the regular rate of pay. There is no limit on the number of hours employees 16 years or older may work in any workweek. The FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest, unless overtime is worked on such days.
Record keeping: Employers must display an official poster outlining the requirements of the FLSA. Employers must also keep employee time and pay records for non-exempt or hourly employees.
Child Labor: These provisions are designed to protect the educational opportunities of minors and prohibit their employment in jobs and under conditions detrimental to their health or well-being.
Worker Classification Rule: This year the Department of Labor has also expanded its classification of workers to include freelancers as part of the contractor classification. Workers are typically categorized as either employees or contractors. It’s important to classify them correctly to avoid fines. More information is available on the Employee and Contractor Classification page of the DOL website.
Volunteers, however, will not be considered employees for FLSA purposes if they volunteer freely for public service, religious or humanitarian objectives, without contemplation or receipt of compensation.
Does FLSA Apply to My Ministry?
It depends. Non-profit organizations may be liable for compliance under FLSA if they fall under enterprise coverage or if they perform a commercial function. Non-profit workplaces like schools, hospitals, mental health centers, and residential care facilities are recognized as enterprises, and therefore are required to remain in compliance. If organizations or ministries use volunteers as part of their staff, these individuals do not fall under the regulations.
How Does My Ministry Remain in Compliance?
If your ministry falls under FLSA regulation, be sure to analyze the following areas:
- Employee Classification – DOL will impose heavy fines on employers who misclassified their employees and contractors. Remember to review your worker’s job duties, equipment ownership, and scheduling when evaluating their status.
- Federal and State Wage Legislation – Be sure to review both your Federal and State Wage legislation before determining the correct pay rate. Typically, either the Federal or State regulation will be more in favor of employees. Always follow the regulations that favor your staff.
- Volunteer Work – Be careful when employees participate in volunteer activities onsite. These activities must be different than their typical job tasks. If they are too similar to their current duties, DOL may determine that these hours should be applied toward the 40-hour work week limit, therefore moving them into overtime. Having employees sign a document acknowledging that they voluntarily agree to provide services with no expectation of being paid for their volunteer service is a good practice.
- Document – As always, be sure to document any changes in employee status, type of work, or any other relevant employment information. This can help your ministry avoid any legal ramifications connected to classification and overtime payment.
Hiring the best fit for your ministry is essential. When you have the right people on board, be sure you’re in compliance with Federal and State Legislation, especially when it applies to FLSA. This will help you continue to assist the needs of your ministry and the community.
