Fair Labor Standards Act Ministerial Exemption

By Mark Bradley, Insurance Services • BMA Financial

The US Department of Labor’s Fair Labor Standards Act (FLSA) sets the structure for determining which positions are exempt (vs. non-exempt) from FLSA overtime requirement regulations. Exempt positions are most commonly thought of as salaried, whereas Non-Exempt positions are hourly and subject to overtime pay requirements.

A key requirement for Exempt classification is a minimum earnings threshold. Effective July 1, 2024, the requirement is $43,888. Employees earning less than that amount do not meet the requirement, must be classified as Non-Exempt (hourly) and are eligible for overtime pay. This threshold will increase to $58,656 effective Jan. 1, 2025, and remain in place for three years.

Churches, as employers, are not excluded from FLSA requirements and are expected to comply with the regulations and classify employees accordingly.

Ministerial Exception

In simplest terms, the Ministerial Exception states that practicing, licensed, ordained ministers and clergy are exempt from the FLSA earnings requirements. While the regulations do not state that, established court precedents support that position. That should not be viewed as applying to other church employees.

Church Employees

As noted above, there is no clear structure for the Ministerial Exception to apply to any church employees other than practicing ministers. It is not recommended that any church attempt to apply this exception to non-ministerial employees, as this could result in incorrect employee classifications and risk compliance violations.

Conclusions

Licensed ordained ministerial employees actively practicing within your church as part of their official job duties are considered to be exempt from the FLSA earnings requirements and may be paid accordingly. All other church employees should correctly be classified as Exempt or Non-Exempt based on their annual earnings.

Do you have questions? We’re here to help! BMA Financial Insurance Services is your trusted partner. We can help clarify and understand whatever your situation may be. Let us explain your options. Our focus is on educating our churches and pastors to help them make well-informed decisions about these very important topics. Contact me at (501) 499-4205 or mbradley@bmaamerica.org.