Major Changes to Overtime Rules Could Affect Ministries
Many times those of us working in the non-profit world believe the greater good exempts us from new and changing laws. Sometimes we are exempt from things and sometimes we are not. Being informed on the ever changing rules by which we operate the business side of our organization is imperative.
The U.S. Department of Labor has proposed new regulations designed to expand overtime protection for workers employed by nonprofits, for-profits, and governments. Taking the time to review your employee classifications will help you understand if these new regulations put you at risk or will impact your organization.
A review of the following may be a good idea in preparation for potential new overtime regulation rules:
- Review worker classifications to be sure everyone who is an employee is treated as such for payroll purposes.
- Review worker classifications of employees to ensure that "exempt" versus "covered" determinations are accurate.
- Review the impact of the proposed increase in minimum salary level paid to employees to exempt them from overtime pay. Proposed exempt worker salary is recommended to be increased from the current $23,660 to $50,440 per year.
- The salary basis test requires that the employee be paid a predetermined salary, rather than on an hourly basis, and that the amount paid is not adjusted based on whether the person worked certain hours.
- The duties test requires that the individual’s job duties must primarily involve executive, administrative, and professional duties as defined by the Labor Department regulations.
- The salary level test – which is the subject to the proposed regulations – requires that an employee be paid at or above a minimum specified amount. That amount is currently set in regulations at $23,660 per year and requires regulatory action by the Department of Labor to change it. (see “Classifying Employees Correctly", National Council of Nonprofits website: https://councilofnonprofits.org/tools-resources/classifying-employees-correctly)
It's always a good idea to be aware of what may be coming as far as new laws and regulations are concerned, and thinking through some of the guildelines above should make any possible changes easier to swallow when they are implemented.
Tammy Bunting is AcctTwo’s Director for Not-for-Profit Services. She is also the CFO of Preston Trail Community Church in Frisco, Texas. Tammy has more than 25 years of experience in accounting, business administration, operations, and management. This includes work in both the secular and non-profit Christian environments. She’s been responsible for providing the controllership functions of all business environments at a multi-ministry church enterprise, and been a partner in a thriving Intacct value-added reseller business. Tammy was raised and educated in the Christian church, and has a unique perspective into the world of non-profit and faith-based business administration and accounting.
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