As you know, the final Fair Labor Standards Act’s (FLSA’s) overtime rule was set to go into effect Thursday, December 1. On Tuesday, November 22, a federal judge in Texas issued a nationwide injunction preventing the Department of Labor from implementing its new overtime rules, which would have doubled the FLSA’s salary threshold for exemption from overtime pay and would have automatically adjusted the threshold every three years beginning in 2020.
Due to the uncertainty of what may happen with the rule in the future, churches may wish to consider the following:
If you have already implemented the rule, consider leaving your decisions in place. Many employers have already prepared for the December 1 deadline. Each workplace is unique and employers must consider which approach causes the least disruption for their workplaces. For example, if you have not already reclassified employees, you may want to postpone your decision and monitor the policy developments closely. On the other hand, if you raised otherwise exempt employees’ salaries to meet the proposed threshold, you may want to keep those in place.
As we posted previously, if changes in the federal law occur, California standards would again apply. The California benchmark for exempt employment is tied to the California hourly minimum wage.
For employers with 26+ employees (such as some of our larger churches), the California minimum wage goes to $10.50 on January 1, 2017. This would make the minimum salary benchmark for exempt employment $43,680.
For employers with 25 or fewer employees (such as many of our smaller churches), the minimum annual salary benchmark would be based on an hourly minimum of $10.00 per hour, and would stay at the 2016 level of $41,600 for 2017. Then, on 1/1/18, the 25 or fewer employers would need to go to the level based on the $10.50 hourly minimum, or $43,680.
As the California hourly minimum wage increases for the applicable employer size, the minimum level for exempt employment also increases.
The best option under all scenarios is to ensure that all positions are correctly classified. Where a position is classified as non-exempt, only the applicable minimum hourly rate would apply.
Please contact employment counsel for assistance in classifying employees and Conference Human Resources with basic questions at (626) 568-7300