Overtime Reprieve – Cause for Thanksgiving!

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Nonprofit employers can breathe a sigh of relief that proposed regulatory changes for “exempt employee” salary qualifications have been shelved, at least for now.

The Department of Labor (DOL) previously published proposed regulations to increase the minimum annual salary requirement for exempt employees, from the current $22,660 level to $50,440.  In other words, in order for a salaried worker who performs generally higher-level duties to qualify as “exempt” from overtime and other protections under the Federal Labor Standards Act (FLSA), he or she must also earn at least $50,440 annually.  This drastic adjustment resulted in tremendous opposition, with an enormous outpouring of 270,000 publicly filed comments.  Many nonprofits have been quite alarmed, since such change could impose drastic financial adjustments to compensate currently exempt employees who work sacrificially long hours for low pay. 

The DOL has indicated that it will take substantially more time to review the comments, with finalization not likely until late 2016.  In the meantime, employers should maintain their current classifications for exempt and non-exempt employees, with accompanying budgetary and time-keeping considerations. 

Churches and other religious institutions in Illinois, Indiana, and Wisconsin can also take some comfort that they are covered by the “ministerial exception.”  More specifically, the federal Seventh Circuit Court of Appeals (covering these states) has ruled that ministers may not be bring any wage claims against their employers (as well as other employment-related discrimination claims), due to the religious nature of their employment and related First Amendment considerations.  So any further DOL regulatory changes should not affect minister compensation.

For additional background regarding the DOL’s proposed regulations, please see our prior blog article.