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A church secretary works more than 40 hours for many weeks during the year, but is never paid overtime compensation since the senior pastor assumes that the church is exempt and that the secretary is exempt from overtime pay because she is an "administrative" employee. A church board member questions the pastor's legal conclusions. Who is correct?

Take the quiz first, then read the article for all the details.

1. A church cannot avoid liability for overtime pay by treating full-time workers as self-employed.
   True or False
   
   
2. A church can avoid liability for overtime pay by paying lay employees an annual salary instead of an hourly rate of pay.
   True or False
   
   
3. Religious organizations can adjust their liability for overtime compensation by prohibiting all unauthorized overtime work.
   True or False
   
   
4. Churches are not required to pay overtime compensation to employees who meet the definition of executive, professional, or administrative workers.
   True or False
   
   

Certain workers are exempted from coverage under the minimum wage and overtime compensation requirements. Two exemptions are of interest to churches and religious organizations.

First, the Act exempts "any employee employed by an establishment which is an … organized camp, or religious or nonprofit educational conference center, if (A) it does not operate for more than seven months in any calendar year, or (B) during the preceding calendar year, its average receipts for any six months of such year were not more than [one-third] of its average receipts for the other six months of such year … ."

Second, the Act exempts "any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools)." The definitions of employees "employed in a bona fide executive, administrative, or professional capacity" are complex, and they are contained in regulations issued by the Department of Labor. They involve a consideration of both job functions and compensation.

In evaluating the potential application of the Fair Labor Standards Act to religious organizations, consider the following points.

1. The Act's minimum wage and overtime pay requirements only apply to employees who are either (a) engaged directly in commerce or in the production of goods for commerce, or (b) employed by an enterprise engaged in commerce or in the production of goods for commerce.

2. Churches and religious organizations that satisfy the definition of an enterprise engaged in commerce or in the production of goods for commerce will be subject to the minimum wage and overtime pay requirements of the Act.

3. Church employees may be covered by the Act's minimum wage and overtime provisions, even if their employing church is not an enterprise, if they personally are engaged in commerce or in the production of goods for commerce. This is known as individual coverage. Individual coverage is triggered if an employee is engaged in any of the following activities on more than "insubstantial" or infrequent basis: (1) receiving or making interstate phone calls; (2) receiving or sending interstate mail or electronic communications (such as email); (3) traveling across state lines in the course of employment; (4) use of the Internet.

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