White Paper
Does FLSA Apply to My Ministry?
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The Fair Labor Standards Act (“FLSA”) was originally passed in response to abuse of workers in the Industrial Revolution. It was intended to make sure that workers got paid for overtime and got paid a living wage, and that children were protected.
FLSA sets out provisions governing equal pay, minimum wage, overtime, and record-keeping requirements for certain employers. Essentially, religious organizations may have to worry about FLSA under two conditions:
- They are considered an “enterprise” under the Act; or
- Their “employees” are subject to FLSA’s protections.
This memo provides a general overview of the special issues facing religious employers in the context of these two inquiries. Ultimately, whether an employer is subject to FLSA, or whether an employee is included, will depend on the unique factual circumstances of each case.
This memo recommends that an individualized assessment of each employer and job description be conducted to ensure a legally defensible position.
I. Does FLSA Apply to Your Ministry Overall Because It Is an Enterprise?
A. Should You Want FLSA to Apply?
FLSA was passed for the protection of workers, and most employees of religious organizations would probably expect to get paid minimum wage and be paid for overtime.
Sometimes this becomes an issue in internship-style programs where workers receive a small stipend or non-monetary benefits rather than traditional compensation. Situations like these must be analyzed carefully and may be better structured as volunteer positions.
More commonly, concerns arise within mission organizations or church projects where ministry workers undertake long trips and time-consuming projects. Many workers in ministry see themselves as professionals and may resist tracking hours or clocking in and out, even if they are not highly compensated.
B. Is Your Ministry an Enterprise?
FLSA covers an “enterprise engaged in commerce or in the production of goods for commerce.” There is no automatic exemption for churches or religious organizations.
However, to the extent a church or ministry does not engage in commerce as defined by the Act, it may not be subject to FLSA as an enterprise.
If an organization has business revenue of less than $500,000 and does not operate one of the specifically listed institutions under the statute, FLSA may not apply. Charitable donations do not count toward this total because the focus is on commercial activity revenue.
Even if the ministry itself is not an enterprise under FLSA, individual employees may still be covered.
II. Is the Employee Covered?
Even if an organization is not subject to FLSA as a whole under enterprise coverage, it may still have to comply with FLSA requirements if it has employees protected by the Act.
The general test is whether the employee is engaged in commerce or in the production of goods for commerce. Because the Department of Labor defines commerce broadly, many employees may fall within FLSA coverage.
Interstate phone calls alone may satisfy the definition of commerce.
Even when employees are generally covered, many exemptions may still apply.
A. Executive, Administrative, or Professional Exemptions
Employees employed in a bona fide executive, administrative, or professional capacity may be exempt from FLSA’s minimum wage and overtime requirements.
To qualify for these exemptions, employees generally must:
- Meet the applicable duties test; and
- Be paid above the required salary threshold.
1. Executive Exemption
The executive exemption primarily applies to management-level employees.
To qualify, the employee must:
- Primarily manage the enterprise or a recognized department;
- Regularly direct the work of at least two full-time employees or equivalents; and
- Have authority over hiring, firing, promotion, or related employment decisions.
Management activities include interviewing employees, training staff, setting schedules, directing work, disciplining employees, and planning operations.
2. Administrative Exemption
The administrative exemption does not apply to all clerical or secretarial employees.
Instead, it focuses on employees performing office or non-manual work directly related to management or business operations while exercising discretion and independent judgment on significant matters.
Relevant work areas may include:
- Accounting
- Finance
- Marketing
- Human resources
- Public relations
- Computer network administration
- Procurement and purchasing
Employees may still qualify even if their decisions are reviewed by higher management.
3. Professional Exemption
The professional exemption applies to employees performing work requiring advanced knowledge in a field of science or learning.
Typical examples include:
- Doctors
- Teachers
- Lawyers
- Accountants
- Engineers
- Architects
- Theologians
Creative professionals may also qualify where work requires invention, imagination, originality, or talent in artistic or creative fields.
The article also discusses the Department of Labor’s 2016 overtime rule changes, salary threshold increases, and subsequent legal challenges that affected implementation.
B. Highly Compensated Employees
A highly compensated employee exemption exists for employees earning $134,004 or more annually who perform office or non-manual work and meet at least part of the executive, administrative, or professional duties tests.
C. Employees Working in Foreign Countries
Employees whose services are performed in workplaces within foreign countries are not subject to FLSA’s minimum wage or overtime requirements.
This exemption is especially important for U.S.-based mission organizations sending missionaries abroad.
D. Volunteers
FLSA does not apply to bona fide volunteers.
Courts evaluate volunteer status by examining not only wages but also whether individuals receive other benefits that may effectively amount to compensation.
The memo suggests that interns either be paid minimum wage or clearly structured as volunteers.
E. Camps
Certain camp employees may qualify for an exemption applicable to amusement or recreational establishments that operate fewer than seven months per year and meet specific financial requirements.
F. Ministerial Exception
Several federal circuit courts have recognized a ministerial exception to FLSA compliance for ministers and religious personnel.
This principle is tied to broader legal doctrines preventing courts from interfering with relationships between religious organizations and ministers.
Courts have applied this reasoning in cases involving ministers, seminarians, and religious workers performing ministerial duties.
G. Clergy and Religious Worker “Exemption”
Although no formal statutory exemption exists specifically for clergy and religious workers, Department of Labor guidance strongly supports the position that such individuals are not covered employees under FLSA.
Department of Labor materials identify clergy and religious workers as exempt from overtime provisions and outside traditional FLSA coverage.
Ministries are encouraged to carefully analyze compensation structures and continually reevaluate guidance as legal interpretations evolve.
III. What if FLSA Applies?
If an organization or employee is covered by FLSA, several requirements apply.
A. Minimum Wage
Covered employees must be paid at least the federal minimum wage, currently $7.25 per hour.
State law may impose higher minimum wage requirements that apply in addition to federal law.
B. Maximum Hour Requirement or Overtime
Covered employees generally may not work more than 40 hours per week without overtime compensation.
Overtime must be paid at one-and-a-half times the employee’s normal rate of pay unless an exemption applies.
C. Record Keeping Requirements
Covered employers must maintain detailed records for non-exempt workers.
Required records include:
- Employee name and Social Security number
- Address
- Birth date for minors
- Occupation
- Hours worked
- Wage rates
- Overtime earnings
- Deductions and additions to wages
- Dates and periods of payment
Payroll records must generally be kept for three years, while wage computation records must be retained for two years.
D. Youth Employment Standards
FLSA places restrictions on child labor, including minimum employment ages, hour limitations for minors, and prohibitions on dangerous work.
IV. Conclusion
FLSA considerations are highly fact-specific. Both the job description and the employee’s understanding of the role are relevant.
Ministries should analyze positions carefully, develop clear rationales regarding exemption status, and ensure compensation structures appear fair and appropriate regardless of the ultimate FLSA determination.
While missionaries abroad may willingly work long professional hours for modest support-based compensation, home office workers or administrative staff may have very different expectations regarding wages and overtime protections.