Can a Part-Time Employee Be Paid a Salary?

You could be making a common, and costly, misclassification mistake

Paying a salary to a non-exempt employee can be complicated. Many organizations—including ministries—often are unaware that employees who fit the non-exempt definition set by the Fair Labor Standards Act (FLSA) are entitled to minimum wage and overtime, even if the worker is paid a salary. To see if you have an employee who qualifies as exempt, see the FLSA Risk Assessment Chart.

Job titles do not create an exemption

It’s a common mistake to classify a worker as exempt in order to pay the worker on a salaried basis. Be aware that a title alone—such as “administrative assistant”— does not create an exemption. Generally, the job duties and salary of support staff and clerical workers often do not meet the standard.

Note: The job duties and salary of support staff and clerical workers often do not meet the standard.

For non-exempt employees, hourly pay is the safer compensation method—it’s a straightforward way to track regular and overtime hours, and may offer protection against pay disputes. However, if your ministry is strongly committed to paying non-exempt employees a salary, there are certain FLSA rules you must follow.

For non-exempt employees paid a salary, ministries should:

• Determine the hourly rate of pay. If your ministry chooses to pay a salary to a non-exempt employee, you’ll still need to track the employee’s work hours. For every work week, the employee must make at least the federal minimum wage as required by the FLSA. To calculate the hourly rate of pay each week, divide the salary amount by the number of hours worked in that seven-day period.
• Check local minimum wage. Your area’s minimum wage requirements may be higher than federal standards—your local Wage and Hour Division office can offer guidance specific to your area. Consult with a local attorney when setting rates of pay.
• Calculate overtime. Generally, overtime is paid at one and a half times the regular rate for all hours worked over 40 in a seven-day, 168-hour work week. Note that the rate of overtime, and how it is calculated, can vary by state.
• Know exceptions to the rule. There are several exceptions to minimum wage standards, including full-time students and workers with disabilities. Consult with a local attorney to see if you have a worker who qualifies.
• Avoid off-the-clock volunteering. Ministries should avoid the practice of allowing non-exempt employees—whether paid a salary or an hourly wage—to volunteer to work unpaid job-related hours to help save the ministry money. Even if this is well-intentioned and the worker is willing, the ministry could end up owing back pay, tax withholdings, and steep penalties if an employee’s pay falls below minimum wage.

If you’d like to read the four other tips in this series, download Payroll and the Church: Answers to 5 Common Questions from MinistryWorks.

The information provided in this document is intended to be helpful, but it does not constitute legal advice and is not a substitute for the advice from a licensed attorney in your area. Please consult your attorney when creating, reviewing, or revising policies and procedures.