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Can a Part-Time Employee Be Paid a Salary?

Paying a salary to a non-exempt employee can be tricky. Many businesses—including ministries—often are unaware that employees who fit the non-exempt definition are entitled to minimum wage and overtime standards, whether they are paid a salary or an hourly wage. Failure to follow federal or local wage standards can lead to violations of labor laws, and ministries may be held liable for back pay, back taxes, and penalty fees.

Avoid a common worker classification mistake

In general, employees fall into one of two categories:

It’s a common mistake to classify a worker as exempt in order to pay the position a salary. Be aware that a title alone—such as “administrative assistant”— does not create an exemption. The employee must meet specific tests regarding job duties and salary amount to qualify. Note that most support staff and clerical workers do not meet the standard.

Minimum wage and overtime standards still apply

For non-exempt employees, hourly pay is the preferred 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 this method of pay, there are certain FLSA rules you must follow.

For non-exempt employees paid a salary, ministries need to:

  • 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 hours. For every workweek, the employee must make at least the federal minimum wage of $7.25 per hour, as required by the FLSA. To calculate the hourly rate of pay each week, divide the salary amount by number of hours worked in that seven day period.

    Example: An employee is paid $250 a week salary for 25 hours of weekly work. The employee’s regular hourly rate is calculated at $10. During one 7-day pay period, the employee worked 40 hours. For this week, the pay rate calculates at $6.25 ($250 divided by 40 hours), putting the employee’s regular hourly rate below federal minimum wage. An additional $1 per hour ($7.25 minus $6.25) for 40 hours is needed to bring the pay to minimum wage, for a total of $290 for the 7-day pay period.

  • Calculate overtime. Overtime is paid at one and a half times the regular rate for all hours worked over 40 in a seven-day, 168 hour workweek. You may find this overtime calculator helpful for general guidance.

    Example: A non-exempt employee receives a salary of $375 a week for whatever number of hours the work requires. During one week, the employee works 50 hours, at a regular rate of $7.50 ($375 divided by 50 hours). At 50 hours, the employee is making minimum wage, but the overtime standard still applies. In addition to the salary, half the regular rate, or $3.75, is due for each of the 10 overtime hours, for a total of $412.50 for the week.

  • Check local minimum wage. Your area’s minimum wage requirements may be higher than federal standards—find your area’s local Wage and Hour Division office here, or consult with a local attorney when setting rates of pay.

  • 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, the ministry could end up owing back pay for regular and overtime hours, tax withholdings, and steep penalties if an employee’s pay falls below minimum wage.

What’s the alternative?

Whether the salary is for part-time or full-time work, a non-exempt employee is entitled to the same minimum wage and overtime rules as hourly-paid employees. Managing the hours and pay for a non-exempt employee paid a salary can be difficult and time-consuming. Ministries can eliminate the weekly task of rate-of-pay calculations by converting the employee to the preferred method of an hourly wage.

What our customers are saying about MinistryWorks®

Our church received a notice from the IRS. I’m a CPA, but payroll taxes aren’t my specialty. I forwarded the notice to MinistryWorks to see if they could help. Within a couple of hours, I received a reply that said, ‘We’ll take care of it!’ That kind of service is normal with MinistryWorks, and we’re paying less than we had been paying our previous payroll provider. I can’t recommend MinistryWorks enough!
Scott Goldsmith, CPA
Mosaic Church, Indianapolis, IN