Fair Labor Standards Act: What Local Churches Need to Know About Minimum Wage and Overtime

United Church of Christ Local Churches may employ lay workers, have schools or daycares as part of their ministries, or even run commercial businesses. These activities may require a Local Church to comply with the Fair Labor Standards Act (FLSA). This article describes the FLSA and provides answers to some common questions about how the statute might apply to United Church of Christ Local Churches and their ministries. The FLSA is a lengthy and complex statute. To maintain readability, I have not cited to the U.S. Code or the Code of Federal regulations in the article below. I am including links to helpful DOL resources at the end of the article.

Be aware that even if the FLSA does not apply to your church or ministry, state minimum wage and overtime requirements may apply— be sure your church is following all applicable laws and get legal counsel if necessary. Some states and municipalities have higher wage requirements. 

What is the FLSA?

The FLSA is Depression-era employment legislation that established uniform minimum wage, maximum hour, reporting, and workplace safety standards in the United States. The FLSA has been modified many times since its passage in 1938, but it remains the primary federal governing law for employee rights. The Department of Labor (DOL) is the federal agency responsible for enforcement of the FLSA.

What does the FLSA say about minimum wage and overtime?

If an employee is covered under the FLSA, the church must pay the employee at least the federal minimum wage of $7.25 per hour and time-and-a-half pay for any hours the employee works over 40 hours in a week, unless an exemption applies as described below. Be aware that if a state has more favorable wage and hour laws, such as a higher minimum wage, and your church is covered by the state law, it must follow the state law. 

Does the FLSA apply to my church?

There are two levels of analysis a church must do to determine whether the FLSA applies to the church’s lay employees. First, the church must determine whether it is covered as an enterprise, which means the FLSA applies to all church lay employees, or if the church is not covered as an enterprise, whether it has individual lay employees whose work includes activities in interstate commerce that would bring the lay employees within the coverage of the statute. 

Second, if the FLSA applies to the church or its lay employees in the first test, the church must determine whether its employees are exempt from the minimum wage and overtime requirements under the FLSA, or whether these requirements will apply. This two-part analysis may require a church to consult with legal counsel for assistance.

How can I tell if my church is covered as an enterprise?

UCC Local Churches are non-profits. Enterprise coverage only applies to non-profits if the non-profit is engaged in ordinary commercial activities, like selling items (such as in a coffee shop or bookstore) or providing services for a fee. The gross volume of commercial activity must be at least $500,000 annually for the FLSA to apply to a non-profit as an enterprise, and this amount does not include charitable contributions or donations used in furtherance of the church’s charitable or religious purposes. A Local Church that operates a school, preschool, or daycare, is covered as an enterprise under the FLSA regardless of whether the annual gross volume of business is $500,000.  

Our church is not covered as an enterprise— how can I tell if any of our church employees are covered? 

A church’s lay employees may be covered on an individual basis if they are engaged in interstate or foreign commerce. Commerce activities include selling or packaging goods made in another state, regularly sending mail, engaging in telephone or other communications, or traveling to other states. Although the interstate commerce threshold of the FLSA is very low, more than occasional interaction with commerce activities is required. No percentage or precise guidelines exist on the amount of commerce activity sufficient for enforcement, but the DOL offers both in its Field Operations Handbook and in the regulations that enforcement is not focused on sporadic or isolated commerce activities not part of regular pattern of work by the employee. Thus, Local Churches may have employees that are covered by FLSA if they regularly interact with persons in other states.

If our church is either covered as an enterprise or some of our employees are covered, does that mean we have to pay them minimum wage and overtime?

Not necessarily! Most employers and employees are familiar with the classification of employees into the categories of “exempt” and “non-exempt.” The “non-exempt” classification refers to an employee who is covered under the FLSA (either through the church as an enterprise or as an individual employee) and therefore must be paid minimum wage and overtime.  The “exempt” classification refers to an employee who would otherwise be covered, but meets certain exemption requirements, and thus does not need to be paid minimum wage or overtime. Whether an employee is exempt or non-exempt is defined under the law, and not the choice of the employer. 

To qualify as exempt, an employee must be paid at least $684 per week on a salary basis, and perform applicable duties under a specific exemption category. (At the time this article is published in August 2025, the 2019 rule setting the minimum salary level is in effect. Churches should ensure that rule has not changed as they are reviewing their employee classifications.) The exemption categories most common in a religious setting are the executive exemption, administrative exemption, and professional exemption. 

An employee covered under the executive exemption must 1) have the primary duty of management of the enterprise or a department or subdivision thereof; 2) regularly direct the work of two or more other employees; and 3) have hiring and firing authority. 

An employee covered under the administrative exemption must 1) have the primary duty of performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and 2) have the primary duty of the exercise of discretion and independent judgment with respect to matters of significance. 

An employee covered under the professional exemption must engage in 1) work that requires advanced specialized knowledge; 2) in a field of science or learning; 3) customarily acquired through prolonged specialized intellectual instruction, or work in a recognized field of artistic or creative endeavor. For the professional exemption, work requiring advanced specialized knowledge includes work predominantly intellectual in character that requires consistent exercise of discretion and judgment, and is not routine or manual in nature, and cannot be performed at the high school education level. 

Remember that an exempt employee will be paid at least $684 per week on a salary basis AND have the duties outlined in the exemption categories. Other exemption categories exist; if you have questions, consult employment counsel. Whether an employee meets the duties test under the exemption categories depends on the actual job responsibilities of the employee and their work. Different churches may have similarly-titled roles that have different job responsibilities, so the title of a role does not indicate whether an employee in that role is exempt. It depends on the facts and circumstances of the job.

Aren’t all employees who are paid a salary exempt?

Whether an employee is paid on a salary basis does not determine whether that employee is exempt or nonexempt and therefore entitled to overtime. With few exceptions, if an employee is covered by the FLSA and makes less than the standard salary level, the employee is nonexempt and thus entitled to overtime for all hours worked over 40 in a week. If an employee makes more than the standard salary level but does not qualify under the duties tests described above, the employee is nonexempt and thus entitled to overtime for all hours over 40 worked in a week. Only employees who make at least the standard salary level, are paid on a salary basis, and qualify under the duties test described above are exempt from being paid overtime. The FLSA requires that employers keep records of hours worked for all nonexempt employees, regardless of whether they are paid a salary or on an hourly basis.

Can our church provide comp time instead of overtime pay?

An employer may provide “comp time” in the same workweek to ensure that a nonexempt employee does not work more than 40 hours in the week. An employer may not give the employee time off the following week in lieu of overtime earned the previous week. The entitlement to overtime is based on a nonexempt employee working more than 40 hours in one week. If an employee works three 12-hour days at the beginning of the week, the employee can be instructed to work only four hours on the fourth day of the week and not to come back to work until the following week. But an employee cannot be instructed to work 50 hours in a week and then 30 hours the following week in lieu of being paid 10 hours of overtime. This is true even if the employee would prefer “comp time” to overtime pay. 

What happens if our church has covered, non-exempt employees, but does not pay them minimum wage or overtime?

Your church can be sued by the DOL or the employee for violations of wage and hour laws. Your church may be ordered to pay back pay plus liquidated damages and other penalties. Willful violators can be criminally prosecuted and fined up to $10,000 for the first violation and may be fined or imprisoned for the second violation.

This article refers several times to “lay employees.” Does the FLSA apply to clergy?

Clergy employed in ministerial functions for churches are likely exempt from the overtime provisions of the FLSA, even if they do not meet the exemption tests described above. The 2019 DOL rule establishing the current standard salary level recognized the FLSA does not apply to clergy. The DOL Field Operations Handbook also recognizes that clergy are not protected by the FLSA when they are serving “pursuant to their religious obligations in . . . institutions operated by their church or religious order.” Additionally, several Courts of Appeal have held the Free Exercise and Establishment Clauses of the First Amendment to the U.S. Constitution create a ministerial exception from the FLSA for employees who are and/or have the duties of an ordained minister of a religion. UCC Local Churches are urged to consult with their Conferences and refer to their Conferences’ ministerial salary guidelines in setting a fair and just salary for their ministers.

The following are resources your Local Church may find helpful. Remember to check your state law!

General information about the FLSA and links to resources: Wages and the Fair Labor Standards Act

General information about overtime and links to resources: Overtime Pay

For all churches and other nonprofit ministries: Fact Sheet #14A: Non-Profit Organizations and the Fair Labor Standards Act (FLSA)

If your church runs a preschool, daycare, or school: Fact Sheet #46: Daycare Centers and Preschools Under the Fair Labor Standards Act (FLSA)

Special rules may apply if your church runs a seasonal establishment, like a summer camp: Fact Sheet #18: Section 13(a)(3) Exemption for Seasonal Amusement or Recreational Establishments Under the Fair Labor Standards Act (FLSA)

The information provided in this article is not legal advice.  If you need legal advice, please consult with an attorney.