Compensation and Staffing News
MARCH 2019
Budgeting for Benefits
UUA insurance premiums change by calendar year. As you set your budget for the 2019-2020 program year, it's a good idea to build in a little cushion for possible mid-year (January) premium increases. We usually don't have exact numbers until shortly before Open Enrollment in November.
Tax Withholdings
The 2017 Tax Cuts and Jobs Act introduced, among other things, new tax brackets and revised default withholding tables. Some of your staff may have requested changes to their withholdings last year, in anticipation of the effects of the new tax law on their own situation. Most probably did not.

As they file their taxes this season, some taxpayers have found themselves owing more than they expected. It's too late for the 2018 tax year, but you can help your employees prepare for 2019. The IRS provides this Withholding Calculator to help taxpayers figure out the appropriate amount of tax to have withheld from their paychecks throughout the year. Please pass it along to your staff, and remind them that they can change the amount withheld anytime simply by completing a new Form W-4 .
Proposed Change to Overtime Threshold
The Fair Labor Standards Act (FLSA) is a federal law that protects employees by establishing standards for minimum wage, overtime, recordkeeping, and youth employment. Most employees of organizations of all kinds, including churches, are classified as nonexempt, which means that their employer is not exempt from adhering to these standards with respect to their pay. Some employees, however, can be classified as exempt, releasing the employer from the need to follow the FLSA rules for those workers. In determining whether an employee is exempt, an employer looks at both their salary and their responsibilities.

Since 2004, the minimum salary at which an employee can be considered exempt has been set at $455 per week, or $23,660 annually for a full-year worker. Receiving this salary does not automatically make an employee exempt it also depends on their responsibilities. The U.S. Department of Labor has announced a proposal to raise this threshold to $679 per week ($35,308 annually). A comment period has begun, and the DOL is expected to finalize the new rules in late 2019 or early 2020.

The classification of employees as exempt or nonexempt is more complicated in congregations because of the ministerial exception, a special exemption for those who have "essential religious duties." The ministerial exception is a consequence of federal court rulings based on the First Amendment. It is separate from the FLSA proper, and the determination of which employees are covered by it is based only on their duties. Because there is no salary component, a change in the FLSA exemption salary threshold will not impact employees classified as exempt under the ministerial exception.

Does your congregation employ anyone who earns at least $455 per week, but less than $679? Unless they fall under the ministerial exception, you'll need to adjust their salary or reclassify them as nonexempt if the rules go through as proposed; there will be associated changes in time-tracking and recordkeeping. As a reminder, for all nonexempt employees, you must keep records of total hours worked each workday and each workweek, and pay time-and-a-half for hours over 40 in a workweek.

It is very important to properly classify your staff under the Fair Labor Standards Act, and to follow the appropriate pay and recordkeeping rules for each classification. We know it can be hard to implement the FLSA confidently, The Office of Church Staff Finances has a page of resources about the Fair Labor Standards Act to help you, and we'll do an educational campaign if/when changes are finalized.

Finally, remember that just as some states set a minimum wage that is higher than the federal minimum, some states also have stricter overtime requirements.
UUA Office of Church Staff Finances
24 Farnsworth Street | Boston, MA 02210