In an important development for ministries and nonprofits, a Texas district court has blocked the Biden administration’s overtime rule. This decision reverses key changes that were set to significantly increase salary thresholds for overtime eligibility.
What Were the Proposed Changes?
The blocked rule, implemented on July 1, 2024, raised the salary thresholds for overtime eligibility:
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- From $35,568 to $44,000 for most salaried workers.
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- From $107,432 to $133,000 for highly-compensated employees.
It also included plans for:
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- A further increase to $58,000 and $151,000 starting January 1, 2025.
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- Automatic adjustments every three years based on inflation.
However, the court’s decision halts these changes, reverting thresholds to the previous levels of $35,568 and $107,432.
Why Was the Rule Blocked?
The court ruled that the Department of Labor (DOL) exceeded its authority by prioritizing salary thresholds over job duties in determining overtime eligibility. This ruling, coupled with concerns about the impact on businesses, led to the nationwide block.
What Does This Mean for Ministries?
The decision reverts salary thresholds back to $35,568, and $107,432 for highly-compensated employees. Ministries that adjusted payroll based on the proposed increases may need to reassess their practices. While the Biden administration could appeal, this is unlikely due to the upcoming administration change. The incoming Trump administration may introduce its own updates, but historically, such changes have been modest compared to the Biden administration’s plans.
Here’s what ministries should do next:
- Review compensation practices: Ensure employee classifications align with the reverted thresholds of $35,568 and $107,432.
- Monitor updates: The incoming Trump administration may propose modest changes, but no significant increases are expected soon.
- Plan for compliance: Work with HR professionals or financial advisors to stay prepared for potential future updates.
If you’ve already made changes to employee pay or classifications based on the Biden administration’s proposed thresholds, proceed carefully before undoing those adjustments. While reverting salaries or classifications may be legally permissible, doing so could:
- Undermine employee trust and morale.
- Create legal risks if reductions conflict with previously communicated plans.
- Disrupt your ministry’s operations and budgeting.
Keep in Mind:
While the FLSA sets federal standards for overtime eligibility, it’s important for ministries to be aware that some states have higher salary thresholds than the federal level. States like California, New York, and Washington enforce their own thresholds, which may exceed the FLSA limits.
Ministries operating in these states must comply with the higher state thresholds to remain compliant with local labor laws. Be sure to review your state’s specific requirements and adjust your compensation practices accordingly.
How This Impacts Ministry Budgets
For ministries that planned for higher salary thresholds, this ruling could provide relief in payroll costs. However, it’s essential to remain vigilant about compliance with current regulations and adapt as necessary. Non-compliance could result in penalties or legal challenges.
Final Thoughts
This recent ruling highlights the ever-changing landscape of labor laws and the importance of staying informed. Ministries must remain proactive, ensuring compliance while balancing financial stewardship.
Want more insights on payroll and finance for ministries? Check out our resource library for articles, tips, and updates to keep your ministry on track.
