Assistant Professors Dr. Bill Egner Dr. Brad McKerly
10 Webinar Discussions 1.Hiring—David Lyons. April 22 2.Hiring, part 2—Dr. Bill Egner. April 29 3.Compensation—Sutton Turner. May 6 4.Compensation—May 8 (9 am) & May 13 5.Reviews—Dr. Paul Utnage. May 20
6.Terminations—Jon Wright. Not May 27 but May 28 at 2 pm! 7.Terminations, part 2—Daniel Rolfe. June 3 8.Staffing Plans & MultiSite— Jim Tomberlin. June 10 9.HR Policy—Eric Rojas. June 17 10.HR Policy, part 2—Matt Anthony & David Middlebrook. June 24
1.Strategy: The Culture of Your Church. July 1 2.Strategy: Parsing the Preaching Pastor, July 9 3.Web, July 15 4.Hardware & IT, July 22 5.Productivity Tools, July 29 6.Multisite & Cutting Edge Issues, August 5 7.Advertising, August 12 8.Policy & Practice, August 19 9.Policy & Practice, August 22 10.Communications Team, August 26
HR POLICY – PART 2 David Middlebrook & Matt Anthony
What does it Require? Minimum Wage Nonexempt workers are entitled to a minimum wage of $7.25 per hour. Nonexempt workers must be paid overtime pay at a rate of not less than one and ½ times their regular rates of pay after 40 hours.
Computing Overtime Pay Overtime Overtime starts after the maximum allowed for a given type of employment. Example (regular 40 hour work week): An employee works 44 hours in a work week. The employee’s regular rate is $8.00. For hours 41-44, the employee’s rate will be $12.00. The employee will receive a total of $368.00.
What’s NOT Included? Vacation, holiday, severance, or sick pay; Meal or rest periods, holidays off; Premium pay for weekend or holiday work; Pay raises or fringe benefits; A discharge notice, reason for discharge or immediate payment of final wages to terminated employees; OR Limit to the number of hours in a day or days in a week employees may be required or scheduled, including overtime, if at least 16 years old.
EXEMPT! EXEMPT WORKER Differs from Nonexempt Special information is required for homeworkers, for employees working under uncommon pay arrangements, for employees to whom lodging or other facilities are furnished, and for employees receiving remedial education.
Exemption Defined Some employees are exempt from the overtime pay provisions, some from both the minimum wage and overtime pay provisions and some from the child labor provisions of the Fair Labor Standards Act (FLSA). Exemptions are narrowly construed against the employer asserting them. The ultimate burden rests on the employer. Exemptions are typically applied on an individual workweek basis.
Who is Exempt? Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and employees in certain computer- related occupations (as defined in Department of Labor regulations)
Recordkeeping: What to Keep… NONEXEMPT WORKER Personal information, i.e. name, address, phone number, occupation, gender, date of birth; Hour and day when week begins; Total hours worked by day and week; Total straight-time earnings; Hourly rate for any overtime worked; Overtime pay for the workweek; Deductions from or additional to wages; Total wages paid each pay period; and Date of payment and pay period covered.
FAMILY MEDICAL LEAVE ACT Eligible employees are entitled to take up to 12 weeks of unpaid job-protected leave EACH YEAR, with maintenance of group health insurance, for the birth and care of a child, for the placement of a child for adoption or foster care, for the care of a child, spouse or parents with a serious health condition, or for the employee’s serious health condition.
Special Rules Employers are required to provide reasonable break time for an employee to express milk for her nursing child for one year after the child’s birth, at the employee’s discretion. Employers must provide a private place, OTHER THAN A BATHROOM, that is shielded from view or intrusion. FLSA standards and contractual obligations are enforced on immigrant employees.
Penalties Penalties for violations of the child labor provisions range from $11,000 to $100,000. Penalties for violations of minimum wage or overtime requirements are up to $1,100 per violation. Any retaliation against an FLSA whistleblower will result in fines up $10,000. Second convictions may result in imprisonment. An employee may file a private suit for back pay and an equal amount of liquidated damages, attorney’s fees and court costs. There is a 2 year statute of limitations on recovery of back pay and a 3 year statute of limitations on willful violations of the FLSA.
Free Labor or Unpaid Internships There has been a growing trend to use unpaid internships as a way to gain industry experience at a low cost to corporations. There are six criteria to make sure an unpaid internship does not fall under FLSA: The internship, even though it includes actual operation of the facilities of the employer, is similar to training which would be given in an educational environment; The internship experience is for the benefit of the intern; The intern does not displace regular employees, but works under close supervision of existing staff; The employer that provides the training derives no immediate advantage from the activities of the intern; and on occasion its operations may actually be impeded; The intern is not necessarily entitled to a job at the conclusion of the internship; and The employer and the intern understand that the intern is not entitled to wages for the time spent in the internship.
The Wages of Wang Xuedan Wang v. The Hearst Corporation The large magazine publisher “hired” 3,000 unpaid interns between 2006 and 2013. The company instructed its employees to use interns rather than couriers. In addition, the interns wrote marketing plans, story boards, performed research, administrative duties, scheduling and client relations. Interns worked from 9am-5pm or later. The interns received a letter academic credit for their time. The court sided with the interns and determined the internship did not meet the 6 point test for unpaid internships.
More Cases Moses and His Brothers Get a Job In 1995, a church was cited for violating the child labor laws when it used children under the age of 16 as “vocational trainees” to perform remodeling, carpentry, concrete work, masonry work, hanging sheet rock and framing. The court ruled that because the church was the primary beneficiary of the work, it could not be considered “vocational training”. Devil’s in the Details In June 2006, the U.S. Department of Labor announced that Atlanta Erosion Consultants would pay 193 employees $574,486 in unpaid overtime. A Wage and Hour Division investigation discovered these employees’ overtime pay was disguised as bonuses on the company payroll records, and that these workers lost wages because they were forced to work off the clock.
What about Preachers? Ministerial Exception Ministers who earn $455 per week or more, are considered exempt. While the Department of Labor has not specifically excepted Ministers from the FLSA, some reports by the DOL have stated that ‘clergy and religious workers’ are not covered by the FLSA. It is generally accepted that Ministers who earn under $455 per week are not considered under the regulation.
An Oath of Poverty Alcazar v. Corporation of Catholic Archbishop of Seattle In this case several seminary students brought a claim against a religious organization for violation of a state minimum wage law. The Federal court dismissed the claim and stated “The … ministerial exception applies to both state and federal claims, and prohibits a court from inquiring into the decisions of a religious organization concerning…rate of pay…or any other employment related decision concerning ministers.
Obamacare and New Labor Issues Obamacare Full Time Employee vs Full Time Equivalent Under the 2010 Patient Protection and Affordable Care Act (PPACA) employers with 50 or more “Full Time Equivalents” must provide affordable healthcare insurance to their employees. A “Full Time Equivalent” is not the same as a “Full Time Employee”.
Full Time vs Full Time Equivalent Full Time Employee Traditionally the employer has defined what is full time (e.g. 40 hours or 35 hours) Under PPACA, anyone over 30 hours is entitled to full time benefits of health insurance. Full Time Equivalent Part time employees whose hours add up to over 30 hours equal 1 Full Time Equivalent Two 15 hour/week part time employees equal 1 FTE. If an organization has 100 15 hour/week employees, that organization has 50 FTEs and is subject to the requirements of PPACA. Make sure you consider your part time employees when determining your PPACA compliance
What’s the Big Deal? IRC Sec. 107 provides that a minister may exclude from his gross income a specified parsonage allowance used to rent or otherwise provide a home.
Housing Allowance Haters Judge Revives Atheist Challenge To Clergy Housing Allowance An atheist-led challenge by Freedom From Religion Foundation to the longstanding parsonage tax break enjoyed by clergy will now move forward -- again -- after a Wisconsin federal judge recently ruled that the group has new legal standing for its lawsuit.
Three Requirements FIRST: Designation must be made by a “church or other qualifying organization.” SECOND: Rental allowance must be designated writing of the payment. THIRD: Rental allowance must be designated in advance of the payment.
What is a Church or Other Qualifying Organization? No precise definition of a church No precise definition of what constitutes another “qualified organization”
What is an Integral Agency? “Integral Agencies” of a church or religious organization are deemed to be qualified organizations. “Religious Organizations” are undefined by IRC or regulations.
Who Qualifies? Minister of the gospel who is ordained, commissioned, or licensed as a minister by a church.
What Qualifies for Exclusion? Services Performed in Exercise of Ministry 1.Ministration of Sacerdotal Functions; 2.Conduct of Religious Worship; 3.Control, Conduct, and Maintenance of Religious Organizations; 4.Administration and Maintenance of Religious Organizations and their Integral Agencies; 5.Performance of Teaching and Administrative Duties at Theological Seminaries; 6.Service Performed by a Qualified Minister as an employee of the United States; 7.All Service Performed by a Minister in the Conduct of Religious Worship, Ministration of Sacerdotal Functions, or the Control, Conduct, and Maintenance of Religious Organizations that are operated as an Integral Organization; and 8.Service Performed by a Minister, Pursuant to an Assignment or Designation by his or her Church, for an Organization which is neither a Religious Organization nor Operated as an Integral Agency of a Religious Organization.
Designation of Allowance Three Requirements to Designate 1.Adopted by the church Board of Directors or Congregation; 2.In Writing; and 3.In advance of calendar year in which payment will be made.
Amending a Housing Allowance Neither the IRS nor the courts have addressed this question Many practitioners believe it to be perfectly reasonable to amend mid-year if circumstances change
Reasonable in Amount NO limit on the amount of a minister’s compensation that can be designated. Beware of Intermediate Sanctions Excess Benefit Transactions Private Inurement
Safety Net Allowances Wise not to limit a housing allowance to a calendar year. Designation should recite that it is effective for the next year & all future years, unless otherwise provided.
Social Security Housing allowance exclusion is for Federal Income Tax purposes only. Cannot be excluded in computing a minister’s Social Security (self-employment) tax liability.
The “Double Deduction” Ministers who own their homes and who itemize their deductions are eligible to deduct mortgage interest and property taxes on Schedule A (Form 1040) even though items were excluded from income as part of the housing allowance.
Fair Rental Value Clergy Housing Allowance Clarification Act of 2002 Limits housing allowance to “annual fair rental value of the home furnished, plus utilities.” The LESSER of the actual expenses of a minister’s home ownership, including utilities, repairs and taxes – or the fair market rental value of the home including utilities and repairs are excludable from gross income for federal income tax purposes. Three Ways to figure Fair Market Rental Value (FMRV) Realtors informal opinion Appraisal 1% Rule – 1% of FMRV of home equals monthly FMRV
What’s the Calculation? Can Include: Down Payments Mortgage Payments Rent Payments Real Estate Taxes Property Insurance Utilities Appliances & Furniture Structural Repairs Remodeling Expenses Yard Maintenance & Improvements Maintenance Items HOA Dues Cannot Include: Cleaning Services Food Domestic Help
Things to Remember Only Available for Principle Residence (Commissioner v. Driscoll) Home Equity Loan Payments could qualify Not Retroactive Not Unlimited (subject to FMRV determination)
Be Systematic on Housing Allowances Have a standard written application Have a deadline to turn in far in advance of anticipated housing payments being made; employees should anticipate changes and reapply Good practice to have standing meeting where Board approves or disapproves, in writing, housing allowance applications towards year end for the coming year
Consequences If not preapproved, or not in writing or more than the lesser of the allowed formula then the payments (or the excess in the case of more than is allowed by the formula) can’t be taken tax free by the employee The IRS is typically unyielding with violations in this regard as this is “low hanging fruit” that doesn’t require a lot of manpower on the part of the service
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Contact Information David Middlebrook firstname.lastname@example.org Matt Anthony email@example.com www.ChurchLawGroup.com 972-444-8777
Q & A Send Questions via Chat to Tami Bring issues from your organization’s review methods—practices that are currently being used at your church and practices that you’d like to attempt in the future.