Skip to main content

Camp Worker and Overtime

Question:

One of a camp’s fulltime maintenance men is paid $600 per week ($31,200 per year). Some weeks he puts in less than 40 hours. But during camping season, he easily works 60 to 70 hours a week. Is the camp required to pay him overtime?

Answer:

As a general rule, the camp is not required to pay overtime if the employee meets two requirements.
  1. The employee meets the salary test and is paid on a salary basis of at least $913 per week (or $47,476 per year),* and 
  2. The employee meets the duties test of the executive, administrative, professional, or other exemption.**
Because the maintenance man is paid $600 per week, he does not meet the salary test (No. 1 above). The camp is then required to do one of two options:
  • Option A. Increase the employee’s weekly salary, or
  • Option B. Reclassify the employee to a nonexempt employee, which means the employee will be paid on an hourly basis. 
Option A is the simplest. The camp can just increase the maintenance man’s weekly salary from $600 to $913 per week. Because the employee’s compensation would increase by $16,276 ($47,476 - $31,200), this would likely create havoc on the nonprofit’s budget.

As a result, Option B should be implemented. This means that the employee will be paid on an hourly basis. The camp should require the employee to record all his hours worked each day. As an example, the camp could pay the employee $10 per hour. If the employee works 30 hours in one week, the employee would receive gross wages of $300 ($10 X 30 hours) for that week. But if the employee works 70 hours, the employee receives time-and-a-half of $15 ($10 X 1.5) for anything more than 40 hours. Hence, the employee is paid $850 in total gross wages for the week.***

Option B would also create significant budget concerns depending on the employee’s regular hourly rate. If this is the case, the employer could limit the weekly hours of the maintenance man and hire an additional employee.

Because each employment situation varies, we suggest the camp seek appropriate legal counsel. In addition, state minimum wage and overtime laws need to be taken into consideration.

*The Department of Labor announced the final rule updating the overtime regulations on May 18, 2016, with an effective date of December 1, 2016. The DOL final rule is the result of President Obama’s executive order in 2014.
**See the DOL’s Fact Sheet #17A for more information on exemptions, although the fact sheet has not yet been updated to reflect the $913 per week salary requirement.
***$400 ($10 X 40 hours) + $450 ($15 X 30 hours) = $850

Comments

Popular posts from this blog

Rental of a Church Parsonage to a Non-Minister

Question: A church owns a parsonage, but the pastor does not use it as he owns his own home. The church rents the parsonage to a tenant other than a minister or employee of the church. Will the church be responsible for paying income tax on these monies as Unrelated Business Income (filing a Form 990-T) even if the money is used to carry on the business of the church? Answer: Whether the money is used for church purposes is irrelevant.  IRS Publication 598  states: "If an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business." Fortunately, in the case of rental income from real property, such income is "excluded in computing unrelated business taxable income" (Publication 598). Caution: see content below regarding debt-financed property.  However, a second concern not a...

How can my ministry expenses be covered by the church?

     How can my ministry expenses be covered?                            Many ministers use their personal autos for ministry purposes. Their employers can reimburse these costs using a standard mileage rate published by the IRS. The per mile rate represents employees’ entire reimbursable cost other than highway tolls and parking tabs. If not covered by use of the ministries’ credit card, other costs can be reimbursed as well—business and travel meals, lodging, office supplies, and professional library purchases among them. Some ministries reimburse travel costs using per-diems published by the IRS. If employee business expenses are not reimbursed, the personal tax deduction benefit to the individual minister is severely limited. Non-taxable reimbursements after documentation is provided to the employer follows IRS rules for accountable plans. Non-taxable cash advances before expenses are in...

What is the best retirement account for a Minister?

       What are my options for retirement savings?                  Regardless of options, start now! You probably have learned about traditional and Roth IRAs. We have often found them well short of the benefits we will share here regarding Internal Revenue Code section 403(b) plans. These plans must be established by your employer (although you might need to be the initiator). They are funded in two ways—withholding from your paycheck at your option (called “elective deferrals”) and as initiated by the employer (matching or non-elective contributions). These contributions not only save income tax, but they also reduce the income you must report as subject to the 15.3% SECA tax. Further, at retirement with the cooperation of your church or Christian ministry the distributions to you can be tax-free to the extent of your qualified housing expenses. Many ministries also adopt what are often called “FICA alternative” be...