minimum wage laws and implications for youth workers

I AM NOT AN EMPLOYMENT LAW EXPERT OR AUTHORITY. and this post should NOT be taken as ‘legal advice.’

BUT: the other day over lunch, a graduate of our Youth Ministry Coaching Program, who leads a wonderful nonprofit ministry not too disimilar from the Cartel, but local and Catholic, asked me a question just as we were wrapping up:

So, how do you think the new California minimum wage is going to impact youth ministry?

my first response: huh? (it was a deeply thoughtful response.)

she unpacked her question, and it drove me to an afternoon of searching the internet, ruminating on the implications of what i was finding.

we all know that many, many youth workers are underpaid. old story. but i think — from what i can understand — that many churches are going to operating illegally in how they pay their youth workers, at least in California and other states that are raising their minimum wage. in fact, i suspect that a ton of California churches are already operating illegally, and the issue is about to get worse.

the issue surrounds the classification of exempt and non-exempt employees. i had to deal with compliance on this all the time when i was leading YS, so it was all coming back to me as i read today.

the simplest, lay terminology for understanding an exempt employee is a salaried employee (that’s not technically accurate, but easiest to understand). in other words, federal employment law (for which nonprofits like churches are NOT exempt) says that any employee must be paid at least time-and-a-half for any time more than 40 hours a week. that sort of employee then is ‘non-exempt.’ an exempt employee is one who is exempt from that rule.

sure, a few youth workers are probably hourly employees. but the vast majority are salaried (and their churches treat them as exempt employees, whether they do so intentionally or not).

what the federal law says:

3 tests for exempt status (employees must meet ALL THREE):

the duties test

this one takes LOTS of words to unpack it on every description i could find. but the bottom line for our purposes here is that youth workers can easily fall under the heading of “professional exemption.” in other words: most youth ministry employment easily passes this test.

the salary basis test

this one is simple. for an employee to be exempt, she must be paid a base weekly amount (however often pay is actually distributed) that doesn’t change based on how many hours she worked that week. in other words: most youth ministry employment easily passes this test.

the salary level test

here’s were things get problematic!

federal employment law says an exempt employee must make at least $23,600/year. most full-time youth workers make at least that. but it seems (as far as i can tell) that state laws trump this when they exist. in california, for example, an exempt employee must earn more than twice the minimum wage.

current minimum wage in Cali is $10/hour, or $20,800 for 40 hours/week. that means an exempt employee must currently make a minimum of $41,600.

think about the implications of this:

  • if you are a full time california youth worker making less than $41,600 (assuming you’re salaried), your church is breaking the law.
  • and if you’re a full-time youth worker anywhere in the US, and you’re being paid hourly, your church is legally obligated to pay overtime for anything past 40 hours in any week (think: camp, missions trip!).

but here’s where things are going to get tricky and more complicated (i’m using my state of california as the example, but this is playing out in many states):

California minimum wage is now set to move to $15/hour by 2022 or 2023 (depending on the organization’s size — if you’re not sure what your state’s minimum wage is, click here). that means the minimum wage (with no overtime) will be $31,200/year for a full-time employee (working 40 hours/week). AND THAT MEANS that an employee will need to make a minimum salary of $62,400 to be considered an exempt employee. and if the employee is non-exempt, they are required (by law) to be paid time-and-a-half for every hour over 40/week.

got that? in california, by the year 2023 (that’s less than 7 years from now!), churches employing full-time youth workers will have two options:

  • pay them a minimum salary of $62,400 (and consider them exempt)
  • or pay them something less than that and make them a non-exempt employee, but pay overtime any time the youth worker works a minute over 40 hours/week.

OH, and before you ask: churches (or any other nonprofit) are NOT allowed to have employees volunteer hours (a common misconception and violation of the law).

on one hand, this is great news for youth workers, right? really, i’d love to see all my youth ministry friends receive salaries that allow them to stay in their jobs as they move out of their young adult years.

on the other hand, i’m concerned that this will result in plenty of churches who simply can no longer afford a full-time youth worker. in other words: i expect a bunch of california youth workers to lose their jobs on january 1, 2023.

of course: tons of churches will ignore the law and be non-compliant. that’s thin ice to be on, both morally and legally. (think: massive fines and 100% exposure to lawsuits.)

your state might be different than cali (heck: south carolina has NO minimum wage! so only the federal laws apply). so do some looking. but i hope churches will be both proactive and legally compliant!

thoughts?

38 thoughts on “minimum wage laws and implications for youth workers”

  1. I’m glad you’re the one who poked the stick at momma bear here (and not me). You’re scratching the surface on a bigger issue here- the fact that many churches pay their employees worse wages than Taco Bell, and then try to spiritualize it. I just had a friend quit ministry who is mad at not only his church… but CHURCH in general for the way he’s been treated (long hours away from family, no days off…). This is another area where we (Christ’s church) need to be above reproach. Thanks for doing the math.

  2. Great stuff. We are fortunate at Current to have an Executive Pastor who’s first career was as a lawyer. I am fairly paid and treated well, as is our whole staff. But I sadly recognize I’m in the minority. I think you are (again) ahead of the curve on this…much more ink will be spilled on this topic in the coming years. Thanks for leading the way, as always.

  3. Social Entrepreneuship. The reality is that the church is going to need a new engine to fund its ministries! This is just the first shot. Our current engine doesn’t work. We are going to need to create ministries that do Kingdom work AND are viable economic models. The benevolent hole that is the church will not be able to sustain itself. Just wait until our congregations age some more and they pull the tax status. The Titanic has been sinking for some time and nobody wants to admit it.

  4. I have a question in how this figures into benefits. Does that salary amount include medical benefits? Most churches I’ve been to – and the one I work at – gives a salary and then you are responsible to pay for your own health insurance out of that amount. My church separates if for me and then I just get my health insurance money each month to pay the bill. Is that minimum salary amount before health insurance and any other benefits (like retirement, though I’m responsible for that myself as well) or after? Just curious because that would further affect costs.

  5. May I contribute a contrarian/silver-lining thought? What if this forces churches away from paid professional staff and pushes them towards a more lay-lead ministry model, where multiple adults are needed to step into the roles that were once held by one paid person?

    I wonder what would happen if the Cartel found a spot at the forefront of that movement, helping churches create lay-lead youth ministries?

    Just an idea. Also, very glad I moved out of California years ago!

  6. My one question is how do benefits play into this? Does the benefits portion of a package for an exempt employee count as putting them above the salary line or is it only pay?

  7. yeah, like i wrote: i think it’s complex, and there are certainly upsides and downsides. and many of those will only be discovered over time.

    on CA — uh, it’s gonna be 80 here today. how’s your snow and corn? and: i think this will be an almost-universal issue (with variance by state, for sure).

  8. Thanks for starting the conversation… we have been discussing and praying about this in the last year – and sometimes we leave more frustrated then hopeful. It’s a difficult and very needed conversation that I feel “we ” have been purposefully avoiding because nobody wants to make the first move afraid of what it means to the ministry.

    But it must be done…maybe a conversation with some of your YMCP’s? I know would be up for it

  9. Lay Lead ministries. That is likely the future. What resources are recommended for this?

    Also, upper 70’s and 80’s all week and next here in the North West.

  10. This is having a real effect on us as a urban serving Faith-based nonprofit. Interns and program staff don’t get the full experience running day camps or summer camps. Only the highly paid very experienced exempt employees make real decisions. If we are not careful, we will be an organization with no middle, either you’re a high paid exempt employee or you are a $15 in our employee.

  11. Thanks for initiating this conversation. The “volunteer hours” is where I’ve seen this be a issue. Our part-time paid Student Ministries Assistant is by law, not allowed to volunteer hours related to youth ministry in our church. Knowing that her heart is for youth, the solution that we arrived at was paying her to drive students to Splash Camp.

  12. I have been chewing on this one a bit in our denom. It seems likely some congregations will cut youth positions like you note or on the other end of the spectrum churches will cap hours at 40 and “cut” camps, missions trips, service projects, and conferences, which is also alarming to me.

  13. As an XP, thanks for bringing this up. This will be a massive issue in California and a few other states with higher minimum wages in the coming years but less so in most states where wage laws are less stringent. It will be a blessing to have more under-paid church staff get a raise. It will also create upward pressure on other lower paid roles (Children’s staff, book keepers, etc) as churches try to keep pay scales appropriate across roles.

    Sadly, many smaller churches do not comply with the law now, so there will be lots of non-compliance going forward.

    I encourage everyone to START the compensation conversation with your church leadership so they can plan and be compliant, particularly if you know you may be eligible for a legally required raise!

  14. At NNYM we use Insperity for a “co-employment” solution to help keep us in compliance. We have ONE employee in a number of states, so the HR laws can be overwhelming to keep up with. One thing Insperity has told us is that, even if your STATE has no minimum wage, the FEDERAL minimum wage has to be paid.
    Second, I believe “full time” can begin at 30 hours, rather than being required to be 40+. That does bring down the ceiling a little for an exempt employee, right?
    Thanks for stirring the pot, Mark. The truth is our friend, even if it’s not easy!

  15. http://www.dol.gov/whd/overtime/NPRM2015/
    The US Department of Labor will issue federal updates to the law. The proposed changes might go into effect in 2016 and require all US employers to pay OT wages for non-exempt people making less than about $53K per year.

    Bottom line: churches need to pay their employees a living wage and also be legally compliant.

  16. The number you use for minimum annual salary, is that a salary package? Or simply taxable income? How might a housing allowance fit into that?

  17. We just dealt with this in our internship program. We used to pay our ym interns a stipend and gave them housing. Now we have had to move to minimum wage and they are hourly employees. Ironically, if we paid them nothing they could work as many hours as possible. The implications of this law go way beyond ym in the church world. When you add that to health care expenses many professional church works will lose jobs. I would love more lay leaders in our ministry but those numbers have been diminishing and not increasing over the past ten years. Lord have mercy! For real.

  18. Richard Hammar wrote about this in Church Law and Tax Report last fall. In summary, it sounds like youth pastors are exempt from FLSA:
    “FLSA regulations specify that ‘…there are some workers, such as … clergy, who are statutorily exempt or whose exempt status is not affected by the increased salary requirement in the final rule,’ and that ‘clergy and religious workers are not covered by the FLSA.’ This language indicates that the official position of the DOL is that clergy are not subject to the minimum wage and overtime pay requirements of the FLSA regardless of the amount of their compensation. Further, two federal courts have ruled that the so-called ministerial exception prohibits the DOL from applying the FLSA to ministers.”
    http://www.churchlawandtax.com/cltr/2015/september-october/workers-eligible-for-overtime-pay-likely-to-increase.htm

  19. interesting. i really only looked deeply at the california laws; and the california laws seem to be significantly more stringent than the interpretation you reference. ultimately, i think the issue for churches is going to need to be understood at a state law level.

  20. no — wage laws have nothing to do with benefit packages and such. honestly, though, i’m not 100% clear on how housing allowance factors into this (but i would be careful not to assume).

  21. i’m sure there are differences from state to state; but rules on using the title intern are SUPER restrictive in california these days.

  22. Sorry for the bad link. I think you have to have a subscription to Church Law & Tax Report to read it: “Workers Eligible for Overtime Pay Likely to Increase.”

  23. Yo marko. Thanks for bringing this up. We have been talking about this for a bit now. There are also some other qualifications to be exempt, like 51% of your time must be a supervisory role of other staff, and supervising volunteers doesn’t count. We are moving to hourly and planning on budgeting mass overtime for camps and missions.

  24. Thank you for giving me a real time post for my intro. to youth ministry students to read tomorrow. Almost 1/3 of my class are students who come from CA and plan to return. It’s gonna be a good discussion!!

  25. This is brilliant Marko. Thanks for the insight. Kinda makes me want to send a request back to the two former churches I served in youth ministry for the 15+ years of basically violating the law when I was making in essence $2.35/ hour. Especially from June-Aug. Thanks again.

  26. As someone who just left youth ministry after 16 years, I find this pretty interesting. But what if churches start raising slowly raising salaries now. A little here, a little there and then they will be compliant by the time the laws change. This way it’s not such a bit hit all at once. Who knows, maybe they can even continue the trend of paying a little more and get ahead of the curve!

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