Is Your PMC Ready for FLSA Changes?

fair-labor-standards-actNot familiar with FLSA? or the Fair Labor Standards Act? Ignorance is no excuse.

And your PMC could be at risk. Especially with changes effective December 1, 2016.

  • If your PMC is not keeping accurate records of the time employees are working…
  •  If your ED is not exempt and she or any employees at your clinic routinely work hours that they do not report…
  •  If your ED is not exempt and she or any employees routinely work more than 40 hours without being paid overtime…

 Your PMC is in violation of the FLSA. And you are creating risk for your organization.

As Christians, we should be motivated to standards of excellence because we are serving the Lord rather than people (Ephesians 6:6-7). And we who are serving the King in the battle for the sanctity of human life have a duty and obligation to familiarize ourselves with the law so that we do not put our ministries at risk.

According to Oregon attorney and Dove Medical CEO Beverly Anderson, who also serves as a Sparrow consultant, “It is important that PMCs know the laws and know that they’re required to follow the laws.”

 “The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments.” Source:

What impact does the FLSA have on PMCs? Assuming that most employees of PMCs would not qualify for exemption from FLSA, Beverly listed several:

  • “For starters, it means that employees must be compensated at least minimum wage for the hours they work.”
  • “If the ED or any employee works more than 40 hours in a week, they must be compensated for time and a half for overtime.”
  • “The board of directors is being negligent if the ED or any employee is not being paid for overtime—they would be able to sue for overtime.”
  • “They are required to keep accurate records of the time they work, if they are not exempt.”
  • “Employees must be compensated for all of the time when they are required to be on duty; for example, if they’re required to be at a banquet, that time must be compensated”. who-knew-unsure-woman-questioning
  • “Employees cannot volunteer their time.”
  • “If employees are permitted to do any work, they must be compensated.”

Beverly shared about an employee who had been fired and then came back and hung out at her former place of employment for several weeks and then sued the company for all those hours when she had simply been hanging out. Because of how the wage and hour laws are structured, the court ruled in her favor. According to Beverly, employees “almost always get two to three times what would have been paid in the first place.”

Beverly mentioned four standards that all PMCs should follow to ensure compliance with FLSA:

  1. “Require all non-exempt employees to report their hours.flsa_req
  2. Employees can be paid by salary, but they must still report hours and not work over 40 hours if they’re not exempt.
  3. If they work over 40 hours, they must be paid time and a half. If paid by salary, divide the annual salary by 52 weeks, and then by 40 hours to determine the hourly rate.
  4. Any PMC that has an ED that is working more than 40 hours should have the salary raised to $47,476, both from a legal and ethical standpoint. If the board does not want to pay them that much, they need to tell them not to work that much.” 

Unless employees are exempt from FLSA, they must be compensated for their time.

So, what qualifies an employee to be exempt?

“There are three tests to qualify for exemption,” and according to Beverly, “the only employee who can qualify to be exempt in most PMCs would be the executive director.”

flsa-47476The first is the salary-level test. In the past, this amount has been $23,660. Effective December 1, 2016, the salary required for exemption is $47, 476.

If the employee passes the first test, the second test is the salary-basis test. This means that the employee must be paid this amount regardless of the quantity or quality of the work performed. Salary is not subject to reduction.

The third test is the duties test. If the individual is an executive or manager of an organization or a division, or has administrative duties in which she has discretion and judgment about decisions, or if the individual has an advanced degree, she may meet the criteria for this test.

Considering the impact and obligations of FLSA as well as state and local laws governing wage and hours, Beverly made three strong recommendations:

Beverly said she fears many boards operate from the perspective that, “Our executive director loves us and would never sue us.” She continued, “That is a horrible risk management technique—to overlook the law to protect the ministry—to hope that the executive director is going to be good-hearted enough when she’s not being paid adequately creates a horrible risk exposure—especially when relationships can be strained between boards and executive directors.”

If not properly trained, boards may operate pregnancy ministries as non-profits with a “do-gooder” mentality, and not see the employees working there as having “real jobs.” While they might not say it out loud, they can have an attitude that “since this is a ministry, the people who work there don’t need to make any money.”

However, there is a difference between volunteers and employees. While PMCs may depend on volunteers, employees are required by law to be compensated for their time and are not allowed to volunteer.

Though the primary motivation for employees to work for a PMC must be deeper than making a living, what does it say about how much our boards value their employees and their service, when the government has to correct a ministry for inadequately compensating them?

Is your PMC compliant with the FLSA? Will you still be compliant when the changes go into effect on December 1? If not, what do you need to do?

Reni Bumpas
Sparrow Solutions Consultant

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