I am handling personnel issues in my church, a non-profit institution. The church has 8 employees, does no interstate commerce, and has a budget slightly less than $300,000 per year. We want to put a person who has been earning a wage for taking care of the nursery on a monthly salary for reasons that will accommodate her needs. Is there any legal reason federally or according to Illinois law that we cannot do this?

As far as I know, salary or wage is solely a matter to be agreed between employer and employee. So, as far as I know, you can do it. But if anyone has information to the contrary I would be very interested to see it.

Hello G:

By being non profit, the IRS is concerned with how much money drops to the bottom line, if any. It is NOT concerned with how employees are compensated...

excon

I think your question relates to can the job be salaried or does it have to be hourly. A lot depends on how the job is defined. While I doubt very much that a church would be challenged on this unless the employee raised the issue, you can write a position description emphasizing the individual's responsibility in managing the nursery. With what I know about small churches, I'm guessing that would be accurate in that, in all likelihood, the individual will be running the nursery with little or no supervision and thus pretty much making almost all decisions on how it is run (within a defined budget, of course). That would pass most of the tests for salaried vs hourly employment.

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Originally Posted by Zazonker

I think your question relates to can the job be salaried or does it have to be hourly. A lot depends on how the job is defined. While I doubt very much that a church would be challenged on this unless the employee raised the issue, you can write a position description emphasizing the individual's responsibility in managing the nursery. With what I know about small churches, I'm guessing that would be accurate in that, in all likelihood, the individual will be running the nursery with little or no supervision and thus pretty much making almost all decisions on how it is run (within a defined budget, of course). That would pass most of the tests for salaried vs hourly employment.

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I do not see any guidelines or "tests" for salaried vs hourly employment nor do I see supervision or lack of supervision to be a determining factor. What are you quoting?

There are guidelines as to the min amount that can be paid as salary and they are not allowed to receive overtime.

But I wonder why a hourly amount would not do the same.

Without looking it up it is somewhere around 25,000 a year. So as long as you are paying them that much, salary would be OK.

There are guidelines for determing is an employee is exempt or non-exempt, meaning they may or may not get overtime. I think some people confuse salaried vs hourly with exempt vs non-exempt.

The applicable Federal Law is the Fair Labor Standards Act. It establishes the rules for employment within the United States. Under the Act, there are employees who are covered by the act, i.e. "non-exempt" from the provisions of the act, and people who are for some defined reason not covered by the act "exempt". Hourly employees are, by definition "non-exempt" meaning covered by the Act. This is not changed by the fact that some companies use a category called "salaried non-exempt". They are, for the purposes of the Act, non-exempt and therefore indistinguishable from hourly employees. (Certain companies use the distinction to differentiate between benefits packages, status, etc.)

Exempt employees must meet three tests. These tests thus distinguish between employees who can be paid on a salary basis (exempt) and those who must be paid on an hourly basis (non-exempt). The tests are Salary Level, Salary Basis, and Job Duties.

In my initial post I addressed the job duty test, feeling that it was the most relevant in this case. Salary basis is covered based on payments being for a set period of one month. (there are other ways to satisfy this). Fr_Chuck addressed the salary level, federally set at $23,660/year. Some states have a higher standard.

For more information, just look up the Fair Labor Standards Act. The Act itself is long and difficult to read. There are many books and articles written to help interpret it.

Correct, I know people who were put on salary at about 20,000 a year, well after a couple years guess what, they had to pay all of those ast managers all the over time they had worked.

Also I know one personaly although it was a few years ago, I was salary along with a couple other engineers, the company made us start punching the time clock, there was a law suit and just because we had to punch the clock we won all of the overtime.
I never found this rule in any book, but I know it happened since I got a nice check from it.