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Run the Payroll Fee Auditor →Blog · Payroll Management · Nonprofit
Nonprofits & Religious Organizations: Hourly vs. Salaried Employee Payroll (2026)
Hourly versus salaried in a nonprofit is not a preference, it is the exemption test: a salary of at least $684 a week plus a duties test, and nonprofits have industry-specific exemptions on top. Social and community service managers at the national median earn $1,546 a week. BEG: $45 per employee per month inside the payroll software you already use, live in 3 to 5 days.
Who in a nonprofit can be salaried and exempt
Program staff and case managers classified as exempt executive, administrative, or professional employees must be paid on a salary basis of at least $684 per week ($35,568 per year). Employees below that level are owed overtime for hours over 40 in a workweek.
Nonprofit charitable organizations are not covered enterprises under the FLSA unless they run ordinary commercial activities, such as a gift shop or fee-based services, with at least $500,000 in annual sales or business done. Employees working in the charitable activities can still be covered individually if they engage in interstate commerce, such as interstate phone calls or shipping.
The salary math for nonprofits
The standard salary level is $684 a week, $35,568 a year. BLS puts the May 2025 national median for social and community service managers at $80,390, which is $1,546 a week, above the floor, so for that role the duties test is the whole question. Paying a salary to a non-exempt employee is legal; it just does not remove overtime, which is then computed on the salary divided by hours actually worked each week.
What changes when a role moves between the two
Moving program staff and case managers from hourly to salaried changes the pay code, the timekeeping rule and the overtime treatment at once. A salaried non-exempt employee still needs hours recorded every week, and a salaried exempt one needs the exemption documented against the rule above, because in an audit the burden of proving the exemption sits with the employer.
The rules behind this page, with sources
General information, not legal advice. Every rule below was read on the agency page linked next to it.
- Program staff and case managers classified as exempt executive, administrative, or professional employees must be paid on a salary basis of at least $684 per week ($35,568 per year). Employees below that level are owed overtime for hours over 40 in a workweek. [DOL WHD, Earnings thresholds for the EAP exemption (29 CFR 541.600)]
- Nonprofit charitable organizations are not covered enterprises under the FLSA unless they run ordinary commercial activities, such as a gift shop or fee-based services, with at least $500,000 in annual sales or business done. Employees working in the charitable activities can still be covered individually if they engage in interstate commerce, such as interstate phone calls or shipping. [DOL Fact Sheet #14A]
Read the full guide to FLSA overtime rules for employers, and the rest of the nonprofit payroll library.
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Frequently Asked Questions
Can a nonprofit pay program staff a salary and skip overtime?
Only if the role meets an exemption: the $684 weekly salary floor plus the duties test, or an industry-specific exemption. Program staff and case managers classified as exempt executive, administrative, or professional employees must be paid on a salary basis of at least $684 per week ($35,568 per year).
Does the $80,390 national median for social and community service managers clear the salary test?
$1,546 a week is above the $684 floor, so salary is not the obstacle; the duties test is. BLS OEWS, May 2025.
What does managed payroll cost for a nonprofit?
$45 per employee per month, all-inclusive, inside the payroll software you already use, with no monthly minimum. Grant-funded payroll allocation, clergy housing allowance and FUTA exemptions are configured at setup, not billed as add-ons.
Related Resources
Anthony leads payroll solutions at Business Executive Group, a national managed payroll firm serving businesses across industries including Nonprofits & Religious Organizations. BEG manages payroll at $45 PEPM, all-inclusive, with deep expertise in compliance, multi-state filing, and industry-specific payroll requirements. Get instant pricing at beghr.com.
Authoritative source: U.S. Department of Labor: Overtime Pay Under the FLSA
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