First of all, I am so honored that you have respondend to my post. As one of the founders of this wonderful site, you have my utmost respect.
I wish there was a simple answer to these questions, but as far as I can tell, this is an evolving area of the law. At the risk of putting everyone to sleep, I am can only show you what I'm learning in my research of "church law." I am no expert in this area, so I invite everyone to chime in and correct me where I am wrong. Please remember that lawyers rarely gove one-word answers!
Certain workers are exempted from coverage under the minimum wage and overtime compensation requirements. Two exemptions are of interest to churches and religious organizations. The applicable federal law in the United States is, among others, the Fair Labor Standards Act (asleep yet).
With regard to minimum wage, the Act exempts "any employee employed by an establishment which is an … organized camp, or religious or nonprofit educational conference center, if (A) it does not operate for more than seven months in any calendar year, or (B) during the preceding calendar year, its average receipts for any six months of such year were not more than [one-third] of its average receipts for the other six months of such year … ."
So, I'm thinking that the Sea Org will not satify the exemption because it operates year-round. I can't really speak to the issue of their annual receipts.
Second, the Act exempts "any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools)." The definitions of employees "employed in a bona fide executive, administrative, or professional capacity" are complex, and they are contained in regulations issued by the Department of Labor. They involve a consideration of both job functions and compensation.
Basically, this is a restatement of what is true for all employees. If you are truly and executive, administrator, or professional, you are a different class of employee than an hourly employee. You can be paid an annual salary and be expected to work as many hours as it takes to get the job done. It is not as easy to satisfy the requirements of this type of employment as one might think.
There are many class action lawsuits pending because employers classified their employees exempt as "administrators" (thus denying them overtime) improperly. One key factor in this analysis is whether or not the employer controls the day-to-day activities of the employee. If so, the employee is probably not exempt and should be receiving minimum wage and overtime.
For example, David Miscavige is exempt. He runs the show. His lawyers are exempt. They are professionals. Perhaps heads of local orgs are exempt. They run the show locally. Sea Org employees are controlled by their superiors to such an extent, and with such a detailed paper-trail, that I doubt the church could successfully claim that they are exempt.
In evaluating the potential application of the Fair Labor Standards Act to religious organizations, the following must also be considered:
1. The Act's minimum wage and overtime pay requirements only apply to employees who are either (a) engaged directly in commerce or in the production of goods for commerce, or (b) employed by an enterprise engaged in commerce or in the production of goods for commerce.
This might mean selling books, providing counseling for a fee (auditing), perhaps even some of the MEST work would qualify (working at a center that also functions as a hotel for guests). I would argue that any services provided to the public for a fee are acts of commerce.
2. Churches and religious organizations that satisfy the definition of an enterprise engaged in commerce or in the production of goods for commerce will be subject to the minimum wage and overtime pay requirements of the Act.
3. Church employees may be covered by the Act's minimum wage and overtime provisions, even if their employing church is not an enterprise, if they personally are engaged in commerce or in the production of goods for commerce. This is known as individual coverage. Individual coverage is triggered if an employee is engaged in any of the following activities on more than "insubstantial" or infrequent basis: (1) receiving or making interstate phone calls; (2) receiving or sending interstate mail or electronic communications (such as email); (3) traveling across state lines in the course of employment; (4) use of the Internet.
I would imagine that Sea Org employees are heavily engaged in the activities listed in number three. This is a powerful argument, in my opinion.
The provisions of the Fair Labor Standards Act are interpreted liberally in favor of employees. As a result, church leaders should not take the position that a particular worker is not covered by the Act's protections without first consulting legal counsel.
4. Religious organizations that are covered by the Act's requirements can adjust their liability for overtime compensation and minimum wage payments in a variety of ways. For example, they can reduce the number of hours worked each week; prohibit all unauthorized overtime work (however, they must also ensure that workers in fact do not work overtime, since an employer who "prohibits" overtime is still required to pay overtime compensation to employees that it "allows" to work more than 40 hours each week); reduce hourly compensation (but not below the minimum wage); reduce fringe benefits; or take credit for all indirect and noncash payments made on behalf of employees, to the extent allowable (depending on the state, there are limits).
5. All employers having employees covered by the Act must maintain records documenting covered employees' wages, hours, and the other conditions and practices of employment. Included are payroll records, employment contracts, pension plans and other employee benefits, and worktime schedules. If an employer intends to claim credit for noncash payments, it must maintain records documenting the value of such payments.
6. Many states have enacted their own versions of the Fair Labor Standards Act. It is imperative to review the potential application of state minimum wage and overtime compensation laws to church workers.
7. Penalties may be imposed for violations of the Act. Employers who violate the minimum wage or overtime pay requirements are liable to their employees for the amount of the unpaid minimum wage or the unpaid overtime pay, and "an additional equal amount as liquidated damages." In addition, employees who are not paid minimum wage or overtime compensation can collect the reasonable cost of their attorney's fees in suing the employer. Employers who "willfully" violate the minimum wage or overtime pay requirements of the Act are subject to a fine of up to $10,000 for each violation. A 2-year statute of limitations applies to the recovery of back wages except in the case of willful violations, in which case a 3-year statute of limitations applies.
So there you have the result of my brief foray into this subject. I should also mention that I left a suggestion for you guys to consider - creating a "Law and Scientology" section. This may create crossover to other sections, and thus, you all may not want to do it, but there is a major upside. A legal forum might attract more legally-minded people to this issue (lawyers love to blog); might inspire some readers to pursue church law; and might provide a helpful reference tool all around. End of pitch. Thank you for your time!