Q: Can we pay a ‘bonus' to a pastor or worship leader for a successful derivative work (i.e. a worship song or a book based on sermons) they created and the church owns?
A: Yes, as long as the overall compensation of the employee is reasonable. A church cannot compensate any of its employees more than a reasonable amount. A reasonable amount is determined by experts using a facts and circumstances test. This test looks at the totality of the circumstances and compares similarly situated employees working for similar employers. If an employee creates something of great value, then it is reasonable to compensate that employee based on the increased value to the employer and not just the services performed.
For example, when University of Florida professors created "Gatorade" to assist their football team, they created property that generates more than $12 million in royalties annually for the benefit of the university. It is entirely reasonable that the professors be paid a percentage of the royalties (reportedly 25 percent of the royalties received) as compensation. Their compensation far exceeds that of professors that only teach and conduct research with unknown value since they are only compensated for the value of their current services.
Another example from the church world demonstrates the same principle. One of the most popular Christian songs is "Shout to the Lord," authored by Darlene Zschech and owned by Hillsong Music, a part of Hillsong Church in Sydney, Australia. At the time of the writing of this song, Zschech was a part-time worship leader at Hillsong Church. Under copyright law, all songs written by employees within their duties are owned by their employers. According to estimates, this one song generates millions of dollars of royalties for Hillsong Music. It would be entirely reasonable to compensate a part-time worship leader a percentage of the royalties because of the value created by that one song.
I suggest that any bonus be based on comparable data. For example, if songwriters are typically compensated at the rate of 10 percent of the royalties, it would be unreasonable to give them a bonus of 50 percent of the royalties.
Go deeper on copyright law and intellectual property for churches with Richard Hammar's Essential Guide to Copyright Law for Churches.
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