The Respect for Marriage Act Does Less for Religious Liberty Than Meets the Eye

The Respect for Marriage Act (RMA) should be met with a healthy dose of realism

The Respect for Marriage Act (RMA) should be met with a healthy dose of realism and skepticism. The Act provides limited protection for the religious liberty of churches and religious organizations, but it does not ultimately do much to change the status quo and it instead may invite more litigation against religious organizations, churches, and individuals who own businesses.

The reality is this: We cannot yet fully understand what it means for same-sex marriage to be enacted into federal statutory law. Given the breadth and complexity of federal law, we do not fully know, and cannot conclusively predict, how this law ultimately will impact churches, religious organizations, and people of faith.

Federal statutes and regulations represent a massive and complex web that connects to more areas of our life than we can comprehend. The Act’s statement that “any Federal law, rule, or regulation in which marital status is a factor,” should give us pause.

A search of the United States Code shows that the phrase “marital status” appears 248 times. The Code of Federal Regulations contains 350 uses of the phrase “marital status.” And each of these statutes or regulations likely is accompanied by a body of judicial decisions and complex interpretive rules.

The religious liberty protections contained in the Act are a slight improvement from the current state of the law but offer little more than the status quo—or an invitation for more litigation. For instance, there is this substantial question: Will this Act supersede state and local public accommodations laws, which are the primary legal vehicles for lawsuits? The answer likely only can come from court decisions rendered through future lawsuits.

Additionally, while the Act does contain some protections from the loss of tax-exempt status, grants, and contracts for religious organizations, the wording is vague and yet again may invite more litigation against religious organizations and churches.

The RMA also leaves out protections for individuals—those who sit in the pews and own for-profit businesses that they wish to closely align with their religious beliefs and practices. If the wording of the Act is true that, “Diverse beliefs about the role of gender in marriage are held by reasonable and sincere people based on decent and honorable religious or philosophical premises,” then why are individuals with sincerely held religious beliefs left unprotected?

Finally, we would be naïve to expect that this law will remain unchanged into the future. Statutes often are frequently amended and protections now in the law only exist as long as a majority in Congress wants them to remain.

Erik Stanley is an assistant professor of law at Liberty University School of Law, where he teaches and writes on litigation, church autonomy, and religious liberty issues. Stanley also is a partner at Provident Law in Scottsdale, Arizona, and has more than 20 years of experience handling religious liberty cases and advising religious institutions on various matters, including employment, tax, zoning and land use, and bylaws and policies.

Part 6 of 6

The Remote Worker and the FLSA

How churches should handle employee classifications and overtime pay as more people work from home.

Many employers—including churches—offered remote-work options even before the COVID-19 pandemic. Many churches were willing to accommodate employees who were just as happy and effective working from home.

Many employers typically are comfortable with exempt employees working remotely. Those are the employees not bound by the 40-hour workweek and not entitled to overtime.

But employers struggle with how to build systems that allow nonexempt employees—those bound by the 40-hour workweek and entitled to overtime pay—to work remotely and still meet all the regulatory standards.

Categories of employees

Before reviewing tips for handling a remote workforce, it is good to review the three categories of employees in light of the Fair Labor Standards Act (FLSA). The FLSA establishes minimum wage, overtime pay, and recordkeeping standards, among other things. There are three categories of employees affected by the FLSA: (1) those covered by the ministerial exception; (2) exempt employees, and (3) nonexempt employees. Some default rules and definitions can help churches categorize employees.

Caution. The information provided in this article is based on federal law administered by the US Department of Labor (DOL). Each church should also review state and local laws to determine additional requirements.

Use the following steps to classify church employees for the FLSA.

Step 1: Ministerial exception

The court-created ministerial exception says that employees qualifying as “ministers” are not subject to the FLSA employment laws. Therefore, employees qualifying as ministers may be excluded from wage and hour rules.

Churches may take advantage of the ministerial exception. However, it isn’t clear how the ministerial exception applies to employees of para-church organizations or other nonreligious-based organizations, such as nursing homes.

Every church should review all of its employees to determine which ones may be classified under the ministerial exception. For those classified under the ministerial exception, churches should support these determinations with well-constructed job descriptions and clear communication with the employees covered. The designation of “ministerial exception” also should be included in their personnel records. These employees have now been classified in the church’s systems and are removed from future FLSA consideration.

Step 2: Exempt employees minimum salary test

After completing Step 1 and removing all the “ministers” from FLSA consideration, the next step is an objective wage analysis on the remaining employees.

All exempt employees, except for doctors, teachers, and lawyers, must meet a minimum weekly salary test to be deemed an exempt employee.

All employees who make less than $684 per week or more are classified as nonexempt employees and thus eligible to receive overtime pay under FLSA.

Unless the employees are doctors, teachers (not daycare teachers), or lawyers, their duties are irrelevant and they are classified as nonexempt when they fall below this minimum salary threshold. The amount may not be prorated for part-time employees.

Note. The minimum salary threshold was raised by the DOL in 2020, from $455 per week to $684 per week. The threshold remains subject to future changes.

Step 3: Exempt employee duties test

For all remaining employees, it is necessary to examine their job duties to see if they meet the exempt employees duties test as defined by DOL.

To be exempt, an employee must make more than $684 per week, as discussed, and perform duties defined in the DOL’s Executive, Administrative, Professional, or Computer classifications. The appropriate classification should be supported by a well-constructed job description.

Caution. The Administrative classification is most abused by employers. This classification does not include administrative assistants, so churches should take care before they universally apply this classification.

Caution. Simply agreeing to a salary pay arrangement does not create an exempt employee. Churches may pay a nonexempt employee with a salary arrangement, but they must still comply with wage and hour rules, including timekeeping and overtime rules.

After performing the “duties test” analysis, any employee properly classified in one of the exempt duties categories is an exempt employee, and thus not subject to wage and overtime rules under FLSA. Any employee who does not fit one of the exempt duties categories is a nonexempt employee and falls under FLSA rules.

Remote work requirements: The nonexempt employee

Employers have traditionally attempted to keep their remote workforces limited to their exempt employees because those workers do not receive overtime pay, and tracking their hours for such purposes is therefore unnecessary. Churches have taken a similar tact, often attempting to limit remote work to only their ministerial employees, who are also exempt employees and are not eligible for overtime pay.

Nonexempt workers are subject to minimum wage and overtime rules—whether they work in the workplace or in their homes.

Remote nonexempt workers pose several concerns to employers, including these questions:

  • How does the employer know what time is good work time, given how much easier it is for work to stop and start at home due to distractions?
  • How does the employer know if the worker is working at all?
  • Are the boundaries between work and personal time so blurred that supervisors forget the nonexempt worker cannot answer texts or emails at any time of the day or night?
  • How does the employer keep track of the time that is worked?

Maintaining a remote workforce involving nonexempt workers requires employers to rethink and solidify their work requirements. It also requires instilling a high sense of integrity into all employees. The remote-work arrangement requires a high level of trust in both the employer and the employee, no matter the classification of the employee, but especially with the nonexempt employee.

Employers should establish strong expectations for all nonexempt employees with good communication regarding expectations and policies.

Note. The remote work arrangement requires a high level of trust in both employer and employee, no matter the classification of the employee, but especially with the non-exempt employee.

Work times

Nonexempt employee should know the general hours when they are expected to perform their duties. While it is acceptable to have this as a flexible arrangement, it will eliminate frustration if it is strongly defined.

Break times

Information should be provided about allowed breaks, and when breaks are—or aren’t—compensated. For example, breaks of 20 minutes or less are still required to be compensated, whereas the break of 30 minutes or longer, like a lunch break, is not required to be compensated.

Employees need to clearly understand that performing any work tasks during a break creates compensable work time.

Therefore, if the employee breaks for lunch, but continues to check email during the 30-minute lunch break, a break has not occurred, and the employee must be compensated for this time.

This is easier to understand and comply with at the office, but an employee may struggle with the temptation to skip breaks or work through them when in the comfort of their own home. In reviewing time records, employees who report no breaks should be questioned to determine actual work practices.

Responding to Other Employees

When working from home, the office/home boundaries are more blurred than ever before. Additionally, a church may have employees working on different schedules. Exempt employees who are night owls might be working at midnight while others will rise with the sun and start early. In either instance, emails, phone calls, or texts may easily be sent to nonexempt employees when they are not on the clock.

The church must determine when responses will be expected from nonexempt employees. Supervisors need to understand that just because an employee is working from home does not mean that all time at home is available for work. All employees, especially nonexempt employees, need to set and communicate boundaries regarding when they will or will not respond to an email, text, or phone call.

Churches need to respect an employee’s personal time and assist them in enforcing these established boundaries. Frustration should not be expressed by the night owl whose administrative assistant is an early bird because he or she is not available when the night owl is working.

While just seeing a text does not create work time, responding to it may.

Time that is infrequent and insignificant (de minimis time) outside of regularly scheduled working hours may be disregarded, if it cannot be precisely recorded for payroll purposes. Key concepts in determining de minimis time include:

  • Short. The time involved is fleeting. For example, a text is sent to an administrative assistant after hours that only requires a quick “yes” or “no.”
  • Unexpected and Not Required. The occurrences are infrequent and not anticipated. The requests should not occur more than a few times per year and never close to other requests.
  • Time Recording Is Practically Impossible. It must be proved that precisely recording the time would not be possible.

In practice, the de minimis time exception should not be regularly relied upon; it should be the exception and not the rule. When time is involved in after-hours work, employers must pay the minimum time increment for each response.

For employers that track time in 15-minute increments, the employer must pay for 15 minutes if an employee responds to the text during off-hours. (Some states have a minimum amount of time, as high as two hours, which must be paid for each off-hours response.)

To address these concerns, churches should create policies both to assist with capturing all work time and to protect the church if time is not correctly recorded. Policies should include:

  • No off-the-clock work. All employees should understand that nonexempt employees are not expected to work “off-the-clock” or outside of their customarily defined work times. Nonexempt employees may receive texts and emails after hours, but there is no expectation that they will be responded to until the next scheduled workday.
  • All work time is reportable. All nonexempt employees are expected to record all time worked, including time involved with “after hours” texts and emails. If the church is aware of an employee violating the policy, it must take steps to correct the reporting issues. Nonexempt employees should never be “donating” time in their required work areas.

Churches need to actively train all employees, including ministers, on respecting boundaries, as well as time reporting requirements, especially for nonexempt employees. The church should also monitor compliance through periodic surveys sent to all staff.

Timekeeping requirements

How time will be kept and how often it must be submitted to a supervisor and the payroll department are important questions to be answered. There are many excellent electronic timekeeping systems that make this task more manageable than even ten years ago.

Many of those systems also have safeguards to prevent employees from logging into the system while they are not on the clock and at, say, the local amusement park.

Since there is a higher risk of accidental work time with remote workers, the system also should provide a method for entering time “after the fact,” meaning it was worked when the employee was not logged into the system. If a physical system, such as an Excel spreadsheet, is kept by the employee, then guidance should be provided as to how often time must be submitted to supervisors.

Tip. If the church is not keeping time records for all nonexempt employees, this is a great—and important—time to start. DOL requires employers to keep records of the hours worked each day, as well as the total hours worked each week. These records must be maintained for two years. This is required, even if the nonexempt employee is paid on a salary basis.

Remote workforce requirements: The exempt employee

Since the exempt employee is not required to keep track of the exact hours worked, FLSA concerns differ from the nonexempt employee concerns. It is critical to understand when exempt employees’ pay can be reduced if the employer determines they are not working predetermined hours.

Pay for the day

Exempt employees must be paid for a full day if they worked any part of the day. Therefore, if an exempt employee completes their job by lunchtime, they must still receive a full day’s pay.

Pay for the week

In general, if an exempt employee is available to work, an employer must pay the employee for all the days in the workweek if the employee works even part of the week.

For example, if a full-time exempt employee’s work can be accomplished in two days during the week, the employee must be paid for the entire workweek if he or she is available to work during the entire workweek.

Application of paid leave time

Employers may require an exempt employee to use paid leave time in half-day or full-day increments. However, even if there is no paid leave time to apply to a half-day or partial day, the full day still must be paid. The employer is not required to pay for a full day taken without leave.

Next Steps

  • Review how your church’s employees are categorized to ensure they fall within legal definitions.
  • Establish appropriate communications to all staff regarding nonexempt employees. Use the communications to help build an environment of trust and respect for boundaries.
  • Establish a method of polling employees to help determine that boundaries are being respected.
  • For more information on the church and worker classifications under the FLSA see the excellent book Church Compensation – Second Edition: From Strategic Plan to Compliance by Elaine Sommerville, CPA, available at

This article was adapted from a chapter originally appearing in Working Remotely: A Framework for Success, GreenDot.Press (2022). Used with permission.

On-Demand Webinar

Handling A Child Abuse Allegation in Your Church

Planning well so that your ministry responds well if the unthinkable ever arises.

Loading the player...

Churches across the country continue to face allegations of child abuse. Real people are behind these allegations- those who file complaints, those who are accused, as well as those in positions of authority who must respond.

In most cases, the gospel in not reflected in the responses. Fallout is significant for everyone involved, and Church leaders must find a way to do better with such high stakes- whether spiritual, mental, relational, or legal.

Watch this video to hear from recognized experts in church leadership and law about responding to allegations, including abuse reporting, investigations, victim care, and more.


Jeff Dalrymple | Executive Director, Evangelical Council For Abuse Prevention

Robert Showers | Attorney & Principal Partner, Simms Showers

Sally Wagenmaker | Attorney & Partner, Wagenmaker & Oberly

Theresa Sidebotham | Attorney & Founder, Telios Law

Reading & Resources: 

Download the resources and templates mentioned in this webinar below. Or read one of the articles to get a handle on the basics of developing fair compensation in your ministry.

10 Legal and Tax Developments for Churches and Church Staff

Richard Hammar covers what church leaders should know—and anticipate—for the rest of 2022 and into 2023.

Loading the player...

Editor’s Note. This video is exclusive to Church Law & Tax members only. However, you can sign-up here to watch this video for free.

Each year, attorney and CPA Richard R. Hammar, the co-founder and senior editor of Church Law & Tax, reads and reviews countless cases of relevance to local churches, clergy, and church leaders. This evaluation allows him to identify developing legal, tax, and risk management issues–and pinpoint trends that will affect congregations in the future.

In this recording, Hammar will detail 10 of his most important recent findings. It’s a must-see program for church leaders who want to know what to watch for throughout the remainder of 2022 and into 2023, and perhaps more importantly, to plan and prepare well so that they reduce the legal and risk liabilities their churches may face.

Download the presentation slides here to follow along and take notes as you watch.

Stay up-to-date on Legal Developments and Supreme Court cases affecting churches.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

Giving Remains Strong for Most Churches Despite the Ongoing Pandemic

But a third of churches have experienced a decrease in donations.

Giving in 64 percent of the nation’s churches remained the same or higher in January through September 2021 when compared to the same period in 2020, according to a new study conducted during October 2021 by the Evangelical Council for Financial Accountability (ECFA).

It’s worth noting that a similar ECFA study on giving conducted in 2020 showed that 58 percent of churches indicated giving remained steady or grew when compared to the previous year. Such positive news in both studies came even as the pandemic spread, along with the many difficult financial dynamics that have accompanied it.

The 2021 survey included 346 churches and 696 religious nonprofits, with 69 percent being ECFA members and the rest from other evangelical churches or nonprofit ministries.

Yet amid the financial good news, it must not be missed that more than a third (36 percent) of those churches surveyed experienced a drop in giving—with 12 percent reporting giving decreased by more than 10 percent. Many churches continued to struggle throughout 2021.

However, for many of these churches, the decrease in giving was offset by a decrease in expenses, Warren Bird, ECFA’s senior vice president of research and equipping, told Church Law & Tax. “Additionally, their church facilities haven’t been used as extensively during the pandemic, and at least some of their ministries were shifted to online, all of which can translate into lowered costs,” he added.

Cash reserves untouched by many

Of the churches surveyed, 65 percent did not have to dip into their cash reserves and 34 percent were able to grow their reserves. Still, a third (33 percent) said they used some of their reserves while 2 percent drained their reserves.

“Certainly not all churches that tapped their financial reserves are in dire straits,” Bird said, “but for some churches, the pandemic served as an accelerator of long-standing financial issues that need to be addressed.” (With many churches and ministries seeking help during the pandemic, ECFA has seen an increased number of downloads of its free eBooks on how and why to strengthen a church’s cash reserves and on strategic planning for church budgeting.

Outlook for 2022

Nearly two-thirds (64 percent) said they were optimistic about giving trends moving into the new year while over a third (36 percent) felt either uncertain or pessimistic going forward.

Bird believes there might be several reasons for such uncertainty and pessimism.

“As church leaders anticipate 2022, most anticipate some big challenges ahead,” Bird explains. “Key volunteers prior to the pandemic have been slow to return or reengage. Weekly in-person worship attendance is averaging lower today than prior to the pandemic for most churches. Some churches need to shift toward a significant relaunch or replant.”

Amid all that, he added that there are the mental health issues that have risen from these stressful times. “Heightened levels of anxiety and shorter-fuse tempers are real issues for both congregations and pastors,” he said.

Even so, Bird stresses that challenges have always been a part of biblical history.

“The Bible is full of stories about terrible pestilences and plagues like pandemics, all of which God worked through,” he says. “God, who owns ‘the cattle on 1,000 hills’, doesn’t lack any resources. He is able to provide for the financial needs of his church as our hearts—and wallets—stay mission-focused.”

On-Demand Webinar

Fraud in the Church: What We Learned from 700 Church Leaders

Discover the results of our 2021 church fraud survey and the best practices for reducing vulnerabilities.

Loading the player...

A new nationwide survey of more than 700 church leaders conducted by Church Law & Tax shows nearly one-third serve in congregations that have suffered from some form of financial misconduct. Churches of all sizes, ages, and locations are susceptible, according to the survey’s findings—and fraud prevention experts say the vulnerabilities that perpetrators commonly exploit are ones easily remedied. The survey also revealed surprising patterns regarding the types of people who are most prone to steal from their churches.

CPA Vonna Laue and attorney and Church Law & Tax content editor Matthew Branaugh co-led the research project. In this free, one-hour webinar, Laue and Branaugh sit down to discuss:

  • the purpose of the survey,
  • the results that stood out most,
  • and the best practices leaders can implement now to reduce their church’s vulnerabilities.

Download the presentation slides to follow along and take notes as you watch.

More on this topic:

Increase your church’s awareness on financial misconduct by learning from this recommended reading collection.

NEW! Safeguarding Your Church’s Finances:

Explore this multi-session video course for pastors, board members, staff, and volunteers on the basics of fraud prevention. LEARN MORE!


Introduction: Religious Land Use & The Church

A five-part series on an often overlooked law that can benefit churches.

Loading the player...

This virtual roundtable, featuring attorneys Midgett Parker, John Mauck, Noel Sterrett, and Eric Treene, explores why every church should understand the ins and outs of the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA).

This federal law provides powerful protections to houses of worship. Even if your congregation has yet to encounter obstacles from local government officials, zoning boards, or neighborhood associations, it should understand what RLUIPA is and how it works.

The virtual roundtable is conveniently set up in five segments for church leaders to watch, either individually or as a board, committee, or leadership team. It includes a companion PDF guide containing practical, helpful information. It also includes two video case studies featuring church leaders who successfully used RLUIPA to navigate challenges they faced.

Church Law & Tax members can access the full series here: Religious Land Use & The Church: A Virtual Roundtable.

RLUIPA Case Study: City Walk Urban Mission

How one religious organization successfully navigated zoning codes.

Loading the player...

A zoning board sought to shut down City Walk Urban Mission in Tallahassee, Florida, through the enforcement of zoning code. This video case study shows how Pastor Renee Miller, the executive director of City Walk, worked with attorney Noel Sterett to successfully navigate the issue and continue the ministry’s work in Tallahassee.

Church Law & Tax members can watch the full Religious Land Use & the Church: Virtual Roundtable series, which includes an insightful discussion with leading attorneys, a companion PDF guide, and another video case study featuring a church that faced government challenges to a property it planned to purchase.

Matthew Branaugh is an attorney, and the business owner for Church Law & Tax.

SBA’s PPP Changes May Help Churches with Loan Forgiveness

Agency announces new direct forgiveness portal, removal of necessity questionnaires.

Two key changes recently made by the US Small Business Administration (SBA) may ease burdens faced by many churches who seek forgiveness of their Paycheck Protection Program (PPP) loans.

In one move likely to interest smaller-sized churches, the SBA unveiled “a streamlined application portal” designed to allow borrowers with PPP loans of $150,000 or less “to apply for forgiveness directly through the SBA.” More than 600 lenders have already agreed to participate with SBA’s direct forgiveness program, which should initially help as many as 2.2 million eligible borrowers when the portal opened on Aug. 4, 2021.

Challenges with the loan forgiveness process

PPP is one of the most visible programs made possible through last year’s pandemic-related economic relief passed by the US Congress. Eligible employers, including nonprofits and churches, could receive funds to maintain their headcounts and compensation levels. Upon demonstrating that the funds were used to do so, borrowers could then apply to have their loans converted into nontaxable grants.

To date, nearly $800 billion in PPP loans have been distributed nationwide to 8.5 million recipients. In 2021 alone, the average loan measured $42,000, and 96 percent of the loans went to employers with 20 workers or fewer, the SBA said.

The forgiveness application process began in the summer of 2020. Problems immediately surfaced, though, as lenders scrambled to handle the process. By March of 2021, some of those problems persisted, either because some lenders still were not accepting forgiveness applications or borrowers struggled to document their eligibility for forgiveness, according to one survey of small businesses.

“The vast majority of businesses waiting for forgiveness have loans under $150,000,” said SBA Administrator Isabel Casillas Guzman in a prepared statement. “These entrepreneurs are busy running their businesses and are challenged by an overly complicated forgiveness process.”

Discontinued necessity questionnaires

In another move likely of interest to larger churches, the agency requested and received approval from the Office of Management and Budget (OMB) to discontinue requiring loan necessity questionnaire forms from borrowers of PPP loans of $2 million or more who seek forgiveness. SBA said “[a] significant number” of reviews conducted with submitted forgiveness applications showed “borrowers met the good faith certification requirement,” and the questionnaire forms were viewed by borrowers as “unnecessary and burdensome, among other things.”

In an updated FAQ by the US Department of the Treasury on July 29, 2021, the SBA noted—in Question 69—that the questionnaire requirement proved time-consuming, and the purposes it served could be achieved other ways. The SBA said it “believes audit resources will be more efficiently deployed across all loans if the loan necessity questionnaire is discontinued.”

It continued: “The loan necessity reviews, including the review of the borrower’s completed Loan Necessity Questionnaire, are lengthy and have caused delays beyond the 90-day statutory timeline for forgiveness, thus negatively impacting those borrowers that made their loan necessity certification in good faith.”

In an email alert sent to clients, CPAs Kaylyn Varnum and Mike Batts, both editorial advisors for Church Law & Tax, noted that affected borrowers should work with tax or legal counsel and their lenders if those lenders continue to incorrectly believe the completion of a loan necessity questionnaire is required.

More help

Church Law & Tax has closely followed the economic relief provided to churches and ministries throughout the COVID-19 pandemic. For more help, check out the following:

Matthew Branaugh is an attorney, and the business owner for Church Law & Tax.

Fraud Alert: What to Watch for Now That PPP Loan Amounts Are Public

Churches should be aware of fraudsters posing as lenders or SBA staff.

On December 1, the Small Business Administration (SBA) publicly released information about all Paycheck Protection Program (PPP) borrowers, including the name and address of each borrower, the exact amount of each borrower’s PPP loan, and the name of each borrower’s lender (among other data points).

The disclosure was made as a result of a federal court order to release the data in the public interest.

Public disclosure of this information will result in more scrutiny of PPP borrowers by the media and the general public. It will also likely result in numerous contacts by solicitors and fraudsters armed with specific information about borrowers and their loan amounts.

All PPP borrowers should remain on guard for the possibility of unscrupulous parties, many of them masquerading as legitimate companies or entities, contacting them by email or otherwise for nefarious purposes. Some fraudsters may attempt to create the false impression that they represent the borrower’s lender or the SBA itself.

This information originally appeared in the Batts Morrison Wales & Lee Special Alert e-newsletter. Used with permission.

Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

The Top 10 Articles on Church Law & Tax in 2020

Here’s what interested church leaders the most this past year.

For 2020, the coronavirus pandemic was front and center. The government mandated shutdowns throughout many parts of the country, and the economy was shaken. Church leaders felt the importance and urgency of figuring out how these dynamics were affecting their worship services, various ministries, church governance, and volunteers and staff—all of which is seen in the fact that every article on this year’s top ten list for Church Law & Tax relates to the pandemic.

Several of these articles will be helpful moving into 2021, with the continued concern over the spread of the virus and employment-related questions, including FMLA and unemployment benefits. There may also still be questions on the CARES Act. Additionally, we know that many of you will most likely continue to turn to our 2020 coverage of coronavirus-related issues for guidance. For that reason, we will try our best to offer needed updates for the sake of accuracy and relevance.

The list of the ten most-viewed articles is based on unique page views and starts with the tenth-most uniquely viewed piece and ends with the article that received the most unique page views.

10. How New FMLA Changes Will Affect Churches During the Coronavirus Outbreak
These temporary provisions affect church leaders throughout 2020.
By Danny Miller and Donn Meindertsma

9. What if Someone in Church Has the Virus?
Understanding the rights of congregants, staff, and volunteers.
By Nathan A. Adams

8. Churches and Faith-Based Organizations May Apply for CARES Act Loans
New SBA guidance issued at 11 p.m. on April 3 clarifies eligibility after initial confusion.
By The Editors

7. How to Safely Reopen Your Church and Reduce Legal Liability
Don’t meet until you’ve consulted your local, state, and federal authorities and then follow the strictest guidelines.
By Holly Hammar Lear, PhD MPH RN

6. Will Your Church’s “Good Faith Certification” for a Paycheck Protection Loan Come into Question?
For loans under $2 million, the SBA will assume the borrower determined in “good faith” that it met the PPP loan requirement.
By Frank Sommerville and Cory Halliburton

5. What the CARES Act Means for Churches and Church Staff
How to navigate the government’s $2.2 trillion stimulus plan responding to COVID-19’s economic fallout.
By Richard R. Hammar

4. Coronavirus and the Church: The Latest News and Advice from Church Law & Tax
Doing church during the pandemic.
By The Editors

3. Are Church Employees Eligible for Unemployment Benefits?
Sorting through a complex area of law as churches weigh difficult financial decisions.
By Matthew Branaugh

2. How Churches Can Apply for the Paycheck Protection Program
What leaders should know—including a change extending the application deadline to August 8, 2020.
By Ted R. Batson Jr.

1. An Overview of the CARES Act for Churches
Key highlights from the government’s $2.2 trillion stimulus plan responding to COVID-19.
By Richard R. Hammar

Will the Pandemic Affect Giving for the Remainder of 2020?

New Giving USA study offers insights that should capture the attention of church leaders.

Before the economic downturn due to the COVID-19 pandemic, charitable giving in the US reached a total of nearly $450 billion in 2019—one of the highest years on record, according to findings from Giving USA 2020: The Annual Report on Philanthropy for the Year 2019.

For the third consecutive year, giving to religious organizations “comprised 29 percent of all donations received by charities in 2019,” states the 2020 report.

Religious giving reached its fourth highest inflation-adjusted amount in the 65 years Giving USA has produced its annual report—totaling slightly over $128 billion in 2019. Even so, giving to religion has remained relatively flat when adjusted for inflation when compared to 2018. This contrasts with significant increases in giving to education; human services; public-society benefit organizations (e.g., Pew Charitable Trusts, United Way, Schwab Charitable Fund); arts, culture, and humanities; and giving to environment and animal organizations.

How might the pandemic affect giving throughout 2020?

It’s impossible for anyone to know how giving will be affected in the coming months as the economic effects of the pandemic continue, said Una Osili, associate dean for research and international programs at the Lilly Family School of Philanthropy, in a virtual press conference focused on the 2020 report.

“I think it’s important to have a great deal of humility and know that we are in unprecedented times,” she explained. “None of us can say we have lived through a moment like this before.”

Still, and with that disclaimer, giving patterns tracked by Giving USA for decades offer some possible predictions for the rest of 2020.

Osili said that we can look back to see how donors have responded to past crises—such as the Great Recession a decade ago:

During the Great Recession we saw an outpouring of support. Many households gave to . . . human-service charities. We did see donors reorder their priorities. Many shifted their giving to different types of organizations. I think we’ve seen American philanthropy show resilience during crises in the past. We also have a wealth of data from [past natural] disasters. . . . The evidence we have seen so far [during our current crisis] is that there has been a tremendous outpouring of support from all types of donors. So, I tend to be an optimist.

I just think donors will rally and are rallying,” added Rick Dunham, chair of Giving USA Foundation. “And anecdotally, we are seeing record giving days. . . . I am actually bullish on how this year will play out.”

Wealthier people give more, with a notable exception

Around a decade ago, about the time of the Great Recession, said Osili, Giving USA started seeing a decline in giving by less wealthier households. The 2020 report puts it like this:

For several years, research has indicated that the number of donors is declining, even while the total dollar amount of giving by individuals is increasing. Several scholars, nonprofits, and leaders in the field have expressed concern that this trend, sometimes called “donors down, dollars up,” may result in the loss of small or mid-level donors.

Again, Osili attributes this to the fact that wealthier people are giving more:

Fewer households are participating in charitable giving and giving is coming from higher-income households, and giving is less broad based than it might have been 20 years ago and certainly [since] the Great Recession.

The shift in greater giving by wealthier donors could be, at least in part, attributed to the tax reform of 2017, which raised the standard deduction for joint filers to $24,000 and meant that around 95 percent of tax payers were not eligible for a charitable deduction.

However, church leaders should be pleased to know that religious donors don’t appear to follow this pattern.

“Giving to religion tends to be more democratized—tends to be a broader range,” said Dunham. According to data related to religious givers in the Giving USA studies, he pointed out that “you do see a fairly high participation rate among all income strata” and that when considering percentage of giving, lower-income households “are actually among the most generous.”

Further, Dunham explained that Giving USA studies have shown a correlation between attendance of religious services and giving: “[Our studies have] shown that those who attend at least weekly tend to give five times as much as those that don’t attend at all.”

Highlights for giving to religion—and a concern

For religious giving, the 2020 report offered these highlights:

  • Giving to religion has always received the largest share of giving and continues to grow at a slow but steady rate.
  • Faith-based organizations have found success with online giving, with online donors giving consistently on days other than Sunday, and through the summer months as well.
  • Donors to religious organizations are more consistent compared to others more impacted by the stock market and other events. Several studies in 2019 supported the idea that membership and engagement level are closely linked to giving behavior.

“Religious congregations provide a range of services to communities,” Osili said. “Religious organizations play a bigger role . . . in the face of this [current economic and pandemic] crisis as an anchor in their communities. Going forward there are some very positive trends around religious giving.”

Yet, she offers an insight that should concern churches and their leadership.

With the number of Americans attending services decreasing, and as many congregations still lag behind in using online giving compared to other nonreligious charitable groups, Osili said, there are concerns about religious giving going forward.

“So there is both a positive set of trends to look at but also some that we should watch and we are concerned about,” she added.

On-Demand Webinar

Child Abuse: Emerging Trends from the Biggest Legal Threat to Churches

Important insights and best practices for keeping your church and children safe from child abuse.

Loading the player...

Child abuse remains a perennial top reason churches go to court each year. Recent headlines nationwide only confirm this reality. From jury verdicts doling out multimillion-dollar damages awards, to expanded statutes of limitation for victims to come forward, to new interpretations of the clergy-penitent privilege affecting abuse reporting, the evolving nature of this issue demonstrates the need for church leaders to remain vigilant and intentional about protecting children and youth in their ministries.

Attorney and senior editor Richard Hammar joined Church Law & Tax content editor Matthew Branaugh to discuss these emerging trends. In this video, Hammar also provides valuable best practices and standards churches should follow to prevent possible abuse and avoid costly and painful litigation.

Download the presentation slides here.

Q&A: In Light of the Pandemic, What Should We Include in Our Cash Balances for Forecasting Purposes?

It’s important to remember that liquidity refers to cash available for operations.

With the lingering effects of the COVID-19 pandemic, my church is trying to figure out how to best assess its cash flow going forward. Do you include in your cash-flow forecast your cash reserves and lender-mandated debt service reserves, or do you only include your “operational cash?”

When we’re looking at a liquidity assessment, we’re looking at total liquidity. That is, total cash available for operations. That includes cash reserves that are available for use if needed. The reason we do that is because we’re talking about a scenario such as the one created by the pandemic where a church may need to use its reserves—at least to some extent.
We’ll want to measure all of what we consider to be cash available right now for operations. Whether it’s in your operating account, in highly liquid investments, or in some other account, it is the cash available which can be used for operations.
However, your operating cash does not include restricted cash. For example, it is not your donor-restricted gifts that were given and held for mission trips or for the building fund. Again, it is only your operating cash.
Further, if you have loan covenants as part of your debt agreements that require the church to maintain minimum debt service reserves, keep in mind that failure to maintain the liquidity requirement mandated by a loan covenant is likely an event of default on the loan—which can have very adverse consequences. So, we would not count as available cash any debt service reserves that are maintained due to a legally binding requirement in the church’s loan agreements.

Editor’s note: For more on donor-restricted funds, see chapters 1, 3, and 10 in Mike Batts’s book Church Finance: The Church Leader’s Guide to Financial Operations. He also addresses the proper use of restricted funds in this previous Q&A.

Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

When Does the Clergy-Penitent Privilege Exempt Reporting Child Abuse?

Montana Supreme Court interprets the state’s mandatory child abuse reporting law did not apply and rules in favor of church.

Every state has a child abuse reporting law that requires persons designated as “mandatory reporters” to report known or reasonably suspected incidents of child abuse. Ministers are mandatory reporters in many states, but some states exempt them from the reporting obligation if they learned of the abuse in the course of a conversation protected by the clergy-penitent privilege. This generally refers to communications, in confidence, with a minister in the course of spiritual counsel.

This article explores a decision by the Montana Supreme Court regarding how it interprets the state’s mandatory child abuse reporting law with respect to the clergy-penitent privilege. The court reversed a lower trial court’s $35 million judgment against a church, whose elders decided not to report allegations of sexual abuse by a step-father in the congregation. The court indicated the clergy-penitent privilege exception contained in the state’s abuse-reporting law applied to the church.


Nunez v. Watchtower Bible & Tract Society, 2020 MT 3 (2019)

In 1998, one of three siblings told an elder in her church that her step-father had inappropriately touched and fondled her when she was a child. The elder directed the victim to two other church elders who dismissed her accusations on the grounds that they lacked a confession or a “second witness”—which elders required to substantiate a report of abuse before taking actions against the accused—and there was therefore nothing that could be done. Without recourse, the victim returned home, where her step-father’s abuse escalated to include numerous incidents of rape. His abuse continued until she was old enough to leave home.

In 2004, another sibling told a church elder that the step-father had sexually abused him as a child. Pursuant to the “two-witness” rule, the elder obtained a signed letter from another sibling corroborating the allegations and detailing the step-father’s sexual abuse throughout her childhood. The elder contacted the national denomination with which the church was affiliated and spoke with an attorney in the legal department. The attorney advised him that Montana law did not require him to report the abuse to local authorities. Having received this advice, the elder did not contact the local police to report the abuse.

Instead, three elders formed a “judicial committee” and confronted the step-father about the allegations. After a hearing, the committee believed the victims’ accounts.

Thereafter the committee disfellowshipped the step-father, banished him from the congregation, and informed the congregation detailing the events leading to the step-father’s expulsion. Nevertheless, the step-father requested the local elders to reinstate him to the congregation; a year later they granted his request.

In 2016, two victims (the “plaintiffs”) sued the church for damages stemming from its failure to report the step-father to the authorities. Among other theories, they alleged that the church was negligent per se under Montana’s mandatory child abuse reporting statute. The negligence per se doctrine makes a defendant liable if its actions violate a statute and the violation led to a plaintiff’s injuries. The trial court agreed that the church was responsible for the victims’ injuries on this basis and awarded one of the victims $4 million in compensatory damages and $31 million in punitive damages. The church appealed, claiming that it had no duty to report the abuse.

The Montana child abuse reporting law requires certain professionals and officials to report child abuse to the Department of Public Health and Human Services when they “know or have reasonable cause to suspect, as a result of information they receive in their professional or official capacity, that a child is abused or neglected by anyone.” Clergy are among the professionals required to report under the statute. However, the reporting law exempts clergy from the reporting mandate in some case: “A member of the clergy or a priest is not required to make a report under this section if the communication is required to be confidential by canon law, church doctrine, or established church practice.”

The defendant church claimed that it was excepted from the general mandatory reporting statute pursuant to this exception. The plaintiffs insisted that the clergy exemption did not apply “because the record shows that the church did not in fact keep the report confidential and because church doctrine imposes no requirement of confidentiality.”

The state supreme court reversed the trial court’s judgment in favor of the plaintiffs. It concluded:

We hold accordingly that the undisputed material facts . . . demonstrate as a matter of law that [the church] was not a mandatory reporter [under state law] in this case because church doctrine, canon, or practice required that clergy keep reports of child abuse confidential, thus entitling the church to the reporting exception of the state child abuse reporting law. . . .

This court’s task is to interpret what is contained in the reporting statute as written by the Legislature. We do not opine whether that body could have made a different policy choice that would afford greater protection to child victims. The Legislature is the appropriate body to entertain such policy arguments.

Relevance to church leaders

This case is relevant to church leaders because it directly addresses the role of the clergy-penitent privilege with respect to child abuse reporting laws. Leaders must be aware of who may claim the clergy-penitent privilege. Leaders also must be aware when the privilege may be waived.

Leaders also must be aware of potential civil liability that may arise for failing to report. In this case, the Montana Supreme Court concluded that the church and its clergy were not subject to civil liability for failing to report the plaintiffs’ abuse. Recognition of civil liability would require action by the state legislature.

In many states, clergy who are mandatory reporters, and who fail to report abuse, may be personally liable to victims of abuse assuming that no exception exists. This liability is based on either statute or judicial precedent.

Like the Montana Supreme Court ruling addressed in this article, several courts have refused to allow child abuse victims to sue ministers on the basis of a failure to comply with a child abuse reporting law. A few courts in other states have reached the opposite conclusion.

Key point. Any questions regarding the application of child abuse reporting laws to ministers should be referred to an attorney for guidance and clarification.

Lastly, leaders must note any potential criminal liability for mandatory reporters who fail to report abuse.

The issues raised in this article are covered in greater detail in Richard Hammar’s article, “Child Abuse Reporting and the Clergy Privilege.”

Legal and Liability Issues for Reopening the Church

Webinar hosted by Wheaton College’s Humanitarian Disaster Institute, the National Association of Evangelicals, and Church Law & Tax content editor Matthew Branaugh.

Loading the player...

In this webinar hosted by Wheaton College’s Humanitarian Disaster Institute and the National Association of Evangelicals, Church Law & Tax content editor Matthew Branaugh, along with attorney Rob Showers and church insurance expert Charlie Cutler, discussed the legal and risk considerations that church leaders should weigh as they contemplate reopening their buildings during the COVID-19 (coronavirus) pandemic.

Related Topics:

Q&A: How Should Churches Handle the Bookkeeping for Paycheck Protection Loans?

Also, do you recommend a separate bank account for these loans?

My church has applied for a CARES Act Paycheck Protection loan. If we receive these funds, how should we record the money on the books? Further, do you recommend a separate bank account for these funds for ease of tracking them?

When money is received from the Paycheck Protection Program (PPP), it should be treated as a loan and therefore a liability in your accounting records.
Amounts spent from loan proceeds should be recorded as an expense. The loan balance will stay the same until the time it is forgiven. At that point, you will reduce the loan and recognize grant (contribution) income. Your expenses will not change because of the loan. The ultimate impact on the income statement will be the increase to revenue.
The loan is forgiven eight weeks after receiving it to the extent the money is spent entirely on:
  • payroll costs (at least 75 percent of the loan proceeds)
  • group health care expenses
  • interest on any mortgage obligations that existed before February 15, 2020
  • rent, including rent under a lease agreement that existed before February 15, 2020
  • interest on debt that existed before February 15, 2020
  • utilities that were already in use before February 15, 2020
You are not required to maintain a separate bank account for the Paycheck Protection loan. However, some CPAs advocate creating a new account that is used strictly for these funds because it creates an absolutely clean paper trail for documentation when the loan forgiveness application process begins. That way, there’s no question about the PPP loan proceeds getting combined with other funds. Further, there are no questions about the types of expenses withdrawn from the account truly “coming from” the PPP loan proceeds.
While a separate account may be an effective way to track these funds, money would still need to be transferred from this account because the payroll costs that can be applied to the loan would not directly come out of this account. Whether or not you choose to create a new and separate account, the most important thing to consider is accurate record keeping. For any expenses that will be used to request loan forgiveness, make sure you have good documentation to support the amount.
Vonna Laue has worked with ministries and churches for more than 20 years. Vonna was a partner with a national CPA firm serving not-for-profit entities through audit, review, tax, and advisory services. Most recently, she held the role of executive vice president for a Christian ministry that works to enhance trust in the church and ministry community.

Churches and Faith-Based Organizations May Apply for CARES Act Loans

New SBA guidance issued at 11 p.m. on April 3 clarifies eligibility after initial confusion.

The US Small Business Administration (SBA) has issued new guidance confirming the eligibility of churches and faith-based organizations for the Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL) made possible through the recently enacted CARES Act.

The language of the $2.2 trillion CARES Act calls for the SBA to administer certain relief-related loans, including the PPP loans starting April 3, 2020. The PPP loans, worth 2.5 times the average monthly payroll of employers with 500 or fewer workers, can be forgiven and converted into nontaxable grants if certain criteria are met by recipients eight weeks after their origination dates. The goal is to inject cash, protect jobs, and stimulate the economy as the fallout from the COVID-19 (coronavirus) outbreak continues wreaking havoc on businesses and households.

The Act’s language suggests for-profits and tax-exempt organizations alike can apply for the loans, even though certain tax-exempt entities, including churches, often are ineligible to participate in typical SBA programs.

But confusion immediately erupted on April 2 and April 3 when some churches contacted SBA-approved lenders and were told they were ineligible for the PPP loans. Church Law & Tax, for instance, received numerous messages from church leaders indicating their lenders turned them away.

In a “Frequently Asked Questions” (FAQ) document released late in the evening of April 3, SBA officially clarified its position, stating “no otherwise eligible organization will be disqualified from receiving a loan because of the religious nature, religious identity, or religious speech of the organization.”

“(T)he CARES Act explicitly makes nonprofit entities eligible for the PPP program,” the FAQ continues, “and it does so without regard to whether the nonprofit entities provide secular social services.”

All of the same terms required of other employers are required of churches and religious nonprofits, the FAQ adds, noting “under these [outbreak] circumstances, the Establishment Clause does not place any additional restrictions on how faith-based organizations may use the loan proceeds received.”

Additionally, the SBA guidance provides further clarification regarding houses of worship with respect to their tax-exempt recognition. Under the First Amendment guarantee of religious freedom, churches are automatically considered exempt from federal taxation and do not need to seek official recognition from the Internal Revenue Service (IRS) to demonstrate that status. The FAQ states churches do not need to seek a tax-exempt status letter from the IRS in order to proceed with documentation requirements for PPP or EIDL applications.

The FAQ also contains several other notable statements, including:

  • Churches and religious organizations will not sacrifice their autonomy or First Amendment rights by requesting and receiving loans. The SBA says:

A faith-based organization that receives a loan will retain its independence, autonomy, right of expression, religious character, and authority over its governance, and no faith-based organization will be excluded from receiving funding because leadership with, membership in, or employment by that organization is limited to persons who share its religious faith and practice.

  • The only legal requirements imposed on churches and religious organizations in exchange for receiving loans are those required of all entities participating in the program:

Any legal obligations that you incur through your receipt of this loan are not permanent, and once the loan is paid or forgiven, those nondiscrimination obligations will no longer apply … Consistent with certain federal nondiscrimination laws, SBA regulations provide that the recipient may not discriminate on the basis of race, color, religion, sex, handicap, age, or national origin with regard to goods, services, or accommodations offered. 13 C.F.R. § 113.3(a). But SBA regulations also make clear that these nondiscrimination requirements do not limit a faith-based entity’s autonomy with respect to membership or employment decisions connected to its religious exercise.

However, churches and church leaders also should note this caution from the FAQ regarding activities they conduct that may fall under certain SBA requirements with respect to public accommodations:

SBA therefore clarifies that its regulations apply with respect to goods, services, or accommodations offered generally to the public by recipients of these loans, but not to a faith-based organization’s ministry activities within its own faith community. For example, SBA’s regulations will require a faith-based organization that operates a restaurant or thrift store open to the public to serve the public without regard to the protected traits listed above. But SBA’s regulations do not apply to limit a faith-based organization’s ability to distribute food or clothing exclusively to its own members or co-religionists. Indeed, SBA will not apply its nondiscrimination regulations in a way that imposes substantial burdens on the religious exercise of faith-based loan recipients, such as by applying those regulations to the performance of church ordinances, sacraments, or religious practices, unless such application is the least restrictive means of furthering a compelling governmental interest.

  • Churches and faith-based organizations are not necessarily disqualified from the CARES Act loan programs due to affiliations with other faith-based organizations. SBA says:

If the connection between your organization and another entity that would constitute an affiliation is based on a religious teaching or belief or is otherwise a part of the exercise of religion, your organization qualifies for an exemption from the affiliation rules. For example, if your faith-based organization affiliates with another organization because of your organization’s religious beliefs about church authority or internal constitution, or because the legal, financial, or other structural relationships between your organization and other organizations reflect an expression of such beliefs, your organization would qualify for the exemption. If, however, your faith-based organization is affiliated with other organizations solely for non-religious reasons, such as administrative convenience, then your organization would be subject to the affiliation rules. SBA will not assess, and will not permit participating lenders to assess, the reasonableness of the faith-based organization’s good-faith determination that this exception applies.

The agency then continues:

If you believe that your organization qualifies for this exemption to the affiliation rules, you should submit with your loan application a separate sheet stating as much. That sheet may be identified as addendum A, and no further listing of the other organizations with which your organization is affiliated, or description of the relationship to those organizations, is required. You are not required to describe your religious beliefs.

The FAQ includes a sample addendum churches and religious organizations may use. But it also says applicants can write their own and that the statements “can be very simple.”

The latest guidance from SBA came just hours after other guidance it issued with respect to the relaxing of the agency’s nondiscrimination rules for churches and religious organizations that apply for PPP. That guidance says “all loans guaranteed by the SBA pursuant to the CARES Act will be made consistent with constitutional, statutory, and regulatory protections for religious liberty, including the First Amendment to the Constitution, the Religious Freedom Restoration Act” and a SBA regulation that states:

Nothing in [SBA nondiscrimination regulations] shall apply to a religious corporation, association, educational institution or society with respect to the membership or the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution or society of its religious activities.”

The Act’s language regarding the $349 billion program calls for a streamlined application process aimed to put funds into the hands of small employers quickly.

By providing some basic information about employee headcounts and payroll costs, employers can receive a loan worth 2.5 times the amount of their average monthly payroll over an eight-week period. At the end of the eight weeks, the employers can have the loans forgiven—effectively converting them into a nontaxable grant—if they show they spent funds on specific payroll and operational costs and maintained certain employment counts and compensation levels. If the loan is not forgiven, or only partially forgiven, it is carried forward as an ongoing loan with a term of two years at 1 percent interest.

Learn more about the program and its requirements in this free on-demand recording featuring attorney and senior editor Richard Hammar.

Your Church Can Be Reimbursed for Mandated Sick Leave Pay

Since churches now must provide leave tied to coronavirus, this benefit may prove valuable.

Small- and mid-sized employers, including churches, now must provide paid sick and family leave to employees who are unable to work due to certain absences related to the COVID-19 (coronavirus) outbreak. Ordinarily, providing paid leave will not directly increase out-of-pocket payroll costs because paying an employee for time on leave costs no more than paying the employee while he or she is at work.

However, in the aggregate, allowing employees to take paid leave without using their paid time off represents a business cost. When Congress mandated paid leave, it also allowed businesses to recoup that cost.

Any church or religious organization that withholds payroll taxes for employees is eligible to participate. (Church leaders should note the US Department of Labor’s Wage and Hour Division has now issued a temporary rule laying out the regulations the Act must follow for the remainder of the year, including the recordkeeping requirements employers must keep.)

How it works

New federal regulatory guidance details how employers can recoup qualifying paid leave expenditures under the newly adopted Emergency Family and Medical Leave Expansion Act (FMLA+) and the Emergency Paid Sick Leave Act (EPSLA). Specifically, the Internal Revenue Service (IRS) and US Department of Labor (DOL) have specified a process “designed to immediately and fully reimburse (employers), dollar-for-dollar, for the cost of providing Coronavirus-related leave to their employees.”

Recoverable costs

The guidance emphasizes that employers have “complete coverage” for paid leave costs. Employers will receive 100-percent reimbursement for mandated paid leave as well as health insurance costs. However, this coverage applies only to paid leave occurring on or after April 1, 2020, and prior to the end of this year.


The guidance is designed to provide nearly immediate reimbursement of paid leave costs by means of a credit on quarterly payroll filings. Specifically:

  • Employers file quarterly federal tax returns (Form 941) to report income taxes, social security tax, and Medicare tax withheld from employees’ paychecks and to remit the employer’s portion of Social Security and Medicare taxes.
  • Employers who pay qualifying sick or childcare leave can withhold from the quarterly payroll tax payment an amount equal to the cost of the paid leave.
  • The payroll taxes that employers may retain include withheld federal income taxes, the employee’s share of Social Security and Medicare taxes, and the employer’s share of Social Security and Medicare taxes.

If the paid leave exceeds what the employer would have submitted to the IRS, the employer may request the difference from the IRS. The IRS indicates that it expects to pay the difference as a refund within two weeks of the request.


Paid leave tied to COVID-19 is to be paid at an employee’s regular rate of pay or, in some cases, two-thirds of the regular rate of pay. The regular rate of pay is not simply the wage an employee was earning when leave commenced. It is the average rate of pay during the preceding six months. For an employee who has worked less than six months, the rate is the average weekly rate during that time.

Also, Congress placed maximums on paid leave costs, and employers will not be able to obtain paid leave credit beyond those (except as noted in the next section). If an employee is on leave because he or she is unable to work due to a coronavirus quarantine or self-quarantine, or has coronavirus symptoms and is seeking a medical diagnosis, employers need not pay more than a daily maximum paid sick leave of $511, up to 10 days (or $5,110).

If an employee is entitled to paid leave because he or she is caring for someone with coronavirus, or is caring for a child because the child’s school or childcare facility is closed, or the childcare provider is unavailable due to the coronavirus, the maximum is $200 per day, or $2,000 in the aggregate. Finally, if an employee is unable to work to care for a child whose school or childcare facility is closed or whose childcare provider is unavailable due to the coronavirus, employers may receive a childcare leave credit. This credit is equal to two-thirds of the employee’s regular pay, capped at $200 per day, or $10,000 in the aggregate.

Health care costs credit

An employer may receive a credit above and beyond the just-discussed maximums by adding an amount equal to the cost of maintaining health insurance coverage for the eligible employee during the paid sick leave period. It is not yet clear whether this credit will cover both the employer and employee shares of health insurance coverage.

Application to pastors

The payroll credits for required paid sick and family leave present an interesting wrinkle in terms of how they apply to ministers. All ministers are treated as “statutory self-employed individuals” for Social Security and Medicare purposes. They individually pay for Social Security and Medicare coverage under the Self-Employment Contributions Act, or SECA. The availability of the payroll tax credits for sick and family leave are available only with respect to wages that qualify as “qualified sick leave wages” or “qualified family leave wages,” respectively. These terms are defined in the applicable legislative text as wages “as defined in [Internal Revenue Code] section 3121(a).” The wrinkle for ministers emerges because remuneration paid to a minister is excluded from the term “wages” as defined in section 3121(a) of the Code, and salary paid to a minister thus cannot be “qualified sick leave wages” or “qualified family leave wages.”

But all is not lost. A credit is available for qualifying sick and family leave to an “eligible self-employed individual,” and a minister does fall within the definition of that term. The available credit is applied against the eligible self-employed individual’s income tax.

This appears to produce an interesting situation for ministers who are treated as an employee by their church for federal income tax purposes (that is, as a W-2 employee) but as a statutory SECA tax employee for Social Security and Medicare purposes (and thus an “eligible self-employed individual” for purposes of the credit). The church is paying the minister’s salary and, if the minister qualifies for COVID-19 related sick or family leave, some portion of the wages paid to the minister by the church can qualify for the credit. But it is the minister, and not the church, who will get the benefit of the credit. The church and the minister can perhaps work out an arrangement so that the credit used to pay the minister’s taxes is in some way paid to the church, but this is a complication not present for other employees (unless they too happen to be treated as “statutory self-employed individuals” under SECA). This is probably an unintended result, but it is one that would appear to require a technical correction to the legislative text in order to change it.

Additional considerations

Two additional issues not explicitly addressed in the guidance merit consideration.

First, paid leave is required only if an employee is unable to work, or telework, due to the situations discussed above. If an employee is teleworking, he or she is not on leave, and the payroll costs associated with that work are not recoverable. Accordingly, it is important for employers to track whether teleworking staff are actually “at work” or “on leave” for a coronavirus-related reason. Only costs associated with paid leave time are creditable.

And second, the regulatory guidance does not discuss whether tax credits are available when employees work partial days. In a household with two wage earners, for example, each might take a half-day off to care for children. If each receives a half-day of paid coronavirus-related leave, each of their employers presumably may take a credit for those half-day paid leave costs.

A caution regarding exempt workers

Under the Fair Labor Standards Act, a worker is exempt only if, among other things, he or she is paid on a salary basis. Using leave pay to compensate an exempt employee for a partial day’s absence jeopardizes the exempt status. However, deductions from pay may be made for sickness-related absences of one or more full days without jeopardizing exempt status if the deduction is made in accordance with a bona fide plan, policy, or practice of providing compensation for loss of salary occasioned by sickness.

Donn Meindertsma and Danny Miller are partners in the Washington, D.C., office of Conner & Winters , LLP, and specialize in employment law and employee benefits law, respectively.

Precautions and Protocols to Take When Responding to a Pandemic

A medical professional and church leader explains how churches can respond safely and effectively.

There are many ways churches can respond to the COVID-19 (coronavirus) outbreak to love our neighbors, to prevent infection, and to demonstrate a Kingdom perspective. As both a medical professional and a church leader, I have firsthand knowledge of the best ways churches can do this. I am an infection preventionist at a large Midwestern hospital, working with epidemiologists and other healthcare providers on the current COVID-19 outbreak. I am also a worship leader at a nearby church, where my husband serves as lead pastor.

What we know so far

The global pandemic is spreading rapidly across the United States. This virus is difficult to stop because many infected people display no symptoms but may still carry and spread it. Infectious disease experts are still learning about how easily the virus spreads. Contracting the virus by touching the same surfaces as others (such as door knobs) appears to be a low, but still-present, risk. Being around someone infected who coughs or sneezes is a high risk.

Churches must grapple with both the low- and high-risk possibilities, whether it’s in regard to meeting as a church, keeping a church office open, or stepping into the community to serve as needs expand throughout this outbreak.

Mirror the policies of public schools

During the early part of the outbreak, my church considered asking anyone over the age of 60—as well as anyone with compromised immune systems—to remain home for their own protection. As one Sunday approached, one member in her 70s told me she would most certainly be at church—and she would continue attending each week as long as our church met. Another woman I talked to had been told that the virus was not spread by person-to-person contact. Both conversations offered opportunities for me to provide health education to my beloved church family, but they also showed me the risk of continuing to hold church services at all.

We still met as a church. But soon after, the local public health department reduced its recommended guidance for gatherings to groups of 10 or fewer people, and the local public school system announced all schools were canceled for at least four weeks.

At that point we followed suit and stopped meeting as a church. It’s a common practice for churches to follow the policies of the public schools in their area. This is because the public schools are agencies of the state. If churches align their policies with those of the state, it is unlikely any action will be later found to be liable or negligent. For instance, our church has the same cancellation policy as the public school, meaning if the schools have a snow day on a Wednesday, we cancel our Wednesday night services. The COVID-19 outbreak is another example where churches should follow the recommendations of legal and public health authorities: cancel church when public schools cancel.

Churches providing supplies to those in need

Most people now have had a “potential exposure” to a positive COVID-19 patient, since the virus is present and growing in numbers throughout the country. Still, this should not stop churches from dropping off supplies and meals to those in need.

Here are some tips for serving during this crisis:

  • Make certain anyone preparing and delivering supplies have had no COVID-19 symptoms (new onset of fever, cough, shortness of breath, or body aches).

  • Require leaders and volunteers to wash hands frequently when preparing and delivering supplies.

  • Deliver bags of supplies to the front porch or front door to lower exposure and interaction. Note that any conversations that occur will ideally keep leaders and volunteers outside of the house or apartment, and with at least six feet of distance between everyone after ensuring no one has had COVID-19 symptoms. Ask everyone to cover any coughs or sneezes with the inside of their elbow.

  • Use the same practices (no symptoms, frequent hand-washing, and six feet of distance between people) if your church chooses to distribute supplies from its building or parking lot to people in need.

If your church continues to meet

While recommendations and guidance from local public health departments continue to change daily, and many more places are adopting recommendations or restrictions like the one my area recently embraced, there are still communities around the country that have not yet implemented shelter-in-place restrictions or asked large groups not to meet. It may be just a matter of time before these communities follow the practices the majority of the country is now following, but in the event your church is located in one that hasn’t, I still advise your church not to meet, given the contagious nature of this virus.

However, if your leaders decide to still meet physically, implement the following practices I adopted when our church still met:

  • Instruct greeters to direct all congregants arriving for church to the bathroom to wash their hands. Post signs that read, “Please wash your hands before entering the sanctuary.” Consider keeping entrances locked from the outside that do not have close proximity to a bathroom. (If hand sanitizer is available, that could work as well.)

  • Encourage congregants to space out where they sit, if your church’s seating arrangement allows.

  • Perform a handwashing demonstration during announcements. At my church, I brought kids on stage with me to do the handwashing motions, and I asked the congregation to practice the motions with us.

  • Remove the time for “meet-and-greet” or handshaking. Instruct the congregation to refrain from all physical touching (shaking hands, hugging, and even elbow touching, because that is where people cough).

  • Instruct congregants to walk to a collection plate or designated place to collect offering to avoid multiple people touching the same item.

  • Instruct congregants to walk to the front of the church to receive communion. When we were still meeting, two communion servers wearing gloves distributed the elements. Each congregant was asked to hold their hand flat and one communion server dropped the bread into their open hand. The other communion server placed an individual communion cup on a table in front of them, and the congregant who received the communion picked up the cup. Alternatively, if individual communion cups are not an option, distributing only the bread would be fitting.

  • Remove prayer partners or time when congregants and leaders and pastors typically pray in close proximity. Instead, ask congregants with prayer needs to raise their hands and stay seated, with the congregation then praying about the needs represented.

Churches canceling services

If your church has canceled services, I encourage you to do what our church has done over the past few weeks, including:

  • Increasing your social media presence. Post Scriptures, videos of pastoral encouragement, and short devotionals.

  • Streaming your services online, if you are able.

  • Asking pastoral staff, board members, deacons, or other church leaders to call your church family to check on them and pray with them.

  • Asking your music pastor or worship team to record songs for your congregants on CDs and/or to post on social media. (Note: Be sure you abide by music copyright law.)

  • Encouraging your church family to check in on each other, call each other, and share supplies.

  • Getting creative about this time of solitude. Quarantining can be a spiritual practice for those with extra free time. That time can be used to read the Bible more and pray more.

If you must cancel services, please know that, as a medical professional, I commend your efforts to help control the spread of COVID-19. Each person who stays home is helping to reduce the spread of this virus.

Holly Hammar Lear is a PhD prepared nurse and public health official. She also serves as a worship leader and her husband is the lead pastor of Resurrection Assembly of God in Iowa City, Iowa.

ajax-loader-largecaret-downcloseHamburger Menuicon_amazonApple PodcastsBio Iconicon_cards_grid_caretChild Abuse Reporting Laws by State IconChurchSalary Iconicon_facebookGoogle Podcastsicon_instagramLegal Library IconLegal Library Iconicon_linkedinLock IconMegaphone IconOnline Learning IconPodcast IconRecent Legal Developments IconRecommended Reading IconRSS IconSubmiticon_select-arrowSpotify IconAlaska State MapAlabama State MapArkansas State MapArizona State MapCalifornia State MapColorado State MapConnecticut State MapWashington DC State MapDelaware State MapFederal MapFlorida State MapGeorgia State MapHawaii State MapIowa State MapIdaho State MapIllinois State MapIndiana State MapKansas State MapKentucky State MapLouisiana State MapMassachusetts State MapMaryland State MapMaine State MapMichigan State MapMinnesota State MapMissouri State MapMississippi State MapMontana State MapMulti State MapNorth Carolina State MapNorth Dakota State MapNebraska State MapNew Hampshire State MapNew Jersey State MapNew Mexico IconNevada State MapNew York State MapOhio State MapOklahoma State MapOregon State MapPennsylvania State MapRhode Island State MapSouth Carolina State MapSouth Dakota State MapTennessee State MapTexas State MapUtah State MapVirginia State MapVermont State MapWashington State MapWisconsin State MapWest Virginia State MapWyoming State IconShopping Cart IconTax Calendar Iconicon_twitteryoutubepauseplay