Paying Honoraria to Board Members
Q: We'd like to pay an annual honorarium of $1,000 to each member of our church board as an expression of appreciation for their service. Any legal or tax implications with this?
A: There are several legal and tax issues that need to be considered. Let me mention seven of them.
1. Workers compensation. Workers compensation laws provide for the payment of benefits to employees who sustain work-related injuries or illnesses. These laws generally define the term "employee" broadly. It is possible that a board member receiving annual compensation of $1,000 would be deemed an employee under your state's workers compensation law. If so, then in most states the church would be obligated to provide workers compensation insurance to cover work-related injuries and illnesses. A failure to do so might create an uninsured risk since a church's general liability insurance policy typically excludes such injuries and illnesses on the assumption that they are covered by workers compensation. Check with your workers compensation insurer to see if the board members would be employees under state law.