Jump directly to the content

Payroll Audits: What Every Church Should Know

Preparation can prevent an audit—or handle one if it arises.

Years ago, a panicked client called after the Department of Labor provided notice that it was preparing to audit the ministry's payroll. A disgruntled warehouse worker filed a complaint about unpaid overtime pay, initiating the audit.

The DOL informed me the audit was set for Good Friday—only 72 hours away. I politely informed the federal employee that the ministry was closed on Good Friday. She replied "just a moment." After hearing loud typing on the other end, she continued: "That is not a federal holiday. We will be there Friday."

After an extensive auditing process, we received good news. The DOL determined the disgruntled employee had been paid in accordance with DOL standards.

But there was bad news, too. When the DOL audits an employee's wage and hour claims, it reviews the complainant's file as well as EVERY SINGLE EMPLOYEE file for the past two ...

Log In For Full Access

Interested in becoming a member? Learn more.

David Middlebrook is an attorney and the managing partner of Middlebrook Goodspeed, a firm focused on churches, ministries, and clergy. Middlebrook advises clients and colleagues on an array of church- and ministry-related legal issues, including corporate governance, employment law, risk management, intellectual property, and compensation practices.

Related Topics:
Posted:
  • October 20, 2015

Related ResourcesVisit Store

Church Compensation
Church Compensation
Learn the many pieces of employee compensation.
Your Guide to Employee Handbooks
Your Guide to Employee Handbooks
If updated regularly, an employee handbook can offer valuable legal protection against civil court claims made by disgruntled staff members.
Understanding Labor Laws
Understanding Labor Laws
Regulations that pertain to hiring, firing, paying, disciplining, and supervising ministry employees.
Safe Hiring Practices for Churches
Safe Hiring Practices for Churches
Essential items to consider before you bring new clergy or staff on board.