Q&A: Can We Hire Someone Receiving Workers’ Comp?

Can our church knowingly hire a person who is receiving workers’ compensation benefits?

We have a volunteer who gives a lot of time, maybe 20-30 hours a week. We do not pay him. He is receiving workers’ compensation from an ankle injury. One of our board members is concerned that there may be some liability issues for the church in having him volunteer that many hours while he is on workers’ compensation. Is this a valid concern?

Workers’ compensation benefits are based on the nature and degree of an injured worker’s work-related injury. “Total disability” benefits may be awarded upon a finding that the injured employee can no longer perform compensated employment. As a result, a person’s eligibility to receive total disability benefits is directly affected if he or she begins performing compensated employment. And, such employment may not only result in a discontinuation of benefits, but also a legal obligation to return benefits already paid. Is a church subject to any penalties if it knowingly hires and compensates a person who is receiving workers’ compensation benefits? In most cases, the answer is no. It is the employee, and not the employer, who may be required to return benefits paid while he or she was earning wages from a job.

Still, it is a “best practice” for churches to consider the following precautions: If a church employee is injured on the job (either at church or at a “second job”), and is receiving workers’ compensation benefits, be sure the employee is legally permitted to perform compensated employment before allowing him or her to continue working.

If a church employee is injured on the job (either at church or at a “second job”), and is receiving workers’ compensation benefits, be sure the employee complies with any “notification” requirements prescribed by state law. Persons receiving workers compensation benefits may be required to notify a state agency if there is any improvement in their condition, or if they perform compensated employment. Failure to do so may make the recipient legally obligated to return some or all of the workers’ compensation benefits that were paid.

Note that an injured employee is performing “compensated employment” (which may jeopardize eligibility for workers’ compensation benefits) if he or she is receiving compensation for performing services. The fact that the amount of compensation is small may be irrelevant. And, the employee cannot avoid disqualification by characterizing church compensation as “love gifts.”

If your church has at least 15 employees, and is engaged in commerce, then you are subject to the Americans with Disabilities Act. This Act generally prohibits covered employers from discriminating in employment decisions on the basis of the disability of a person who is able to perform the essential functions of a job with or without reasonable accommodation by the employer. There are exceptions. For example, churches are permitted to discriminate on the basis of religion in their employment decisions. Many states have their own disability laws, and some of these laws apply to employers with fewer than 15 employees (and none requires interstate commerce).

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

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