Must Churches Purchase Workers Compensation Insurance for Their Pastor?

Most churches require it, but an Idaho court rules otherwise.

The Idaho Supreme Court ruled that a state agency acted improperly when if fined a church for failing to carry workers compensation insurance for its pastor. The church had argued that it was exempt from the requirements of the workers compensation law on the ground that its activities were not conducted for financial gain. The state workers compensation law applies “to all private employment.” An employer is one who “has expressly or impliedly hired or contracted the services of another.” When engaged in private employment, an employer must “secure or insure” its potential liability for worker’s compensation claims. However, the law further provides that it does not apply to “employment which is not carried on by the employer for the sake of pecuniary gain.”

The court noted that the church was an “employer” of the pastor, and the pastor performed “services in the course of the trade, profession or occupation of” the church. But it concluded that the church was not engaged in its business “for the sake of pecuniary gain” and therefore was not required to obtain workers compensation insurance for its pastor. State of Idaho v. Bible Missionary Church, Inc., 2003 WL 21180169, (Idaho 2003).

Key point. Most states do not exempt churches from the application of workers compensation laws. Church leaders should understand that a failure to obtain workers compensation insurance may expose their church to a substantial uninsured risk for any work-related injury or illness, since general liability insurance policies exclude such claims because of the assumption that they are covered by workers compensation.

This article first appeared in Church Treasurer Alert, July 2003.

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

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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