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.