Key point 8-07.2. All states have enacted workers’ compensation laws to provide benefits to employees who are injured or become ill in the course of their employment. Benefits generally are financed through insurance premiums paid by employers. Churches are subject to workers’ compensation laws in most states.

A Kansas court ruled that a volunteer worker who was injured while removing a tree from church property was not an employee of the church and therefore was not eligible for workers’ compensation benefits. A church board agreed to cut down two large trees on the church’s property that were hanging over a neighbor’s property. The church could not afford to pay someone to remove the trees, so a board member rounded up about 15 people to help cut down and remove the trees. Several people brought their own chainsaws to help with the project. One of the volunteers (the “victim”) was a board member’s son, and the board member asked him if he would use his truck to pull a trailer to haul away the wood. The board selected the day the trees would be removed. The church provided lunch for the workers that day. The board told the victim that he could have the wood since he was hauling it away.

The first day, the victim and the rest of the group cut down the trees and removed the wood. The victim was the only person who received the wood from the felled trees. While the board member told the workers to cut the trees down, he did not tell them how to do it or how to cut up the tree branches. No one from the church gave any training to the victim on how to cut down the trees. The board member later testified that his son was not an employee of the church at any time. The church did not provide any of the chainsaws or equipment.

On the second day of trimming—approximately a week later—the pastor told the victim that he wanted the remaining stumps cut to the ground. The victim cut his hand with a chainsaw as he attempted to cut one of the stumps. The saw kicked back, caused him to lose his balance, and then the saw struck the fingers on his right hand. He was taken to the emergency room and later had reparative surgery. He missed six weeks of work from his regular job. He has lingering grip and sensitivity issues in this right hand.

The victim testified he was not an employee of the church at the time. Rather, he was employed as a forklift driver for a distribution company. He was not a member of the church but attended on occasion. He also testified that this was a one-time job and he did not have an ongoing relationship with the church. He said there were no set hours for the job, just that the job be completed.

The victim filed a workers’ compensation claim for the injuries to his right hand. He incurred over $50,000 in medical bills. A physician testified that the victim suffered a 34 percent permanent impairment to his right upper extremity. The church had workers’ compensation insurance, but its policy did not contain an inclusion, amendment, or endorsement covering volunteers.

After a full hearing, an administrative law judge (ALJ) denied workers’ compensation benefits because the victim had failed to prove the existence of an employer-employee relationship. The ALJ found that neither the victim nor the church considered him an employee of the church and there was never any intent to create an employment contract. Rather, the ALJ found the working relationship was that of an independent contractor, if anything at all, based on the victim using his own equipment and there was no evidence of the right of the church to control the method or manner of performing the work. The ALJ also stated that the victim was paid in-kind on a one-time basis with cords of wood and that such payment does not constitute “wages.” The Workers’ Compensation Appeals Board agreed with the ALJ’s conclusion that the victim was an independent contractor and added: “[He] was simply doing his father a favor and agreed, along with 15 others, to cut down two trees and haul away the wood. He was not an employee of the church.”

On appeal to a state appeals court, the victim argued that the ALJ and Board erred in finding that he was an independent contractor, not an employee of the church, and therefore not entitled to workers’ compensation benefits.

The Court began its opinion by noting that “there is no absolute rule for determining whether one is an independent contractor or an employee. Generally, each case must be determined on its own facts.” However,the Court noted that “there are some well-recognized tests which courts have used in determining whether one is an independent contractor or an employee,” and that “the principal test is based upon the control exercised: Who has the right to direct what work will be done and when and how the work will be performed? This test is commonly referred to as the ‘right of control’ test.”

The victim argued that he was an employee of the church, not an independent contractor. He had no control over the 15 volunteers who helped remove the wood. He did not set the date and time to remove the trees, and he was working under the supervision of his father and the pastor. He asserted that it was undisputed that he was specifically instructed by the pastor to cut the stumps as close to the ground as possible, and that he received wages in the form of wood from the fallen trees and no other person involved received any type of payment or compensation. Since he had no control over the job, he could not be an independent contractor.

The court pointed to the following additional factors to support its conclusion that the victim was a contractor rather than a church employee:

1. The existence of the right of the employer to require compliance with instructions.
2. The extent of any training by the employer.
3. The degree of integration of the worker’s services into the employer’s business.
4. A requirement that the services be provided personally by the worker.
5. The existence of hiring, supervising, and paying assistants by the worker.
6. The existence of a continuing relationship between the worker and the employer.
7. The degree of establishment of set hours of work.
8. The requirement of full-time work.
9. The degree of performance of work on the employer’s premises.
10. The degree to which the employer sets the order and sequence of work.
11. Whether payment is by the hour, day, or job.
12. The extent to which the employer pays the worker’s business or travel expenses.
13. The degree to which the employer furnishes tools, equipment, and materials.
14. Whether the employer has the right to discharge or terminate the worker.
15. Whether the worker is engaged in a distinct occupation or business.
16. Whether the work is part of the regular business of the employer.
17. Whether the parties believe they are creating the relation of employer and employee.

The court concluded that these factors overwhelmingly demonstrated that the victim was a contractor rather than a church employee, and therefore was ineligible for workers’ compensation benefits:

Here, it is our opinion that when measured by the foregoing standards, the recorded evidence sufficiently supported the findings adopted by the ALJ and Board. Ample substantial competent evidence in the record before us, as echoed in the factual findings below, demonstrates that the church did not possess a right of control over the victim in his completion of the job of cutting down the trees, loading them into his truck and trailer, and cutting the stumps to the ground. There were no conditions of his employment or rules regarding completion of the job. An independent contractor is one who, in the exercise of an independent employment, contracts to do a piece of work according to his or her own methods and who is subject to his or her employer’s control only as to the end product or final result of his or her work. The evidence, therefore, leads to one reasonable inference, i.e., the victim was an independent contractor and is not entitled to workers’ compensation.

What This Means For Churches:

Though the victim in this case was ultimately considered an independent contractor, and thus not eligible to receive workers’ compensation, church leaders should still consider the following four points:

1. Are we subject to workers’ compensation law? Church treasurers should know whether their church is subject to state workers’ compensation law. If you are not sure if your church is covered, consider one or more of the following steps: (1) ask a local attorney; (2) ask your church insurance agent; or (3) call the agency in your state that administers the workers’ compensation program.

2. The risk of being uninsured. Employers that are covered by workers’ compensation law generally pay insurance premiums to cover the cost of benefits paid to injured workers. However, many churches have failed to obtain workers’ compensation insurance, often because of a false assumption that they are “exempt” from workers’ compensation laws. This can expose a church to significant liability for two reasons. First, an injured employee may be able to sue the church for damages in a civil lawsuit. Unlike workers’ compensation benefits, there is no limit on the amount a court can award in a civil lawsuit. Second, the damages a court awards in a civil lawsuit will not be covered under most church insurance policies. Often, general liability policies exclude employee injuries on the assumption that they are covered under a workers’ compensation policy. This can create a dangerous gap in coverage.

Workers, like the victim in this case, who are deemed to be contractors rather than employees, are not eligible for workers’ compensation benefits. However, they may be able to bring a civil law claim against a church for which they perform services. Such a claim ordinarily is covered by the church’s general liability insurance policy.

3. Do we have workers’ compensation insurance? If your church is subject to workers’ compensation law, then be sure you have obtained workers’ compensation insurance. If in doubt, ask your church insurance agent.

4. Employees. Workers’ compensation laws only cover injuries and illnesses suffered by employees on the job. While the courts generally define the term “employee” broadly, there are limits, as this case demonstrates. And note that the fact that a church treats a worker as self-employed for income tax reporting purposes does not mean that the worker is self-employed for workers’ compensation. Miller, 2015 WL 5458679 (Kansas App. 2015).