Pastor, Church & Law

Introduction: Compensation and Benefits

§ 8.06

Compensation and Benefits

Overview

Churches need to be aware of several legal and tax issues related to the wages and benefits they provide for their employees. Here are the critical points you need to know:

Workers compensation —Workers compensation laws were enacted in all 50 states to give injured workers a quicker, less costly, and more certain recovery than was possible by suing an employer directly for negligence. In exchange for such benefits, employees give up the right to sue an employer directly if they’ve gotten sick or been injured on the job.

Workers compensation laws only cover injuries and illnesses suffered by employees on the job. The term employee generally is defined very broadly to effectuate the objectives of the workers compensation law. As a result, persons whom a church may deem self employed for income tax purposes may be deemed employees for purposes of the workers compensation law.

Generally, a church is not subject to any penalties if it knowingly hires and compensates a person who is receiving workers compensation benefits. It is the employee, and not the employer, who may be required to return benefits paid while he or she is earning wages from a job.

If you have not procured workers compensation insurance, your church may be exposed to uninsured risk for injuries sustained by employees in the course of their employment. Even if your church has general liability insurance, this ordinarily will not cover a workers compensation related claim.

Fair Labor Standards Act —The federal Fair Labor Standards Act (FLSA) generally requires covered employers to pay their employees at least the federal minimum wage, plus overtime premium pay of one and a half times the regular rate of pay for all hours worked over 40 hours in a workweek. However, the FLSA includes a number of exemptions from the minimum wage and overtime requirements. These exemptions have created considerable confusion over the years regarding who is, and who is not, exempt. This chapter explains the application of the FLSA, and its exemptions, to church staff.

There are several legal and tax issues associated with the compensation and benefits a church pays to its employees. This chapter will address workers compensation, the minimum wage, and overtime pay. Several other issues are addressed in other books by Richard Hammar, as summarized in Table 8-2.

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
caret-downclosefacebook-squarehamburgerinstagram-squarelinkedin-squarepauseplaytwitter-square