Q&A: Is a Bonus Allowed for a Staff-Created Worship Song or Book?

Fairly rewarding an employee’s work when that work is owned by the church.

Can we pay a ‘bonus’ to a pastor or worship leader for a successful derivative work (i.e. a worship song or a book based on sermons) they created and the church owns?
Yes, as long as the overall compensation of the employee is reasonable. A church cannot compensate any of its employees more than a reasonable amount. A reasonable amount is determined by experts using a facts and circumstances test. This test looks at the totality of the circumstances and compares similarly situated employees working for similar employers. If an employee creates something of great value, then it is reasonable to compensate that employee based on the increased value to the employer and not just the services performed.
For example, when University of Florida professors created “Gatorade” to assist their football team, they created property that generates more than $12 million in royalties annually for the benefit of the university. It is entirely reasonable that the professors be paid a percentage of the royalties (reportedly 25 percent of the royalties received) as compensation. Their compensation far exceeds that of professors that only teach and conduct research with unknown value since they are only compensated for the value of their current services.
Another example from the church world demonstrates the same principle. One of the most popular Christian songs is “Shout to the Lord,” authored by Darlene Zschech and owned by Hillsong Music, a part of Hillsong Church in Sydney, Australia. At the time of the writing of this song, Zschech was a part-time worship leader at Hillsong Church. Under copyright law, all songs written by employees within their duties are owned by their employers. According to estimates, this one song generates millions of dollars of royalties for Hillsong Music. It would be entirely reasonable to compensate a part-time worship leader a percentage of the royalties because of the value created by that one song.
I suggest that any bonus be based on comparable data. For example, if songwriters are typically compensated at the rate of 10 percent of the royalties, it would be unreasonable to give them a bonus of 50 percent of the royalties.
Frank Sommerville is a both a CPA and attorney, and a longtime Editorial Advisor for Church Law & Tax.

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