Like a dentist probing your mouth with that pointy spear of his, the last two Corners concerning payroll matters seem to have touched a nerve! I’ve received numerous contacts concerning independent contractors vs. employees, or paying salaries instead of hourly wages.
Let’s clear the air — the church is an employer. As an employer, it is subject to most of the same “wage and hour” laws and regulations as any other business. When the church pays wages to an employee other than its pastor and, perhaps, certain other staff ministers, it must withhold federal and state income taxes and Social Security and Medicare (FICA) contributions, and also pay the employer share of FICA contributions. There is no religious exemption, and your pastor might not be exempt from overtime wages.
Jesus counseled His disciples that paying taxes is the privilege of being a member of society.
Dozens of regulations have serious consequences for the church when violations occur. Churches are notorious for failing to document employee hours of work, and openly allow “off the clock” work. We’re in the fourth year of mandatory paid sick leave in California, and there are churches that still fail to accrue paid leave to their employees. The church is exposed to thousands of dollars of “penalty wages” and administrative fines when it fails to enforce mandatory rest and meal breaks. This is serious stuff.
Churches insist that paying anyone a “salary” avoids having to keep track of work hours and overtime wages. Not true. Some argue that worship musicians who are paid $25 or $50 to rehearse and play a few songs are not employees and that their payments are merely “love gifts,” not wages. However, some “volunteers” may be misclassified and are employees because they receive compensation — particularly those “love gifts” which the IRS defines as “income” — which may also fail to meet mandatory minimum wage or overtime requirements.
It’s unlikely that the US Department of Labor or the California Department of Industrial Relations will audit your church’s payroll accounting on their own initiative, but nothing prevents them from doing so! If either were to receive a complaint from an employee or volunteer, be assured they will show up and ask to see your Employee Handbook and policies that apply to the complaint.
How will your church respond? Do you even have an Employee Handbook or Policies & Procedures Manual?
Poorly written or incomplete handbooks are trouble the church cannot afford. The church cannot say, “We didn’t know.”
For the discounted subscription fee of just $200, your church can have a fully compliant, automatically updated handbook to give every employee and volunteer. Recent software upgrades now allow expansion of the handbook into a complete Policies & Procedures Manual at no additional cost.
Review a checklist of necessary employee policies posted at www.csbc.com/compliance, then call 559-256-0858 to subscribe to the Employee Handbook Builder. It’s a small price to pay for a large measure of protection!