Employees vs Contractors
Properly determining whether a worker should be classified as an employee or a contractor involves evaluating the nature of the relationship between the church and the worker. The federal requirements and state requirements may differ – and your church would be required to comply with whichever set of rules is more in the favor of the worker.
Below are some key factors to consider based on federal requirements:
- Control: Who controls the work activities? If the church has the right to direct the worker’s activities, then the worker is likely an employee.
- Tools and Equipment: Who provides the tools and equipment necessary to perform the work? If the church provides the tools and equipment, the worker is more likely an employee.
- Duration: Is the relationship between the worker and the church ongoing and long-term, or is it project-based and temporary? If it is long-term, the worker is more likely an employee.
- Other Clients: Does the individual provide the same services to other churches? An individual who provides the same or similar services to other may be eligible to be classified as a contractor.
We’ve found that churches commonly misclassify roles such as childcare workers, musicians and janitors. To ease the administrative burden, churches often pay these individuals by simply writing a check and maybe providing a 1099 at the end of the year. However, in most cases, these roles are still subject to the control of the church, the church often provides the supplies, and the work is done on an ongoing basis.
Why is this important?
The classification laws exist to protect individuals from unfair or oppressive treatment. Classifying a worker as an employee affords the worker the protection of minimum wage laws, overtime laws, and is better financially for the worker because the church contributes half of their FICA (Social Security/Medicare) taxes. Contractors lack these benefits.
Example: A Church Childcare Worker A church hires a childcare worker to care for children during Sunday services and other church events. The church sets the schedule for the worker, provides the toys and equipment needed to care for the children, and directs the worker’s activities. The worker is paid an hourly wage and is eligible for health insurance and other benefits. In this case, the childcare worker is likely an employee, as the church has more control over their work and provides the tools and equipment needed to perform the job.
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