Many churches have received the wrong information or are confused about workers compensation.

It begins with the recognition that employees are an asset to be protected. People are what drive the church. Without people, there is no church.

Let’s consider what worker’s compensation insurance is intended to do. The two basic coverages of workers compensation are to pay for work-related injuries and replace lost wages. State statute will determine the limits and length of time benefits are paid. Most states will allow you to increase the statutory limits for a small premium. I recommend you always buy the increased limits. The price increase is so small that if a serious accident occurred you would be so thankful you did.

Each state regulates their worker compensation benefits. Since I live in Florida I will use our state guidelines. The minimum coverage limits are $100,000 per person, $100,000 per occurrence with an aggregate (total) of $500,000 benefit.

Florida mandates that once a business hires their fourth employee, workers compensation is mandatory. It does not matter if all are part-time. Part-time is considered the same as a full-time employee.

What if your church has fewer than four employees? Do we need workers compensation? That is a question I receive frequently. The short answer is: If you want their medical bills paid and lost wages covered, you do.

The church insurance policy will specifically exclude employees. So if the pastor falls off a ladder while changing a light bulb, he is on his own for medical bills. The church liability policy will not respond. It is similar when you enter a restaurant. If you slip on the water on the floor, the restaurant’s liability policy has medical payments coverage for you as a patron. However, if the waiter slips on the water, he is not covered by the liability policy. He is covered by their worker’s compensation policy.

Many churches have the mistaken idea that since their pastor is a 1099 (independent contractor), he is not an employee. Sometimes a pastor is simply paid a housing allowance and not a regular “salary”. In both cases the thinking is wrong. The requirements to be an independent contractor are very specific. Do you expect your pastor to preach every week? Does he have an office at the church? If you answer yes to either of those, he is not an independent contractor according to Florida Statute 440.02(15)(d).

In order to meet the definition of independent contractor, at least four of the following criteria must be met:

(I) The independent contractor maintains a separate business with his or her own work facility, truck, equipment, materials, or similar accommodations;

(II) The independent contractor holds or has applied for a federal employer identification number, unless the independent contractor is a sole proprietor who is not required to obtain a federal employer identification number under state or federal regulations;

(III) The independent contractor receives compensation for services rendered or work performed and such compensation is paid to a business rather than to an individual;

(IV) The independent contractor holds one or more bank accounts in the name of the business entity for purposes of paying business expenses or other expenses related to services rendered or work performed for compensation;

(V) The independent contractor performs work or is able to perform work for any entity in addition to or beside the employer at his or her own election without the necessity of completing an employment application or process; or

(VI) The independent contractor receives compensation for work or services rendered on a competitive-bid basis or completion of a task or a set of tasks as defined by a contractual agreement, unless such contractual agreement expressly states that an employment relationship exists.

If four of the criteria listed above do not exist, an individual may still be presumed to be an independent contractor and not an employee based on full consideration of the nature of the individual situation with regard to satisfying any of the following conditions:

(I) The independent contractor performs or agrees to perform specific services or work for a specific amount of money and controls the means of performing the services or work.

(II) The independent contractor incurs the principal expenses related to the service or work that he or she performs or agrees to perform.

(III) The independent contractor is responsible for the satisfactory completion of the work or services that he or she performs or agrees to perform.

(IV) The independent contractor receives compensation for work or services performed for a commission or on a per-job basis and not on any other basis.

(V) The independent contractor may realize a profit or suffer a loss in connection with performing work or services.

(VI) The independent contractor has continuing or recurring business liabilities or obligations.

(VII) The success or failure of the independent contractor’s business depends on the relationship of business receipts to expenditures.

Another question is whether someone who cleans/cuts the grass should be covered by worker’s compensation. Many times it is a person that is a member and they work to earn extra income. My question is, “If they were hurt would the church want their medical bills and/or lost wages covered?”

If the worker can demonstrate an employer/employee relationship then the courts may answer your question. Some states can impose fines if an employer deliberately fails to cover or misclassifies employees.

I had a church that owned a camp in South Florida. The caretakers lived in a residence on the property. While baking cookies for a few campers from inside their residence, the wife was burned badly. The church did not pay them a salary. In exchange for looking after the property, they were allowed “free” rent.

A claim was made by the wife. The church strongly discouraged it since the claimant was not here in the US legally. Their “free” rent was treated as compensation and their worker’s compensation policy paid her medical bills.

Why create an adversarial position when it could have been easily avoided? Workers compensation for churches is inexpensive when considering the benefit. Don’t take the risk. You do not want your church to receive bad press in the community because you did not care for your workers properly.

Florida uses a formula to determine your lost wage benefit. They consider the preceding 13 weeks, not counting the week in which you were injured. Two-thirds of your wages are paid based on the preceding average with a maximum benefit available of $886. You should receive your first check within 21 days after reporting the injury.

Churches should be safe places for family and members. Don’t forget the workers, too.

Churches and Workers’ Compensation

Many churches have received the wrong information or are confused about workers compensation.