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Can a church have different PTO policies for job categories?

Employers can generally offer different PTO benefits to different employees as long as there is a valid and non-discriminatory business reason for doing so. We would recommend mentioning your policy variations in your employee handbook to be clear on the subject. With that said, it is important to keep in mind that while employers have a great deal of discretion with the administration of PTO benefits, there are certain provisions governing retirement and health insurance benefits for highly compensated employees and executives. Additionally, if state or municipal law has any mandated sick leave benefits, you’ll want to ensure that those are offered to all employees in accordance with the law.

When structuring a PTO policy that offers different benefits to different employees, it is critical that there is a valid business reason for the difference and no illegal reasons behind the distinction, such as gender for example. You’ll want to ensure that the categories of employment are clearly defined in your policy when differentiating between employment classes that are/aren’t eligible for a benefit such as PTO. This clear distinction assists in mitigating the risk of future claims that someone should have been eligible for a benefit that they were not eligible for. 

Like with all other employment actions, it is important to be consistent in your treatment of all similarly-situated employees. Distinctions among groups of similarly situated participants in an employment benefit should be based on bonafide employment-based classifications consistent with the employer’s usual business practice. In most cases, such classes cannot be as specific as detailed above, as it looks like you are picking and choosing who gets the benefit. However, it could be something like management vs. non-management. or something similar. 

This policy should be distributed to employees in the employee handbook and you should always obtain a signed handbook acknowledgment indicating the employee’s understanding of your internal policies and benefit offerings, as described in the handbook. The acknowledgment should be retained in the employee’s personnel file.

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Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101 
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com

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