Most churches often struggle with “employee classification” usually with their musicians, nursery workers, secretaries, custodians, etc.
Generally, the IRS looks at three areas: Behavioral Control, Financial Control, and Type of Relationship. In most cases, church musicians do not pass the test of being an independent contractor because of the control that the employer exercises over the musician’s work. In two Private Letter Rulings, the IRS has maintained that church organists and choir directors are employees, not independent contractors.
While musicians were free to decline to perform in any program, the church selected the music, dictated the dress, set performance and rehearsal times. In sum, the church exercises sufficient control over the details of the musicians’ performance to make them employees.
If you tell the musician when, where and/or how to play, they are not independent contractors. They are your employees and may be covered by the FLSA.
How has your ministry handled employee classification?
These are general rules that won’t cover every situation possible. If you have a more specific question regarding employee classification, Clergy Financial Resources can help. Our Pro-Advisor service can provide answers to your tax questions, quickly and easily.
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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.
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