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Insurance Coverage for Contractors, Volunteers, and Employees

Man working at a church with a young girl

Exploring Workers Compensation Needs at Church

Many church organizations find the rules and state regulations for workers compensation coverage difficult at best and one of the most confusing aspects of this coverage is how to determine boundaries and parameters in distinguishing between employees, volunteers, and contractors.  While most organizations rely on IRS definitions to determine which category an individual falls into, insurance definitions are much broader with regard to whom is considered a paid employee.

For pastoral staff and church administrative positions, the church may elect to provide church leaders with a 1099 for tax reporting purposes but this does not preclude a staff member from being treated as an employee under Workers Compensation laws.  Any time an employee is paid housing, love offerings, or an agreed amount of remuneration for their services, that person becomes an employee by insurance standards and should be considered in dealing with Employers Liability and Workers Comp coverage. 

Just as your pastoral leaders may be categorized differently than tax laws would stipulate, this also holds true for independent contractors that you might hire to do lawn maintenance or custodial work. Many church organizations use businesses that specifically perform this type of service but the church would still be liable for any injuries incurred by the contractor while on the job at the church premises unless the church first verifies that the contractor provides them with a current Certificate of Insurance specifically listing Workers Comp coverage.  For that reason, any monies paid to these individuals will need to be included as payroll from an insurance standpoint.

Some churches elect to use volunteer staff for various church functions but there are also considerations that should be examined when trying to determine what the church's legal liability is for the individual.  Volunteers, such as camp counselors or nursery workers, fit the definition of "employee" if there is any consideration for payment from the church in any way.  Because most camp workers receive room and board and free meals during camp sessions, they are considered paid employees and should be treated as such.  Gift cards, offerings, or any other compensation for service automatically changes the volunteer status to employee status for those individuals and the church should be aware of its legal responsibility to provide coverage in the event of an accident.

Most states have thresholds that determine when workers compensation is compulsory under statutes and regulations.  Some states look at total number of employees while others determine employer responsibility by total payroll.  In either case, whether a church organization is required by mandate to carry insurance or not, protecting workers while they are on the job and providing coverage to take care of damages to them should be top priority

Loomis Insurance risk advisors understand the important distinctions in determining an employer's responsibility and can help you secure coverage that protects you and your employees.  Please don't hesitate to give us a call today.



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