Employees and Contractors and Churches...Oh My!

Before you make your musician, tech guy, or childcare worker an independent contractor, check to see if they meet this test!

The Biden administration has yet to determine the test for defining employees from contractors. But they are leaning towards California’s “ABC Test,” which really narrows the field of who can be considered and paid as an independent contractor.

Under the ABC test, a worker is considered an employee and not an independent contractor unless the organization satisfies ALL 3 of the following conditions:

1. The worker is free from the control and direction of your organization in how the work is performed

2. The worker performs work outside the usual course of the organization’s business/mission

3. The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as that involved in the work performed (i.e. they do the same kind of work for other organizations)

If this is adopted, then most independent contractors churches and ministries use will need to be paid as employees instead.

So what should you do?

1. Review your contractors to see who would still qualify based on these 3 questions

2. Consider shifting those who fall short over to employees

For more info, check out the recent Church Law & Tax article diving deeper into this issue for churches.