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Employee or Independent Contractor?

By Jan Gartner

Woman holding tax return forms

Each individual you compensate is either an employee or an independent contractor. This is a critical legal distinction, with implications for benefits, taxes, and more. Nearly all workers in our congregations are employees. An employee is entitled to employer-provided benefits (as eligible) and their wages are reported on a W-2 form. The congregation, as employer, is responsible for appropriate payroll tax withholding and remittance.

In general, independent contractor status is appropriate for those who provide services through a business (e.g., custodial services, lawn care, piano tuning) and professionals who support worship or consult on a one-time or occasional basis with no other leadership role in the congregation (e.g., itinerant musician, supply preacher, workshop presenter). Independent contractors are not entitled to benefits, receive a 1099 form (if the congregation pays them more than $600 in the calendar year), and pay self-employment taxes.

Note: Some states have put more restrictive laws in place, making it more difficult to classify a worker as an independent contractor.

The resources below will help you make the appropriate determination for those you compensate. Unless you can make a clear case for independent contractor status, based on IRS common law rules, you should consider each of your workers an employee.

UUA Resources

Additional Resources

  • This Independent Contractor or Employee? page from the IRS describes the behavioral, financial, and relationship factors to help you make the proper determination.
  • This Get the Facts on Misclassification page from the U.S. Department of Labor addresses misunderstandings that frequently result in the misclassification of employees as independent contractors.

About the Author

Jan Gartner

Jan is passionate about helping congregations live out their values within their walls!...

For more information contact comp@uua.org.