The UUA Office of Church Staff Finances applauds progressive employment laws aimed at preventing workers from being exploited. At the same time, we recognize that new legislation can be challenging to interpret and places additional burdens on congregational leaders. Here we provide guidance on California's new AB5 law.
Workers in congregations (and organizations of all kinds) are classified as either employees or independent contractors under the federal Fair Labor Standards Act or more restrictive state law. California Assembly Bill 5 (AB5), which went into effect on January 1, 2020, narrows the definition of independent contractor.
Under AB5, a worker must be classified as an employee unless all three of these conditions apply:
(A) The worker is free from the control and direction of the company in performing the work.
(B) The worker performs work that is outside the usual course of the company's business.
(C) The worker is customarily engaged in an independently established trade, occupation, or business of the same nature as the work performed for your organization.
The focus of this law is businesses that make wide use of independent contractors, denying those workers basic employee protections, employee benefits, and sometimes even a minimum wage (think Uber). Nevertheless, AB5 applies to all employers and workers who have not specifically been exempted. Below is our interpretation of AB5 for congregations.
Consider these three categories:
- Independent Contractor (all along)
A worker who has their own business, with the congregation as one of their clients, and who performs work that is not central to the "usual course of the congregation's business" can still be treated as an independent contractor. In general, independent contractors use their own tools and have limited interaction with congregants. The congregation is only concerned with results.
Examples of Independent Contractors: piano tuner, outside lawn or snowplowing services
- Employee (all along)
In general, any worker with ongoing responsibilities in your congregation is an employee. Even very part-time workers and offsite workers are employees if the congregation "controls their work." Workers with direct responsibilities for the care of people and those who directly handle money should be employees, as it is especially important for the congregation to maintain behavioral control (provide guidance and oversight regarding the "how" of the job, not just the "what"). Special note: Ministers are self-employed for Social Security/Medicare tax purposes, but they are employees for all other purposes. Examples of Employees: congregational minister - whether called, hired (including "contract" ministers), interim, etc.; administrator; accompanist; choir section leader; childcare worker
- Employee based on AB5 criteria
In the past, one-time and very occasional workers have often been classified as independent contractors because their role has been so limited. Based on AB5, however, if they are directly involved in the usual course of the congregation's "business" (e.g., worship, religious education), they must now be treated as employees. A number of professions have been exempted from AB5. Clergy and performers are specifically not exempted. Examples of Employees under AB5: guest preachers, guest musicians, paid faith development program leaders.
Clarifications are ongoing. We're aware that lawsuits are pending and some "softening" of the law is possible in the coming months. For the time being, the safest route is to pay one-time worship guests through payroll. We encourage you to seek advice from your congregation's legal counsel.
For more information, contact Jan Gartner, UUA Compensation and Staff Practices Manager, at JGartner@uua.org.
Employee or Independent Contractor (UUA LeaderLab article): General resource, not specific to California/AB5. Includes links to IRS and Department of Labor fact sheets.
Articles on AB5 from California law offices
The staff of the UUA Office of Church Staff Finances are not certified tax or legal professionals. While we understand the above information to be correct, we encourage congregations to seek
the services of their own experts in dealing with individual circumstances and unusual cases.