Seven unseen HR hazards that could threaten your ministry
CHURCHES AND OTHER HOUSES OF WORSHIP HAVE NONPROFIT STATUS, BUT THEY’RE STILL PLACES OF EMPLOYMENT SUBJECT TO FEDERAL AND LOCAL LAWS.
You answered the call to ministry to serve people, not become an expert in employment law. Yet, in today’s complex legal landscape, HR is a crucial form of stewardship.
Ignoring the complexities of managing staff and volunteers only leads to problems that distract from your mission, damage your reputation, and create unnecessary legal and financial perils. By understanding these seven common pitfalls, you can protect your organization and build a healthy, compliant foundation for years to come.
#1. Misclassifying workers as contractors
This is one of the most frequent and costly errors we see, and getting it wrong exposes you to significant back taxes, fines, and penalties. Think about gig musicians or weekday childcare workers: The key here is control. If your ministry dictates how, when, and where the work is performed, that contractor is actually an employee.
Reduce the Risk: Audit all non-ministerial roles.
#2: Misapplying the ministerial exception
It’s a vital First Amendment protection, allowing churches to choose ministerial staff based on religious doctrine. However, many believe it’s a blanket shield against all employment laws for all staff. It’s not. Relying on this exception without proper counsel is a major legal gamble.
Reduce the Risk: Treat all non-ministerial staff as fully subject to standard employment law.
#3: Improperly handling pastoral compensation
Pastoral compensation is uniquely complex due to a minister’s “dual status.” The church must not withhold FICA taxes and pastors’ housing allowances must be designated by the board in advance and in writing. Otherwise, this benefit can be lost, creating a costly tax burden for the pastor.
Reduce the Risk: Ensure your board reviews, designates and documents housing allowance annually and that you are not withholding FICA.
#4: An outdated staff handbook
Operating without a staff handbook – or one that hasn’t been updated in years – is an invitation for claims of unfairness and inconsistency. An effective handbook clearly outlines expectations (i.e., dress code, PTO, etc.), vital legal statements, and your mission, vision and core values.
Reduce the Risk: Review and update your staff handbook annually, ensuring it aligns with local, state and federal laws.
#5: Inconsistent policy enforcement
When leadership enforces a rule for one employee but ignores the same behavior from another, it destroys trust and becomes the primary driver of discrimination claims. This is especially true in cases of termination.
Reduce the Risk: Train all supervisors on consistent policy enforcement and document all disciplinary actions.
#6: Failing to keep accurate records
Meticulous record-keeping isn’t just for hyper-organized admins. It’s a legal requirement to maintain accurate and confidential personnel files. Form I-9, specifically, has extremely strict retention rules and hefty fines if you’re found out of compliance.
Reduce the Risk: Implement a mandatory system for documentation and record retention.
#7: Making poor hiring decisions
A poor hire not only damages morale but exposes your constituents to potential harm. A structured hiring process requires a clear job description, consistent interviews, thorough reference checks, and mandatory background checks. Rushing the process or skipping due diligence will end up costing you more in the long run.
Reduce the Risk: Commit to a disciplined hiring protocol with mandatory reference and background checks.
The bottom line
The complexities of human resources in ministry can feel overwhelming and shortcuts may seem to save time and effort. But those savings will be quickly dwarfed by the cost, distraction and cultural damage of even one major mistake. Proactive compliance and best practices help build a strong foundation for your staff and ministry.
HR Ministry Solutions is a faith-based 501(c)(3), leading churches and ministries to simplified human resource practices by providing services and education connecting HR to biblical discipleship and stewardship. We offer services ranging from HR compliance audits and custom staff handbooks to educational courses and more.
