As churches grow and begin to hire part- or full-time staff to handle administrative duties, the church’s employment obligations become more complex. To protect the church from legal risk, managers need to understand the distinctions the law draws between employees who are designated as ministers and those who are not.
Questions about who is and who is not a minister, and the special rules governing the title, are made more complicated by the interplay between church doctrine and secular law. There are several sources of the definition and significance of the “minister” title. Many denominations use the term “minister” in specific ways, limiting who can hold the title to individuals with certain qualifications, such as a license or academic training.
There are important legal rules that apply to individuals who qualify as ministers. Some legal regimes defer to churches to identify who is a minister, while other rules define the qualifications that are required for an individual to fall within the rule’s scope. Here are some significant examples:
- Federal tax law.
Although churches are exempt from paying federal income tax, they still must submit tax returns and other paperwork. IRS rules provide a range of exceptions for ministers. For example, a minister’s earnings are exempt from social security and Medicare taxes under the Federal Insurance Contributions Act, or FICA. A church also has reporting obligations, such as a requirement to report the value of housing provided to a minister by the church.
The IRS definition of ministers is as follows: “Ministers are individuals who are duly ordained, commissioned, or licensed by a religious body constituting a church or church denomination. Ministers have the authority to conduct religious worship, perform sacerdotal functions, and administer ordinances or sacraments according to the prescribed tenants and practices of that church or denomination.”
- Anti-discrimination law.
State and federal anti-discrimination laws seek to prevent most employers from basing employment decisions on their employees’ religious beliefs. The “ministerial exception” provides an important carve-out for churches when it comes to their ministers. Provided that an individual is a minister, a church or religious institution is shielded from some types of lawsuits claiming unlawful discrimination.
It is important to bear in mind that the definition of “minister” for purposes of antidiscrimination law is not as clearly defined as it is for federal tax purposes. The leading Supreme Court case on the question, Hosanna-Tabor Evangelical v. EEOC, 132 S. Ct. 694 (2012), involved a religious teacher at a church-run school. Other cases shielding churches have even applied the exception to people who were not of the same faith as their employing institution. In these cases, individuals who claim ministerial exemptions on their tax returns, or who are designated as ministers by the employer church, are often unable to proceed with their suit even though they are not conducting religious ceremonies.
A church may feel tempted to cast a broad net when deciding who to designate as a minister in order to take advantage of the ministerial exception. There may be legal as well as ethical risks associated with making that decision. It likely is not appropriate to designate an employee who does purely secular work, such as a groundskeeper, as a minister in hopes of avoiding discrimination liability.
The Church Law Center is here to help.
These two important examples show that navigating the meaning of “minister” can be complicated and potentially risky for churches. The best course is to have a clear plan for how to handle the term in employment relationships, rather than leaving the question to be sorted out later. The Church Law Center of California counsels religious and secular nonprofits on matters of governance and risk management. If your church needs help understanding its tax obligations, the ministerial exception, or other matters, call us today at (949) 892-1221 or reach out to us through our contact page.