Churches should be training grounds for ministry and leadership, but sometimes compensation gets complicated. I often get asked about paying church interns by stipend, so I decided to do some research.
First, we need to understand that there are 4 types of workers that can do any work at your church:
There is no other, so if you’re paying a stipend to anyone, you’ll need to know first which of the 4 categories they fall into. I will be posting tests for 3 non-employees types. Following is the first test.
If they fail all the tests, your “intern” is probably actually an employee.
Are They an Intern?
I found a pretty strict test of whether or not your worker is an intern. According to this blog post referencing the Fair Labor Standards Act (FSLA), you only have an intern if:
- You are providing training, and it is for the benefit of the intern
- The training is on par with what they’d get through a school or college
- The church gets no immediate advantage from the activities of the interns, and on occasion they’ll actually slow you down
- The interns do not displace regular employees, but work under their close observation (if they get about the same amount of supervision as your regular employees, they’re not an intern)
- The intern is not necessarily entitled to a job at the conclusion of their internship
- The church and the intern both understand that the intern is not entitled to any wages during their internship (though may qualify for a stipend as a volunteer; more on that below)
If they fail even one of these items, then they cannot be classified officially as an intern. But there may still be hope: run your worker past the other upcoming tests for Contractor and Volunteer to be sure.
So why is paying or not paying church interns by stipend a big deal? It’s too common for small businesses and even churches to take the cheater/easy way out and just cut a check to someone that has done work for them (1099 them). If you’re doing it wrong, it unfairly puts more tax burden on the worker and is in most cases illegal.
Especially in states that are pro-labor, you might get away with doing it the wrong way for the short term, but long term, it will be very costly in fees and back taxes.
But maybe they’ll qualify as a contractor. Read more…