Each year, I see hundreds of positions with titles of Pastor/Director, such as Operations Pastor/Director or Student Ministry Pastor/Director. While it may be counterintuitive, whether the person has the title of Pastor or Director, the pay difference between the two is often minimal for upper level staff. Pay differences stem from the scope of work, not the title.
Concerning the credentials, which is a highfalutin way of saying their official status, ordination is not as common as it once was. Some churches license certain staff, perhaps on the road to ordination. The majority of churches have the board commission someone for a ministerial role, with the minutes detailing that action.
Housing Allowances
To receive a housing allowance, one must be licensed, commissioned or ordained. This is regardless of the title of Pastor or Director. The person pays SECA and the church does not pay FICA. As ministerial staff, they are exempt from state and federal wage levels—and don’t qualify for overtime pay.
To easily identify which Directors have been commissioned, I like to use the term Ministry Director for these staff members.
Who is a Minister for Tax Purposes
If licensed, commissioned or ordained, how much time must one do to be considered a ministerial worker? In other words, can our Children’s Director be considered ministerial staff?
In 2012, the Supreme Court in Hosanna vs. Tabor noted that: It is not one that can be resolved by a stopwatch. The amount of time an employee spends on particular activities is relevant in assessing that employee’s status, but that factor cannot be considered in isolation, without regard to the nature of the religious functions performed. This means it is up to you to clearly define roles and tasks for employees.
For example, you can commission a Children’s Director or Church Administrator as long as they have some religious functions in the church—such as prayer, counseling, on-call duty, and ministry oversight, to name a few. Summarize the ministerial work in their role description—and in their title, if possible.
Remember that the IRS rules include Protestant Pastors and Ministry Directors, Catholic Priests and Nuns, Moslem Imams, Native American Shaman, Christian Scientist Practitioners, and many more. To date, the IRS does not want to get into messing with your clearly defined ecclesiastical policy and polity.
These Pastors and Ministry Directors pay SECA and the church doesn’t pay FICA. They also can utilize a ministerial housing allowance. They are also exempt the FLSA’s wage and hour requirements. The bottom line is that you should have good policy to define and defend your decisions.
Who is a Minister for FLSA Purposes
If a person is teaching or acting as a minister, without being licensed, commissioned or ordained, they may be exempt from the wage and hour requirements of the FLSA. The Society for Human Resource Management (SHRM) writes about a children’s teacher:
The DOL addressed whether the FLSA’s ministerial exception allows a private religious day care to pay teachers on an exempt salary basis, even if the teachers would not otherwise qualify under the FLSA. There is no rigid formula for determining who qualifies for the exception, but an employee need not be ordained or have a particular job title to qualify, noted Allan Bloom, an attorney with Proskauer in New York City.To the contrary, employees qualify based on their role in conveying the organization’s message and carrying out its religious mission, a determination that must be made on a case-by-case basis. The DOL said teachers at religious schools can be ministers under this test.
In 2021 the Depart of Labor’s published an Opinion Letter, which you can read here. Before 2021 various judges in federal court districts wrote opinions with such a view. However, if a church was outside of those districts, it was uncertain if the view would be upheld in federal court. With the 2021 Opinion Letter, using the ministerial exception for other staff has a firm footing.
They are exempt the FLSA’s wage and hour requirements—but are not ministers for tax purposes. The bottom line is that you should have good policy to define and defend your decisions.
Use the Free Salary Forecaster to get solid comparable salaries with billions of dollars of downloadable data.
