Guide to Employment: Steps in Bringing on New Employees/Professionals
These days, it is becoming an ever increasingly complex process for bringing into one’s congregation a paid employee or paid minister. However, don’t despair! Many of these things can be done simply and on line, without having to stand in line!
This guide is designed to help you get to the right place. But please note—this is only a guide. You may not need to do all of these, or your state might have something not listed here. Often it's good to ask a tax professional, or contact your state government to ask what must be done—they often have a guide on their state website.
So let’s get started: it’s really not that hard, if you simply follow the steps!
- All employers need to obtain a Federal Employer Identification Number (EIN). You can do this simply through the on-line IRS website: http://www.irs.gov/ Read the fine print about needing to make sure you are properly constituted legal body, as a particular time clock starts running when you apply for your EIN. But it takes under 5 minutes!
- You are advised to run a background check on anyone you pay for any reason. Although the name is misleading, this is done under the auspices of the Fair Credit Reporting Act. You can find links about doing these checks (including a link to a reduced rate service) on the UUA website: www.uua.org/safe/staffing/. Also, check out the UUA’s Responsible Staffing document, linked from the related content sidebar on that same page.
- Ensure that you know the difference between a 1099 contractor and a W-2 employee. Most persons who work in our congregations are legally W-2 employees, and congregations can be fined if they try to include as contractors or consultants those who are actually employees. So the basic rule is that if they work in your place, at hours you define, and with tools you provide, they are generally a W-2 employee. Take that as your starting point, unless they can prove otherwise.
- Document all parts of your financial arrangements through a contract or letter of agreement. This will keep your congregation safe by ensuring that there are no misunderstandings down the road. Make sure that you understand the difference between exempt and non-exempt employees, pay attention to the number of hours that can be worked in a day or a week without incurring overtime, and make sure you spell out whether they will be eligible for unemployment insurance. As well, it’s always good to put in how terminations can be done, whether for cause or not for cause. Tie the contract/letter of agreement with a job description that sets out the essential elements of the job, and the essential skills that the employee has. Pay attention to what accommodations you may need to make under the Americans with Disabilities Act. (www.ada.gov)
- Verify your new employee’s Social Security Number. This can be done from the Social Security website: https://www.socialsecurity.gov/employer/ssnv.htm. If they don’t match, and you haven’t checked before paying them, your congregation could be in a bit of trouble. And again, this is really easy once you’re on the right webpage!
- Verify your new employee’s Employment Eligibility, and make sure that you fill out and retain copies of the US Citizenship and Immigration Service’s Form I-9. All US employers must fill this out, for both citizens and non-citizens. You can find this at ICE’s website: http://www.uscis.gov/i-9. Failure to do so can result in hefty fines. And again, easy, though a bit tedious. The employee chooses what ID to show you, you just make the copies and fill in the form.
- If you are bringing on a new minister, make sure that your Board has passed a resolution setting out the amount of any housing allowance the minister is claiming before you make any payments for housing to the minister. Without doing this in advance, all income of the minister is subject to income tax as well as self-employment tax. It can be a simple motion: we, the board of X congregation, move that X amount of money will be paid to Rev. Y as housing allowance. You’re done.
- Ensure that your staff member fills out and submits a W-4 which will govern the deduction level. Offer your minister the possibility of voluntary withholding, as well. If they opt for this, they will also need to fill out a W-4. This form is available on the IRS website—www.irs.gov!
- Register for withholding taxes at the national, state, and more local jurisdictions. This one is a bit trickier, as you have to register separately for the national and state level. But again, it can generally be done online, which makes it much faster. If you’re using a bookkeeping system, or even some of the ones offered by accounting software, they do all the calculations for you. Make sure that you deduct the appropriate amount, and that you are complying with the filing deadlines for submitting the withholding and paying the employer’s share of the FICA taxes. Again, much of this can be done electronically, but you need to keep track to ensure that you’ve done this at all the appropriate levels. If you (or your employee) are located in an area that has municipal, city, or county taxes, don’t forget to withhold these, as well.
- Prepare and file a New Hire report. Again, this is something that you can generally do electronically through the web. The reason for this: generally it’s to ensure that if anyone is delinquent in child support or other mandated payments they are asked to pay up. In some instances, you may be required to garnish their pay for any delinquent payments, but don’t worry about this until it happens—it’s not a frequent occurrence.
- Obtain Worker’s Compensation Insurance to cover your congregation should anything happen to your employee. Most insurance companies will cover you for this as part of your church insurance policies. So make sure you let them know of your new hires. Generally an email or simple phone call is all that’s needed.
- Determine whether you are subject to enrolling your employees in Unemployment Insurance. Often religious organizations are exempt, but you still need to fill out the appropriate paperwork with your state’s office of unemployment to confirm such an exemption. If you are exempt, your congregation should consider whether they wish to compensate for this by providing severance pay for employees, especially if they are let go for no fault of their own, such as your congregation falling on tough economic times. The UUA and the MidAmerica Region both allow for severance payments in case they have to let folks go. (Note: severance is generally not paid for those who are let go for cause!)
- Enroll your employee/minister in any benefit and pension plans to which they are entitled. Please know that there are tax benefits to ministers who are in the UUA’s pension plan, but that such enrollment includes stipulations that all eligible employees must be enrolled at the same percentage rate. Contact the UUA’s Office of Church Staff Finances at for details. Also, if your organization has 50 or more employees, you might have to provide notices about COBRA.
- Ensure that you have an appropriate time tracking system in place. For most positions, congregations must keep track not only of the hours of employees, but their start and stop times, as well. Check what is required, and make sure your employee knows how to file their time sheets. Again, you can often find this on line at your state’s website.
- Ensure your employee receives a copy of any employee handbook or policies. It is always a good practice to have them confirm in writing that they have received these documents. Your employee handbook should specify such things as expected work week, any paid days off, entitlement to vacation and sick leave, termination procedure, whistleblower protection, non-discrimination practices, any probationary period, how they will be supervised and evaluated including when salary reviews will be made and by whom, benefits available, how to appeal any decision by their supervisor, and any other policies that are incumbent upon your employees. We can help you create such policies, if you want—and of course, these can be delivered electronically! Save those trees.
- Orient your new employees to your culture, expectations, and how to be successful in their position in your congregation.
- Pay your withholding taxes.
- Prepare and file annually the W-2 and 1099 forms by the date established by the IRS. Make sure you file any state and local annual forms to those bodies as well.
- Document formal supervision actions, especially if the employee is running in to issues. Should you need to terminate an employee, having contemporaneous notes of any issues, the requested corrections, and the employee’s continuing progress (or lack thereof) toward their goals will be very important.