Employee vs Independent Contractor

Control and Independence

The most significant factor distinguishing employees from independent contractors is the degree of control a business has over the work performed.

• Employees: Typically work according to the church’s instructions, adhere to a set schedule, and perform duties under close supervision. They are integrated into the church’s operations, often using the church’s tools and resources.
• Independent Contractors: Operate with a high degree of independence. They decide how, when, and where to complete their tasks. They often bring their own tools and work for multiple clients.

Financial Considerations

Financial arrangements further differentiate the two categories.

• Employee: Are usually paid a regular wage or salary and may receive benefits such as health insurance, retirement plans, and paid leave. The church handles tax withholdings, unemployment insurance, and workers’ compensation.
• Independent Contractor: Receive payment per job or project and must manage their own taxes, insurance, and retirement savings. They invoice the church for services rendered.

Relationship Dynamics

The nature of the relationship between the worker and the company also differs significantly.

• Employee: Often have long-term or indefinite relationships with the church. They are integral to the church’s operations and may receive training, undergo evaluations, and follow church policies.
• Independent Contractor: Typically engage in short-term or specific projects. They are not seen as integral to the church’s ongoing operations but rather as specialists brought in for particular expertise.

Practical Examples

Example of an Employee – Consider a youth pastor working at a church:

• Control: The church sets the youth pastor’s daily tasks, work hours, and provides ongoing supervision.
• Financial: The youth pastor receives a salary, health benefits, and paid vacation. The church withholds taxes and contributes to social security.
• Relationship: The youth pastor is a long-term employee, regularly attends training sessions, and follows the church’s policies and procedures.

Example of an Independent Contractor – Now, think about a freelance graphic designer hired by the same church for a new website design:

• Control: The designer determines how to complete the project, chooses the work hours, and works independently from their own office.
• Financial: The designer is paid a flat fee upon project completion, invoices the church, and manages their own taxes and expenses.
• Relationship: The engagement is project-based with a defined end date. The designer does not receive training or participate in church meetings.

Summary

The independence of the individual in the working relationship is key. If you as a church are determining what will be done and how it will be done then it is an employee-employer relationship. If you are only directing the result of the work and not what will be done and how it will be done it is a contractor relationship.