Nonprofit Law/FLSA

Advertisement


Question
We are a small church with an income of approximately $200,000 in offerings per year.  We have recently added a music leader to the church.  He was initially on a volunteer basis and in 2014 we would like to be able to pay his a small amount per month.  He does not have a set schedule, but the duties he performs should take 4-5 hours per week.  We were originally going to just pay him $100 per month, but that is under minimum wage standards.  Are we required to pay minimum wage?

Answer
I have in my profile that this free forum is only for general questions relating to IRS federal exemption issues of 501(c)(3) organizations. Your question is about employment law. But I will
direct you to some information.
to the U.S. Labor Department:
-- Start of Excerpt ---
(a) The provisions of sections 206 [minimum wage]...  of this title shall not apply with respect to-
(1) any employee employed in a bona fide executive, administrative, or professional capacity (including any employee employed in the capacity of academic administrative personnel or teacher in elementary or secondary schools...
---End of Excerpt---
29 U.S.C. 213

The first question, therefore, is whether the music leader is an employee or, in the alternative, an independent contractor. Nolo Press has published, "If you are an independent contractor as opposed to an employee, then you are not covered by minimum wage laws".
http://www.nolo.com/legal-encyclopedia/right-minimum-wage-32961.html (4th paragraph).

There are many factors that the IRS uses to conclude whether someone is an employee or an independent contractor and the nonprofit corporation's treatment of someone as an independent contractor instead as an employee for tax purposes may be incorrect and subject the nonprofit organization to taxes and penalties. For the factors the IRS considers, see
http://www.irs.gov/taxtopics/tc762.html

Note on that page at the bottom "If you want the IRS to determine whether a specific individual is an independent contractor or an employee, file  Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding."

The IRS may determine the status, but it would possibly take then 6 months
www.irs.gov/businesses/small/article/0,,id=99921,00.html

Generally, a music director would be an independent contractor, but, in order for me to reply accurately as to this particular individual, I would need to gather many details. I have in my profile in my forum at http://bit.ly/NonprofitLaw the free service that I offer is only for questions directly related to IRS exempt purpose issues of 501(c)(3) organizations. Your issues are beyond that and I would need to spend a substantial amount of time.  If you want to hire me, send me an email directly to my email address below and I will quote you my fees.

"Tennessee has no wage laws concerning overtime, minimum wage, or the regulation of salaried employees. The United States Department of Labor's Wage and Hour Division enforces the Fair Labor Standards Act regulating minimum wage, overtime and salaried employees."
http://scrible.com/s/2wQC0

Harvey Mechanic, Attorney at Law -
Harvey108@hotmail.com

P.S. This response is intended to be a genera statement of law, should not be relied upon as legal advice and does not create an attorney/client relationship.  

Nonprofit Law

All Answers


Answers by Expert:


Ask Experts

Volunteer


Harvey Mechanic

Expertise

I am an attorney and I volunteer time to answer general questions about U.S. Federal income tax issues of nonprofit 501(c)(3) public charities only. Those questions could be about establishing and maintaining legal requirements for such non-profit organizations in the United States, including Internal Revenue service filings and requirements. I will not be working on this free forum to answer questions about Nonprofit's possible unrelated or for-profit businesses or how to fill out forms. This forum is only for general questions about federal tax law, not as the law applies to your specific situation. If you do not make your question public then I will not be spending much of my donated time on answers that would not benefit the public. If you have other questions, please contact me at Harvey108@hotmail.com I will reply from my email. In any case, do not reveal confidential information to me until after I have contracted with you to provide personal legal services. My responses on this forum are intended to be general statements of law, should not be relied upon as legal advice, and do not create an attorney/client relationship. For me to consider your individual situation and how the law applies, I would need to gather extensive information about the situation. To search my previous answers you can do a Google search by "site:allexperts.com/q/nonprofit" without the quotes and then add your search terms before hitting enter.

Experience

I have been practicing law and especially the law of nonprofit organizations since 1990 when I was admitted to the New York Bar and I have maintained my status with the Bar since that time.

Education/Credentials

B.S. Columbia University in New York City, 1970

J.D. (Law Degree) Brooklyn Law School, 1990 -- Cum Laude.


©2016 About.com. All rights reserved.