08/10/2020

Does the Families First Coronavirus Response Act payroll tax credit apply to church employees?

From Tom Cunniff, General Counsel, Evangelical Lutheran Church in America:

With more schools announcing that they are starting the fall term with remote learning, we are getting an increasing number of inquiries about church employees (particularly ministers) taking leave to care for children.  One issue that has arisen is the extent to which the required paid leave (and commensurate payroll tax credit) under the Families First Coronavirus Response Act (FFCRA) apply to church employees.  While there is no blanket exemption for churches, there are several reasons why the FFCRA leave may not apply to church employees, and to ministers in particular:

1. The FFCRA applies only to employers that are engaged in commerce.  Most congregations or their employees are not going to be engaged in commerce, unless they have a school or similar activity. This is the same issue that arises with regard to overtime under the FLSA.
2. For pastors, the ministerial exception to employment laws may apply.  (Note, this has not yet been tested with the government or the courts.)
3. Employers with fewer than 50 employees (most congregations) and who certify to certain hardships are exempt from the leave provisions to the extent the leave is used to care for children whose school is closed.
4. It is not clear that housing allowance is counted in ministerial income so that it could be refunded through the tax credit.

Some helpful resources on this are:

Our resource (borrowed from UCC):  
https://download.elca.org/ELCA%20Resource%20Repository/Families_First_Coronavirus_Response_Act-UCC_Update.pdf?_ga=2.106937603.1271538237.1594471245-596960671.1552065499

DOL FAQ (see particularly questions 58 and 59 regarding the small business exemption): https://www.dol.gov/agencies/whd/pandemic/ffcra-questions

Methodist Church FAQ: : https://www.gcfa.org/media/2174/ffcra_rev03312020.pdf

We are placing this information in the CARES Act subsection of our COVID-19 Resources page on our website for future reference. Please share with your treasurer and council.