Are Your Church Volunteers Actually Employees? What Alabama Churches Need to Know

Every Sunday, churches across Alabama rely on the same people to make things run. The woman who manages the front desk every week. The man who runs sound at every service and every Wednesday night bible study. The youth coordinator who shows up five days a week, follows a schedule, and answers to the children's pastor. To the church, they are faithful volunteers. To the federal government, they might be something else entirely.

Misclassifying workers as volunteers when they legally qualify as employees is one of the most common and most costly legal mistakes churches make. And most of the time, it happens with the best intentions.

What Makes Someone a Volunteer?

A true volunteer freely gives their time without any expectation of compensation or benefit. They choose when they show up, they are not required to follow a set schedule, and they are not doing work that would otherwise require a paid employee. Think of the congregation member who helps set up chairs before service once a month. That is a volunteer.

The legal problems begin when a church starts treating someone like an employee while calling them a volunteer.

When a Volunteer Becomes an Employee Under the Law

Under federal law, the IRS and the Department of Labor do not care what title a church gives someone. What they look at is the reality of the working relationship. Several factors determine whether someone is truly a volunteer or is functioning as an employee.

Regular schedule and set hours. If someone is expected to be at the church at a specific time on specific days and their absence creates a problem for the organization, that is a strong indicator of an employment relationship.

Direction and control. If a church leader tells someone what to do, how to do it, and when to do it on an ongoing basis, that person is functioning as an employee regardless of what they are called.

Ongoing and indefinite service. Volunteers typically help with specific events or for limited periods of time. Someone who has been serving in the same role week after week for months or years starts to look less like a volunteer and more like an unpaid employee.

Compensation in any form. This is where many churches run into trouble without realizing it. Stipends, housing, regular gift cards, free tuition for a church school, or any other regular benefit provided in exchange for services can be considered compensation. Once compensation is involved, the volunteer classification becomes very difficult to defend.

Work that serves the organization's operational needs. If the church would need to hire someone to do the job if this person stopped doing it, that is a strong sign the role is functioning as employment.

What Happens When a Church Gets This Wrong

The consequences of misclassifying an employee as a volunteer are significant and they do not disappear simply because the church is a nonprofit or a faith-based organization.

The IRS can assess back payroll taxes, penalties, and interest going back years. The Department of Labor can require back wages at minimum wage or higher for every hour the misclassified worker performed services. The worker themselves can file a claim for unpaid wages, benefits, and in some cases damages. In Alabama, workers' compensation and unemployment insurance obligations may also come into play.

Beyond the financial exposure, these situations often become public. A dispute between a church and a long-serving ministry worker is the kind of story that damages a congregation's reputation in ways that are very difficult to recover from.

None of this means a church has done anything wrong intentionally. Most churches that face these issues never meant to create an employment relationship. They simply grew their ministry, relied on faithful people, and never stopped to ask whether the legal classification matched the reality of how those people were being used.

What Alabama Churches Should Do Right Now

The good news is that this is a problem churches can get ahead of before it becomes a crisis. Here are practical steps every church should take.

Conduct a volunteer audit. Look at every person who serves your church in a regular, ongoing capacity. Ask honestly whether their role looks more like a volunteer or an employee based on the factors described above. Pay particular attention to anyone receiving any form of compensation or benefit.

Review your stipend and gift policies. If your church regularly provides stipends, housing, or other benefits to ministry workers, those arrangements need to be reviewed by an attorney to determine whether they create employment obligations.

Document your volunteer relationships. Clear written policies about the nature of volunteer service, including the fact that it is freely given, uncompensated, and not subject to the same requirements as employment, provide important protection for the church.

Consult an attorney before a problem arises. The cost of a legal review of your church's volunteer and employment practices is a fraction of the cost of defending a misclassification claim. Proactive legal counsel is one of the best investments a church can make.

Your Church Deserves Legal Protection

Churches are called to focus on ministry. The last thing any pastor or church administrator wants is to be distracted by a legal dispute that could have been avoided. At Squire Moore Aladebumoye PC, we work with churches and faith-based organizations across Alabama on the business and employment legal issues that come with running a growing ministry.

This article is for general informational purposes only and does not constitute legal advice. Every situation is different.

If you have questions about your church's volunteer and employment practices, we would love to help. Contact us at contact@squiremoore.com or visit squiremoore.com to learn more.