California law requires that nearly all employers carry workers’ compensation insurance, but many churches and religious organizations often wonder if they qualify for an exemption. While some states provide broader exemptions for religious institutions, California law does not exempt churches from workers’ compensation requirements—even for clergy or certain corporate officers. Here’s what churches and ministries need to know.
Workers’ Compensation is Required for Churches
Under California Labor Code Section 3700, any employer with one or more employees must provide workers’ compensation insurance. Churches, ministries, and religious nonprofits are not automatically exempt from this law. This means that if your church has paid employees, you must carry a workers’ compensation policy, just like any other employer in California.
No Exemptions for Ministers, Clergy, or Church Officers
Some states allow religious institutions to exempt clergy or corporate officers from workers’ compensation coverage. However, California does not provide this exemption for churches. Even if a minister or ordained clergy member is considered a spiritual leader, if they receive wages or salary from the church, they must be covered under the church’s workers’ compensation policy.
Similarly, corporate officers and directors of religious organizations do not qualify for an exemption. Even if they are decision-makers or have ownership in the church’s legal entity, California law still requires coverage if they are on payroll.
Who Can Be Exempt?
While workers’ compensation is mandatory for paid employees, some individuals connected to a church or ministry may not require coverage:
- Volunteers – True volunteers who receive no compensation (including stipends, housing allowances, or other benefits) are not required to be covered under workers’ comp.
- Independent Contractors – If the church hires legitimate independent contractors, these individuals may not need to be covered, but misclassification is a serious risk that can lead to legal penalties.
Penalties for Non-Compliance
Failure to carry workers’ compensation insurance in California is a criminal offense. If a church is found operating without required coverage, it may face:
- Fines up to $100,000 from the state.
- Misdemeanor charges with penalties up to $10,000 and potential jail time.
- Lawsuits from injured workers, which can result in significant legal and medical costs.
Best Practices for Churches & Ministries
Given the strict workers’ compensation laws in California, churches should take the following steps to ensure compliance:
- Review Payroll & Employment Classifications – Ensure that all paid staff members are properly classified as employees.
- Secure a Workers’ Compensation Policy – If your church has even one employee, it must have a valid workers’ comp policy.
- Consult with Church Insurance Experts – A knowledgeable insurance provider, like ChurchWest Insurance Services, can help navigate compliance issues and ensure your ministry is protected.
Need Help with Workers’ Compensation?
Churches and ministries have unique insurance needs, and workers’ compensation is a critical part of protecting both employees and the organization. If you have questions about your church’s workers’ comp requirements, contact ChurchWest Insurance Services today. Our team specializes in helping churches stay compliant with California law while ensuring their ministries are safeguarded from risk.
