Duties of Temple Trustees

Non Profit Boards are being held to higher levels of legal accountability. The thought of being sued while doing good is an offense to many, but the threat is justified. A board that conscientiously discharges its responsibility has nothing to fear. It is not endangered by a process, which penalizes less scrupulous organizations.

To avoid or successfully defend against an allegation of negligent selection a mandir must demonstrate that it used reasonable care in the selection of priests, employees, and volunteers.

Title VII of the Civil Rights Act of 1964.

Religious organizations can discriminate on the basis of religion in their employment decisions. This means that temple can consider only persons of their own faith when hiring both priests and lay workers. Religious organizations are permitted this form of discrimination under Title VII of the Civil Rights Act of 1964. But religious organizations are not exempt from the ban on discrimination in their employment decisions based on race, color, national origin, or sex.

Immigration Reform and Control Act

Every employer in the United States must confirm the identity of all new employees and verify that they are either American citizens or aliens legally authorized to work in this country. All religious organizations are subject to these rules.

Sexual molestation

Although no one likes to touch on this issue, many religious organizations have found it an unhappy reality. Temples and temple leaders face legal liability for the negligent selection of priests, temple employees, and volunteer workers. Today several thousand allegations of sexual abuse occur annually with both Protestant and Catholic churches and the resulting lawsuits can result in astronomical judgements. Increasingly, religious leaders find themselves named as defendants in these cases. Plaintiffs allege that the religious organization and its leaders did little or nothing to screen priests or other temple workers during the selection process.

Negligent Selection–Other Cases

Temples can be liable on the basis of negligent selection in other situations besides sexual misconduct. For example, assume that a temple allows an individual to drive a number of persons in a temple vehicle to a temple function and the driver’s negligence causes an accident. Persons injured in the accident learn that the temple did nothing to check the driver’s record. Had it done so, it would have discovered that the driver had been convicted of four moving traffic violations in the past year. The temple may be liable for the accident victims’ injuries on the basis of negligent selection.

How can temples reduce the risk of liability based on negligent selection?

• Employment applications
• Interviews
• Reference checks
• Criminal records checks
• No second chance. Temple managers may feel they should “show mercy” when making employment decisions. This attitude can contribute to a negligent selection claim if a temple gives an applicant a second chance despite the knowledge of prior misconduct and the misconduct is repeated.

This article only touches on the legal aspects of hiring priests and mandir employees. For comprehensive information Christian Ministry Resources is an excellent source of materials covering religious organization legal and tax issues. They can provide an employment application, interview questions, a Pinkerton Employment Verification Form (Criminal records check) and thorough up-to-date information on the legal aspects of the hiring process.

Order Selecting and Screening Church Workers and an application booklet from:
Christian Ministry Resources
PO Box 2301
Matthews, NC 28106
704-821-3845
8:00 A.M. until 4:30 P.M. eastern time, Monday-Friday
Fax 704-821-3872
Employment/Screening Forms

As with the use of any employment form, a temple is always advised to have such a form reviewed by a competent attorney. Laws change on a continuing basis and vary from one state and city to another.

 

Two important considerations–the amount of the salary and the use of “salary reduction agreements.”

1. Salary. Total salary packages are as described in Mandir Staff Compensation.

2. Salary reduction agreements. Many churches have established “salary reduction agreements” to handle certain staff expenses. The objective is to reduce a worker’s taxable income, since only the income remaining after the various “reductions” is reported on the worker’s W-2 or 1099 form at the end of the year. It is important for Mandirs to understand that they cannot reduce a worker’s taxable income through salary reductions unless specifically allowed by law.

a) Housing allowances. Federal tax law permits clergy who own or rent their homes to exclude from gross income that portion of his or her compensation actually spent on their home (furnished, including utilities). This amount must be designated in advance as a “housing allowance” by the church board. Note: these exclusions apply only to priests and only for compensation from services performed in the exercise of their priestly duties. The housing allowance exclusion is for federal income tax purposes only. Priests cannot exclude the housing allowance when computing social security taxes.

b) Cafeteria plans. Cafeteria plans, including “flexible spending arrangements” can be used if several conditions are met. A cafeteria plan is a written plan established by an employer that allows employees to choose between cash and a “menu” of nontaxable benefits including employer-provided medical insurance premiums, group-term insurance, and dependent care.

c) Tax-sheltered annuity contributions. Salary reduction agreements can be used to contribute to a priest’s tax-sheltered annuity (403(b) annuities, SEPs and other plans), so long as the salary reductions meet certain conditions.

d) Equity allowance. Priests who live in Mandir-owned housing are denied the ability to accumulate equity in a home. Many priests who have lived in parsonages often face retirement without housing. To avoid this potential hardship some churches increase their priest’s compensation by an amount sometimes referred to as an “equity allowance.” Some churches place the allowance directly in a priest’s tax-sheltered retirement account.

3. Accountable business expense reimbursement policy. This is available to both priests and lay staff members alike. Under such an arrangement a Mandir (1) reimburses only those business expenses that are properly substantiated within a reasonable time as to date, amount, place, and business purpose, and (2) requires any excess reimbursements (in excess of substantiated expenses) to be returned to the church. This includes the use of a personal automobile for the service of the Mandir.

In making the comparison between Christian and Jewish clergy with the Hindu priesthood some major differences exist that need to be taken into account. Hindu priests have the advantage of home religious services whereas Christian and Jewish clergy generally do not. The two notable exceptions are weddings and funerals. All other religious services such as the baptismals, christenings and bar mitzvah, etc. are generally performed in the church, temple or synagogue. Hindu priests, on the other hand, regularly travel outside their temple to member’s homes for pujas and havans, etc. This naturally affords some incoming making opportunities. For the purposes of this article all such pujas and havans/homams performed outside of the temple are classified as Home Services.

In determining the relationship between Home Services and general priest’s salary temple manager should consider three options.

1. no involvement in Home Services
2. full involvement in Home Services
3. shared involvement in Home Services

All three options are based on the premise that one way or another a priest’s remuneration must approach the general salary guidelines, as discussed on the previous pages, according to the level of education, seniority, cost of living, temple means, etc.

Hours: All options should be based on a mutually agreed upon total number of hours whether weekly or monthly. For example, the Temple management could agree that 40 hours make a full week and budget 30 hours of Temple spent time and ten hours in Home Services. “Overtime” hours could be balanced out by adding or subtracting time or salary at the end of the month.

Option 1 No involvement in Home Services: According to this model the temple decides to simply set the hours of the priest in the temple and not regulate what the priest does outside of the temple on his or her own time. The temple may estimate the “puja worth” of a priest and thereby adjust the temple salary accordingly; letting the priest makeup the difference at will so long as it does not interfere with temple operations.

Option 2 Full involvement in Home Services: According to this model the temple may elect to pay the priest’s salary in full and similarly collect the full amount for Home Services. This option would have to factor in mileage and travel expenses. The temple may want to furnish the priest with a vehicle in order to simplify the process or take advantage of tax considerations, etc.

Option 3 Shared involvement in Home Services: According to this model the temple and priest have an agreed arrangement whereby the priest goes to a member’s home, performs a puja or havan and then divides the proceeds according to some percentage split (for example a 50/50 or some other mutually agreed ratio). Depending on the agreed arrangement mileage and travel expenses may be factored in. For example, the temple may want to furnish the priest with a vehicle in order to simplify the process or take advantage of tax considerations, etc.

There are of course advantages and disadvantages in all three of these options and each temple should evaluate its own situation in order to determine the best course of action.

March 2001

 

Recommended Publications

*The Church and Clergy Tax Guide $17.95. A must for Mandirs and priests. Contains complete and extensive information on all major tax issues that affect churches and clergy. Updated annually.

The monthly magazine Church Treasurer Alert! has accounting, tax, and financial articles by experts on church issues.

Compensation Handbook for Church Staffby Church Law & Tax Report. This handbook is a data survey from over 2,000 United States religious institutions including Christian Churches and Jewish Synagogues.

The Grantsmanship Center in Los Angeles is an excellent resource for information and training on Management, Proposal Writing/Grantseeking, Foundation/Corporate Funding, Government Funding, Fundraising, Nonprofit Business Ventures, Internet Issues, Consulting, Nonprofit Law, and International Funding. They offer a free magazine subscription to staff members of nonprofit organizations and you may access articles from recent issues. www.tgci.com

Grassroots Fundraising has many books about fundraising and publishes The Grassroots Fundraising Journal.
www.grassrootsfundraising.org