How to be a Good Employer and

Supervisorwith

UUA staff Jan Gartner & Kathy McGowan

June 2019

Our Time Together

Why?

• Good stewardship! (~70% of your budget is staff-related)

• Connecting to our values (equity, kindness, worth & dignity)

• Clarity about expectations and goals

• Accountability

• Employees accountable to the congregation

• Leadership (incl supervisors) accountable to the employees

Relationship as Management

• Articulate and model values

• Set goals and expectations

• Do the best you can

• Start from where you are

• Cultural shift! It will take time.

• Clock doesn’t move relationship; let relationship move the clock

Who’s in the Room?

Nuts and Bolts

• Legal compliance as organization

• Relationship with attorney in your area (state/local law)

• Common Trouble Spots

• Employee or Independent Contractor?

• Fair Labor Standards Act

• Ministerial Payroll and Taxes

• Benefit Plan Rules and Administration

Employee or Independent Contractor?

Assume every worker is an employee!

• Employees receive a W-2 form each year

• Employees are entitled to employee benefits (per eligibility)

• Congregation remits payroll taxes

– Federal and state income taxes withheld/remitted – optional for ministers

– Social Security/Medicare (FICA) tax – but NOT for ministers (more later)

Employee or Independent Contractor?

Who might be an independent contractor?

1. One-time or occasional workers (occasional = usually no more than monthly)

– Guest preacher or musician

– Workshop leader

2. Someone doing “a thing” as part of a business

– Piano tuner

– Lawn care

Employee or Independent Contractor?

Independent contractors

• Receive a Form 1099 (above threshold – currently $600/year)

• DO NOT RECEIVE EMPLOYEE BENEFITS (retirement, insurance)

Employee or Independent Contractor?

“Contract” causes confusion

• Contract ministers are employees!

• Workers with an employment contract are employees!

Employee or Independent Contractor?

Make sure you don’t have “independent contractors”

who are actually employees.

Resource page:

https://www.uua.org/finance/compensation/program/employee-contractor

Fair Labor Standards Act (FLSA)

Federal law that protects workers

• Overtime pay

• Minimum wage

• Recordkeeping

• Youth employment

FLSA Classification

Exempt staff• No overtime pay

• Simpler recordkeeping

Nonexempt staff➢ Overtime pay (time-and-a-half) for >40 hours in a week

➢ Must track daily and weekly hours

Think: the employer is

exempt from having to

follow the rules.

Exemptions

White-collar Exemptions

• Executive

• Administrative

• Professional

These exemptions have

• Duties tests (specific to each above)

• Salary threshold

– Currently $455/week

– $679/week proposed

Exemptions

The Ministerial Exception*

• “Essential religious duties”

• No salary threshold

• Seek legal advice

* Not part of FLSA

“Congress shall make no law respecting an

establishment of religion, or prohibiting the free

exercise thereof...”

Exemptions: The Ministerial Exception

Who has “essential religious duties”?

• Clergy (serving in ministerial capacity)

• Ministerial interns and student ministers?

• Our best interpretation, based on case law:

– Director-level staff with leadership, authority, and decision-making responsibilities within

a religious realm of congregational life (i.e., worship and religious education)

– How are these positions framed and carried out?

Fair Labor Standards Act

Make sure your employees are properly classified as

nonexempt* or exempt.

*Assume employee is nonexempt unless/until you can make a case for an exemption.

Resource Page:

https://www.uua.org/finance/compensation/program/fair-labor

Nuts and Bolts: Main Points So Far

• Most workers in your congregation are EMPLOYEES.

• True independent contractors don’t get benefits.

• Know who is EXEMPT and who is NONEXEMPT.

• For NONEXEMPT staff:

– Track daily/weekly hours

– Pay O/T.

Ministerial Payroll & Taxes

Dual Tax Status

Minister is an

employee for

regular income tax

purposes

BUT

self-employed for

Social

Security/Medicare.

Housing

Allowance

Housing-related

expenses are

excluded from

minister’s wages for

income tax

purposes.

Withholdings

Optional

• Minister need not

have income

taxes withheld

from paycheck

(but may elect to)

• Files taxes

quarterly

• Withholding FICA

not allowed!

Three Special Tax Provisions for Ministers

• Treated as a minister for ALL or NONE.

• Minister = fellowshipped or ordained

Payroll & Taxes

Three Special Tax Provisions for Ministers

Payroll & Taxes

Minister’s paycheck?

• Withholdings optional

• Deductions for employee-paid benefits

Jan calls this the“self-employment

tax offset.”

Housing allowance may be paid in a separate check.

Payroll & Taxes

That “dual tax status” thing

A minister is an BUT…

EmployeeFor income tax purposes

(state and federal)

…and for nearly all other purposes.

Self-employedFor Social Security/Medicare tax

purposes

…which is why they file quarterly taxes.

Payroll & Taxes

Self-Employment Tax Offset (payment in lieu of FICA)

Regular Employees

Social Security/Medicare tax = 15.3%

FICA

• Employer pays 7.65%

• Employee pays 7.65% (payroll deduction)

Ministers

Social Security/Medicare tax = 15.3%

SECA

• Minister pays 15.3% (quarterly filings)

• Applies to Salary + Housing

AND SO…

Congregation pays self-employment tax offset to minister.

• Same $$ amount the congregation would have remitted to SS/Medicare

for non-ministerial employee at same salary.

• SECA applies to Salary + Housing, so offset applies to Salary + Housing.

Payroll & Taxes

Self-Employment Tax Offset (payment in lieu of FICA)

Housing Allowance

Payroll & Taxes

Payroll & Taxes

Housing Allowance

• Minister determines expected housing-related expenses.

• Congregation designates housing allowance:

– Every calendar or fiscal year

– In advance

– Through an official action (e.g., board resolution)

• HA excluded from federal & state** income tax,

but minister still pays SECA (self-employment tax) on it.

** Housing allowance is taxed at the state level in Pennsylvania.

Payroll & Taxes

Housing Allowance

Common allowable expenses

• Rent or mortgage payment

• Real estate taxes

• Renter’s insurance

• Utilities

• Furnishings

• Appliances

• Repairs

• Yard maintenance

Housing allowance calculation form

• for the minister’s convenience

• not something they need to turn in

Payroll & Taxes

Housing Allowance

How much is actually excludable from taxable wages?

The LEAST of:

• Amount designated as housing allowance

• Amount actually used to provide a home (rent, utilities, etc.)

• Fair rental value of home, including furniture, utilities, garage

Plain English on next slide…

Payroll & Taxes

Housing Allowance

How much is actually excludable from taxable wages?

In plain English:

• Can’t exclude more than your congregation designated.

• Can’t exclude more than the actual expenses of maintaining a home.

• Can’t exclude more than the Fair Rental Value (including furniture, utilities,

garage)

Payroll & Taxes

Housing Allowance

Key points

• Re-designate each year.

• Any designated HA above actual expenses or FRV is reported as wages.

• HA is NOT included with wages on W-2 form. (Can go in Box 14, the “Just FYI” box.)

Ministers: Withholdings Optional

• Minister NOT REQUIRED to have taxes withheld.

• May CHOOSE to have taxes withheld.**

• Withholdings applied to income taxes, not self-employment tax.

• File taxes quarterly, regardless.

Payroll and Taxes

Payroll & TaxesCost to congregation of special tax provisions

Dual Tax Status

With the self-

employment tax

offset, cost to

congregation is

same as for non-

clergy staff member

at same salary.

Housing

Allowance

No budget impact.

Withholdings

Optional

Whether minister

chooses to withhold

or not, no budget

impact for

congregation.

Payroll & Taxes

Reminders

• Do not remit SECA tax for minister.

• Include self-employment tax offset (in lieu of FICA) in compensation.

• Designate housing allowance each year.

Resource page for ministerial compensation

https://www.uua.org/finance/compensation/program/ministerial-compensation

(poll 3)

Payroll and Taxes

Other Common Questions

• Professional Expenses (Who owns the computer?)

– Need an Accountable Reimbursement Plan

– Unreimbursed mileage no longer deductible

• Annual salary changes?

Payroll & Taxes Resources

UUA.org

• Compensation Program page

• Ministerial Compensation Resources

And also

• Bestplaces.net (cost of living/housing and more)

• Church and Clergy Tax Guide, by Richard Hammar

Main Points on Ministerial Compensation

• 3 special tax provisions

– Dual tax status (self-employed for SS/Medicare ONLY)

– Housing Allowance

– Withholdings optional (and can only apply to state/fed income taxes)

• Do not remit SECA (SS/Medicare) for ministers

• Ministers file taxes quarterly

Benefits

• Health Insurance

• UUA Health Insurance Plans

• Other Health Insurance Options

• UUA Group Insurance

• Dental

• Long Term Disability

• Life

• UUA Retirement Plan

Staff on other health insurance?• Reimbursement of their portion allowed for

GROUP insurance

• Reimbursement NOT allowed for individual

insurance

• Contact Insurance Director Jim Sargent with

questions, JSargent@uua.org

Benefits

Words of Wisdom

• Pay Attention to Details (e.g., eligibility, enrollment windows*)

• Treat Staff Equitably (It’s a UU Value)– Are your staff receiving benefits comparable to yours?

* Enrollment windows for UUA insurance plans:

• 30 days for Health Plan (unless qualifying event)

• 60 days for Dental, Life, and LTD

Benefits

Eligibility: All UUA Insurance Plans

• All Employees working 750 Hours or more annually (about 15 hrs/week, year-round)

➔ If one employee is in the UUA plan, all eligible must be offered the

opportunity to enroll

• Congregation does not have to make the same premium contribution for all

employees (but consider economic justice and equity)

• Hours from multiple participating employers additive

Benefits

UUA Health Plans

• 3 Non-Medicare Plans (Gold, Silver, and Bronze) + Medicare Supplement Plan

• Comprehensive, faith-based (trans, hearing aids, kids w/disabilities)

• Extensive network and outstanding customer service

Annual enrollment or

upon hire

Reminder:

If any staff member is

enrolled, must make

available to all eligible staff.

Gold = highest premium, lowest out of pocket costsBronze = lowest premium, highest out of pocket

Benefits

UUA Dental Insurance through Guardian

• Annual benefit: Up to $1,750

• Makes economic sense (Dentists charge individuals without insurance more)

• Can retain coverage (if not teeth) in retirement

Annual enrollment or

upon hire

Reminder:

If any staff member is

enrolled, must make

available to all eligible staff.

Benefits

UUA Long-Term Disability Insurance thru Guardian

• Benefit: 60% of Salary (and Housing)

• Protects employees AND congregation

Recommendation:Congregation pays but imputes premium on W2

to keep benefit payout nontaxable

Enroll upon hire

Reminder:

If any staff member is

enrolled, must make

available to all eligible staff.

Benefits

UUA Life Insurance thru Guardian

• Benefit: 2x Salary (and Housing)

• Protects employees AND the congregation

Enroll upon hire

Reminder:

If any staff member is

enrolled, must make

available to all eligible staff.

Benefits

Insurance Plans: Costly Mistakes

• Congregational policy conflicting with Plan rules

– Eligibility set by Plan, not by congregation

• Life/LTD: congregation MUST offer both, not just one

• Failure to enroll employee within 60 days (30 days for Health)

• Failure to enroll all eligible employees in disability – and one becomes disabled

Benefits: Retirement Plan

Basics

• 620 participating congregations/4,100 plan participants

• Recordkeeper: TIAA

Eligibility for Employer Contributions

• Successful completion of a ministerial internship, OR

• Previous qualifying for employer contributions at another participating UU employer, OR

• After 12 months AND 1,000 hours of employment (hours from multiple employers additive)

Benefits: Retirement Plan

Know these rules!

• ALL EMPLOYEES may enroll and make elective (employee) contributions

from day one of employment, regardless of hours!

• Employers MUST make employer contributions to all employees who meet

eligibility requirements

• All (eligible) employees must receive the same percentage base employer

contribution and match opportunity**

• Minimum Employer Contribution is 5%; UUA Recommendation = 10%

**In accordance with Employer Participation Agreement on file with our Office.

Did your new

hire previously

work for another

participating

congregation?

Check for

immediate

eligibility for

employer

contributions!

Are you telling

every new

employee (and

reminding all

employees

annually) that

they can make

elective

contributions?

Benefits

Resources

• Benefits Tune-up Workbook (on proper administration of benefits)

• Benefits, Compensation, and Aid Funds page

• Compensation and Staffing News

– Sign up for this monthly newsletter with tips and resources on personnel matters

– Read archived issues (annotated) on Office of Church Staff Finances Publications page

Main Points about Benefits Administration

• UUA defines eligibility criteria for UUA Plans – not congregation.

• Pay attention to enrollment windows, especially for LTD and Life.

• Use the Benefits Tune-up Workbook.

End of Nuts and Bolts

Whew!

Performance Management

What does it mean to you?

Performance Management…

is not people management.

Supervision as Performance Management

• Expectations

• Performance conversations

• Reviews

Accountability

• Clarify expectations

• Honor agreements

• Be in right relationship

▪ The employer/employee relationship is primary

Side note: Hiring from Within

• Unique boundaries, role, and identity should be clear to ALL staff

• Reinforce boundaries and expectations

▪ During interview

▪ Upon hire

▪ Supervision

▪ Staff meetings

Accountability is for All

• Staff

• Volunteers (“unpaid staff”)

• Leaders and Supervisors

Performance Management Cycle

• Define expectations

• Checking in on goals

• Reviewing and adjusting

Parts of a Management System• Policy Handbook*

• Job Description**

▪ Purpose

▪ Essential functions

▪ Core competencies

• Annual assessment documents

▪ Professional goals – aligned with congregational goals (only to be done

when someone is in the role)

* New! Sample Personnel Policy Manual available on UUA.org

** Position Description Template available on UUA.org

Job Description

• Title: Position Title

• Reports to: Supervisor (by title)

• FLSA Status: Exempt or Nonexempt

• Hours and schedule: Number of hours per week; days/times as applicable

• Date created or revised: Current date

Job Description

Purpose – why the position exists

• Director of Religious Education Directs and leads the Religious

Education programs of the congregation, planning and

administering a comprehensive program that nurtures the spiritual

and religious growth of adults, youth, and children. Recruits, trains,

and supports volunteers to play a role in leading religious

education programs.

• Custodian Performs general cleaning and maintenance of the

church buildings, furnishings and equipment in order to provide a

clean, comfortable and safe environment for the programs of the

church.

Job Description

Essential Functions - (Americans with Disabilities Act

language) meet at least one of these criteria:

• Doing the function is part of why the position exists.

• A limited number of employees could perform this function.

• The function is highly specialized and the person in this position has

the specific skills and expertise to perform the function.

EXAMPLES OF ESSENTIAL FUNCTIONS

• For a Director of Religious Education Program Development: Develops programming for children that encourages religious and spiritual development and that builds community, supporting children in developing and acting on their values. Plans and develops curriculum and resources for Lifespan Religious Growth and Learning.

• For a Custodian Resource Management: Follows directions and establishes routines in the proper use of materials and supplies. Monitors heat, lighting, and air conditioning to optimize utilization.

• For an Office Administrator Communication: Prepares reports and recommendations as directed by the Minister and Business Administrator. Coordinates production of church communications, working collaboratively with program staff and volunteers.

Job DescriptionCore Competencies: Core competencies are expected behaviors, attitudes, and personal skills, each of which would apply to many or all job responsibilities.

• Organization and Planning: Organizes people, funding, materials, and support to accomplish multiple, concurrent goals and activities.

• Vision and Purpose: Commitment to and knowledge of Unitarian Universalist Principles, values, history and worship. Articulates a compelling and inspired vision for their program area, in alignment with the mission of the congregation.

• Trust and Integrity: Is widely trusted to keep confidences, admit errors, and adhere to a transparent set of personal and professional values that are congruent with the ministry of the congregation

• Conflict Management: Recognizes and resolves conflicts effectively, applying principles of active listening, collaboration, and equity.

*Check for bias

Setting Performance Goals

• Provide:

• purpose

• direction

• alignment

• Should be SMARTIE

• Specific,

• Measurable,

• Ambitious,

• Realistic,

• Time-Bound,

• Inclusive,

• Equitable

• 2 or 3 goals are plenty!

Performance Management Cycle

• Ongoing conversations (weekly or bi-weekly)

• Quarterly check-in conversation

• Annual assessment

Annual Reviews

• Good job description, including responsibilities and competencies

• Policy expectations

• Clear goals

• Aligned with congregational/staff goals

• Conversations along the way!

Governance Model

• Provides clarity and accountability

• Model determines specifics

Congregational Staff and Boundaries

• Role clarification

• Accountability

• Collaboration

▪ Unclear roles and boundaries → employee feels responsible for everything!

▪ Want to be collaborative, not territorial

Conflict

• Unclear expectations

• Too many bosses

When things are not going well – 3 kinds of conversations

• Duties and tasks are not being done

• Duties & tasks are being done but the way they are doing the job is an issue -

• Duties & tasks ok, functioning ok, but not focused on strategy

What do clarity and accountability look like really?

Close partnerships

• Board

• Head of Staff

• Personnel committee

Roles

• Head of staff

• Board

• Personnel Committee

Roles

Head of Staff

Performance management cycle

Roles

Board

• Strategy with head of staff

(if there is no strategy from the board, it falls to the staff to create one)

• Alignment with all ministries

• Building accountability via conversations

• What did we say we were going to do?

• Did we do it?

Roles

Personnel Committee – conversations are only policy related not

evaluative

• Accountable to the board

• Oversight not management

• Research and recommend policy to the board

• Research and recommend salaries to board – head of staff executes

• Oversight of performance appraisals – i. e. timeline not execution

(Possibly works with board on assessment on minister)

Supervising the Minister

• What does that look like to you?

Supervising the Minister

• How do you want to give and receive feedback?

Minister

Board

Saturday Session

• Tailoring to your needs and interests

• Particular topics

• Q&A, pick our brains

Antoine de Saint-Exupery, French writer

(1900-1944), from "The Wisdom of the

Sands.”

If you want to build a ship,

don't drum up the men to

gather wood, divide the work

and give orders. Instead,

teach them to yearn for the

vast and endless sea.