What Should a Church Do When the Pastor Leaves?

By Raul Rivera

After 20 years of faithful service, the time had come for Pastor Marcus to step down as the lead pastor of Redeemer Church. He felt that the Lord was calling him to new beginnings with a church plant in a neighboring state. Although his departure was no surprise to the board of directors, they were not ready to hire a new lead pastor.

Pastor Marcus suggested that an interim pastor take his place while the pastoral selection committee sought a permanent replacement. He even provided a few names of retired pastors who would be perfect for the position.

While the board was exploring several options, a question was raised to which they did not know the answer: “Should the interim pastor be treated as an employee of the church or as a contract worker?”

A common reality for churches

Many churches find themselves in a similar situation as Redeemer Church. Although the vacancy of a lead pastor position may be due to a variety of reasons, churches are built to outlast the founding pastor. Whatever the scenario may be, times of pastoral transitions can be delicate and crucial in the life of the church and its congregation.

Some churches need only a few weeks or months to find a permanent replacement for a lead pastor, while others can take up to a year or more. No matter the duration, many churches find that utilizing one or more interim pastors can make the transition process more smooth. A church may use the service of one interim pastor, or multiple pastors, to fill the role of lead pastor while the church searches for a permanent replacement.

One of the most important criteria for selecting an interim pastor is that the individual selected be able to provide leadership and spiritual guidance to the congregation. Of equal importance is that the pastor be appropriately classified for payroll purposes.

Employee vs. contract worker

In order for you to choose the proper classification of an interim pastor, it is necessary to first understand the difference between an employee and a contract worker.

When a church hires a worker, one of the most important initial decisions the church must make is whether to treat the worker as an employee or as a contract worker for payroll purposes.

(Recommended reading: "The First Thing Every Church New Hire Must Do")

Churches often mistakenly believe that this decision is discretionary. In reality, the federal government uses common-law rules to determine the worker’s classification.

Times of pastoral transitions can be delicate and crucial in the life of the church and its congregation.

IRS Publication 15-A states, “Under common-law rules, anyone who performs services for you is generally your employee if you have the right to control what will be done and how it will be done. This is so even when you give the employee freedom of action. What matters is that you have the right to control the details of how the services are performed.”

Under common-law rules, there are three factors to consider when determining a worker’s classification for payroll.

1. Behavioral control: Does the church have the ability to dictate how and when the person performs his/her duties? If so, the individual is an employee.
2. Financial control: Does the church control the business aspects of the person’s job? Is the individual able to seek other job opportunities? If the church sets the worker’s schedule and dictates how to do the job, then he/she is an employee of the church.
3. Relationship of the parties: Does the individual provide services that are vital to the church’s existence? If so, he/she is an employee.

(Recommended reading: “5 Best Payroll Practices for Church Payroll Compliance”)

Next, we will take a look at two common scenarios when churches use interim pastors. In both scenarios, we will use the three factors of common-law rules to determine how the interim pastors should be classified for payroll purposes.

Two common practices for churches

There is no one right way to handle pastoral transitions. There are, however, two common practices for hiring interim pastors.

1. The church selects one interim pastor for the duration of the pastoral search. (This practice is most common.)
2. The church uses multiple individuals to fill the role of an interim pastor until a new lead pastor has been appointed. In this situation, individuals from both inside and outside of the church may be selected to preach during services and take on the tasks of a lead pastor.

An interim pastor should be able to provide leadership and spiritual guidance to the congregation.

Let us look at how these practices impact the payroll of a church.

Scenario 1: One interim pastor

Some churches already have a network of potential interim pastors who have the skills needed to lead the church, but who are not interested in becoming the permanent lead pastor. One of these individuals may be willing to serve as the sole interim pastor for as long as it takes the church to find a replacement.

In this instance, the interim pastor would take on the major responsibilities of the lead pastor, including preaching during services, providing spiritual guidance, and may even be a member of the pastoral search committee. In order to fulfill the interim pastor obligations, the individual would likely need to dedicate significant time to the new position.

Although not all interim pastors request to be compensated, most churches who can pay the person will do so out of gratitude and appreciation. We return to the key question, “Should this individual be paid as an employee or as a contract worker?”

To help us answer this question, again we must look to the three factors of common-law rules.

1. Behavioral control: In this scenario, the interim pastor has taken full control over the ecclesiastical responsibilities of the church. Therefore, there are specific times when the person must be available in order to perform the pastoral duties. For this reason, the church holds behavioral control over the interim pastor.
2. Financial control: If the person is unable to seek employment elsewhere due to the responsibilities as interim pastor, then it is safe to say that the church holds financial control. However, if the individual is able to be interim pastor while maintaining employment elsewhere, then the church does not hold financial control. 
3. Relationship of the parties: Since the interim pastor in this scenario is handling the spiritual responsibilities of the lead pastor, it would be difficult to say that the person does not provide services that are vital to the church’s existence. Therefore, we can determine that there exists a significant relationship between the church and interim pastor.

Determination: There are other various facts and circumstances that can affect the outcome of the scenario. However, based upon this specific set of circumstances, we can conclude that the church should treat the interim pastor as an employee. Therefore, the interim pastor should receive a Form W-2 indicating the wages the church paid to him.

(Recommended reading: "How to Hire Church Employees the Right Way, Part 1")

Next, let us take a look at the second scenario.

Scenario 2: Multiple guest pastors

Some churches prefer to bring in multiple individuals, from both inside and outside of the church, to fill in for the lead pastor as the church searches for a replacement. These individuals often fill in as guest speakers. Although it would be safe to assume that these individuals would be treated as contract workers, let us examine this scenario through the three factors of common-law rules.

1. Behavioral control: Although the church has the ability to dictate when a guest pastor preaches at the church, more than likely the individual will be asked to provide this service, at most, a handful of times. Furthermore, if the individual is asked to preach more than once, it would unlikely be for consecutive weeks since churches in this scenario generally have multiple guest pastors lined up to preach.
2. Financial control: Guest pastors are often pastors of other churches or respected members of the congregation who have jobs outside of the church. Even though the church may compensate these individuals with honorariums (love offerings), there is little to no financial control in this instance.
3. Relationship of the parties: While the service provided by a guest pastor is important to the church during this time, the frequency of the service is not on a consecutive basis. As previously stated, an individual in this scenario will usually be asked to provide his/her service a couple of times at most.

Determination: The guest speakers in this scenario who assist churches during times of pastoral transition should be treated as contract workers. With that being said, it is imperative that the church obtain a Form W-9 from each individual that it decides to bless with an honorarium. Furthermore, if the speaker receives more than $600 in honorariums, then the church will be responsible for issuing the individual a 1099-MISC by January 31st of the following tax year.

(Recommended reading: "Surviving Summer, Part 3: Paying Guest Speakers")

Hard transitions made easy

During times of pastoral transition, worrying about how your church should properly classify interim pastors may hardly seem important in the overall picture. However, IRS penalties can be hefty for misclassifying a worker. This is especially true since the classification of employees also directly affects payroll taxes.

Perhaps you are thinking that church compliance is burdensome. I am convinced that if you take time to work ON your ministry and not just IN your ministry, you can create a solid infrastructure that continues to smoothly operate during times of transition.

I encourage you to utilize our resources and services. If you want more information pertaining to payroll, consider enrolling in our online church compliance course, StartCHURCH University. We have an entire unit consisting of four chapters dedicated to this topic. Or perhaps you want to learn how to correctly file W-2s and 1099s for your church. In that case, the W-2 and 1099 applet in our Management Suite will give you step-by-step instructions on how to e-file the informational returns for your church.

Lastly, I would love to have you join us for a day at one of our Ultimate Church Structure Conferences. You and your ministry will reap tremendous benefits from the knowledge that is imparted, and your decision to attend could be one of the best ministry-changing choices that you make all year.

Handpicked content for you:

• “5 Best Payroll Practices for Church Payroll Compliance”
• “3 Common Mistakes Churches Make When Paying Pastors”
• "Do You Know How to Take Board Meeting Minutes?"

---