It is common amongst shelters around the country that residents are offered the opportunity to work, or put more succinctly, are expected to contribute to the ministry with labor as part of their discipleship and the shelter’s stewardship. It is a beneficial arrangement and allows not only for a repayment, of sorts, for the otherwise free services they receive from the shelter or mission programs, but also allows for the regular work that is part of a structured lifestyle conducive for what the community at large expects of its citizens. Where trouble can result from this arrangement is in the classification of what the resident may become in the eyes of the Department of Labor (DOL). That is, are they volunteering to the point where they may decline to do the work, or are they employees who work for an employer and are therefore subject to statutory labor laws, including being covered under the Workers’ Compensation statutes? This problem is further compounded when the ministry gives a stipend in exchange for the services provided making it rather clear the resident is not a volunteer—even a housing allowance may be defined as “remuneration,” and therefore, evidence that an employer-employee relationship exists.
It should be noted that there is no universal agreement amongst the states as to what constitutes an “employee” nor what benefits they are entitled to receive if they are injured in a “job-related” injury. But employers will be held exempt from liability in exchange for Workers’ Compensation (WC) insurance that provides unlimited health benefits for the worker. For this reason, WC insurance does not limit the health protection provided the injury is to an employee and the injury occurred from “work.” To see some of the rules that apply uniquely to your state visit http://www.statelocalgov.net/50states-workers-compensation.cfm. You should check with the laws of your state to see if your arrangement of “work” with your residents is viewed as “employment,” but it is my recommendation that a WC insurance policy be put in place regardless to avoid an adverse determination. Better to pay the minimum premium than to face the stiff penalties the DOL will otherwise impose.
Additionally, it is my recommendation that a Volunteer Accident-Health policy be initiated so that any injuries incurred by your residents do not have to be applied against the WC policy. Citygate Network already has a master policy for this purpose and is a fraction of the cost of WC thereby allowing coverage without needing to classify your guest/residents as employees.
Contact Merriam Insurance today to learn more.
Latest posts by Brian H. Merriam, CPCU, ARM, AAI (see all)
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