Did you know that synagogues, churches, and certain other religious entities are exempt from participating in Federal Unemployment Insurance, and are also exempt in most (but not all) states, as well?

Did you know that synagogues and churches could voluntarily opt-in to unemployment insurance programs in most states, and can also participate in private unemployment insurance plans?

The current economic and employment crisis has hit the religious sector as hard as any other. Staff are being laid off left and right in an attempt to economize.

I would venture that a large percentage of those laid off had no idea they were ineligible for unemployment benefits. I'd venture that many synagogue members and Board members were unaware of this.

Sadly, however, I'd venture that there are people in positions of responsibility at most synagogues who are fully aware of the facts, and choose to say/do nothing. I'd also venture that many synagogues, even aware they could voluntarily participate in unemployment plans for their staff, deliberately choose to not do so, in order to save the expense.

I offer support for that assumption on the basis of my experience with synagogues and other issues of labor law, most especially the definition of employee vs. independent contractor in the IRS regulations. Subjected to the test criteria, most synagogue religious school teachers, specialists, songleaders, etc. are clearly employees, and not independent contractors. However, by pretending they are contractors, the synagogues save the additional expense of paying their share of matching FICA (social Security) contributions.

How many times have we heard the tired, old "we just can't afford it" excuse? That excuse doesn't put food on the table of laid-off synagogue employees, and it prevent synagogue employees from having enough in social security to depend upon when they retire.

Guess what folks-the maximum FUTA tax per employee per year is generally $56. To save a lousy $56 per staff member, synagogues will allow their staff to go without unemployment compensation. Where's the Jewish value in that?

While I was aware of the unemployment insurance situation myself, I cannot once recall in my career being informed by any synagogue at the time I was hired that I would not be eligible for any unemployment benefits. I suspect this may be the experience for most who work in synagogues.

What all this adds up to is a shanda. The very institutions that promote Jewish values are themselves ignoring a whole host of Jewish values, and, in regard to employee vs. independent contractor matters, conveniently side-stepping that most important of Jewish values: dina d'malkhuta dina - "the law of the land is the law," i.e. we must follow the laws of the lands in which we live. The issue of unemployment insurance is perhaps not a matter of not following the law of the land, but it is certainly a moral and ethical issue, and a failure on the part of synagogues to do what the law permits them to do (opt-in to unemployment insurance plans) rather than take advantage of what the law exempts them from doing to save a few bucks.

How can we allow this? Why do we allow this? Why is there no outrage or outcry at this unfair treatment of those who labor in service to Judaism (or Xtianity, or any other religion?)

Here's a sobering fact:

Workers in religious organizations number more than 1,647,219 ...of America’s workforce and earned $28,307,395,000...in 2006. Only 11 percent...are entitled to unemployment benefits -- many of these work in the few states that require religious organizations to pay state unemployment tax. (cf: http://www.mycareervoyage.com/unemployment20090418)

And here are two articles on the subject:

http://tinyurl.com/n5w7se (from the Vozisneais blog)

http://www.washingtonjewishweek.com/main.asp%3FSectionID%3D4%26SubSectionID%3D4%26ArticleID%3D10970%26TM%3D14859.99 (Washington Jewish Week)

Some (but not all) churches have stepped up to the plate to right this wrong, but it appears very few synagogues have done the same so far.

Take Action

If you agree that synagogues (or churches, mosques, etc.) should uphold the core values they hold equally when it comes to how they treat their employees, then contact your local synagogue (or church, mosque, etc.) JCC, Y, et al and urge them to

Opt-in to their state's unemployment insurance system , if possible or, if not, to participate in a private unemployment insurance plan, for their staff.
Follow the IRS code and treat employees as employees, subject to withholding, and the synagogue paying matching FICA (Social Security) payments. (Any employee or employer has the right to ask for a judgment from the IRS on the status of any worker to determine if they are employee or independent contractor.)

For more info on employee vs. independent contractor, see

www.irs.gov/businesses/small/article/0,,id=99921,00.html

It's generally clear, and, in most cases, you'll find that most people who work in a synagogue are employees and not independent contractors. Also, there is no legal minimum number of employees that somehow exempts an organization from these regulations. See:

There is also a great deal of confusion between the terms "Independent Contractor" and "Self-Employed." The fact is, most rabbis or hazzanim who work for one congregation are employees, but their salary CAN BE treated as self-employment income if they so choose. Rabbis/Hazzanim are considered self-employed for Social Security and Medicare taxes, so the synagogue does not have to withhold or report these taxes even if the rabbi is an employee and the synagogue withholds income taxes. A rabbi/Hazzan does have to pay self-employment taxes, (i.e. for Social Security and Medicare.) (A rabbi/hazzan can also choose voluntary tax withholding as an option.)

Though published in 1993, the book "Ministry and the American Legal System" by Richard B. Couser his good information on religious organizations and labor law. Here's a link to a relevant chapter in the book courtesy of Google Books:

http://books.google.com/books?id=xJfWZNHo6nkC&lpg=PA214&ots=_7saf4q4JX&dq=minimum%20number%20of%20employees%20withholding&pg=PA214#v=onepage&q=&f=false

Sorry for the long link, but the URL-shrinkers can't seem to handle this one.