Q: Our church was in the process of reviewing its pastor’s compensation to determine if it is reasonable when the pastor abruptly quit, effective immediately.
However, the pastor requested he still receive compensation for the remainder of this month. What is the church obligated to do?
A: Unexpected resignations are difficult situations for churches to navigate. On top of the relational and logistical challenges of a pastoral vacancy, the church must carefully fulfill its legal obligations to a departing employee.
What does ‘at-will’ mean?
Most states in the US are “at-will employment” states. While employment is not guaranteed by the employer for any length of time, employees are also not required to provide notice before resigning.
This means employees can quit or be terminated at any time.
In these states, the church is only obligated to pay compensation up to and including the last day of work for any employee. In addition to earned compensation, the church may also need to pay the pastor any accrued vacation or paid time off (PTO) that the pastor has not used. This depends on state law and the church’s own policies.
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The church’s obligations may be different if they have entered into a contract with the departing pastor. Employment contracts are the most common exception to at-will employment. If this church has entered into a contract with the pastor–for example, one specifying that the pastor is paid on a month-to-month basis, or is otherwise entitled to full monthly payment–then the terms of that contract would control.
If there is no contractual obligation to continue payment, the church may still choose to continue paying the pastor through the end of the month (or longer) as a gesture of goodwill. The compensation should be reasonable.
If the church does plans to pay any additional compensation, itthey should consider executing a separation agreement before making any payments.
Spell it out in the separation agreement
A separation agreement can specify a severance amount in exchange for a release of all claims the departing pastor may have against the church. This provides the church some legal protection even in an amicable departure. Many churches pay a reasonable amount of severance to departing employees, even those who have voluntarily resigned.
The church should consult local counsel before executing a separation agreement.