Key point. Employees of churches and church-affiliated schools are ineligible for unemployment benefits in most states.
A Pennsylvania court ruled that a terminated employee of a church-affiliated school was eligible for unemployment benefits since her employment was not exempt from coverage. A common question for any church that operates a school or preschool is the application of state unemployment laws to its employees. Are employees entitled to unemployment benefits if they resign or are terminated? This question was addressed by a Pennsylvania court. An assistant (the "plaintiff") to the principal of a religious school was terminated, and she applied for unemployment compensation benefits under state law. A state agency determined that she was ineligible for benefits because she did not have sufficient wages entitling her to benefits. In reaching this conclusion, the agency excluded wages from her employment with the school since it considered such employment to be excluded from the definition of "employment" under the unemployment compensation law on the basis of the following exemption:
Service performed in the employ of (i) a church or convention or association of churches or (ii) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled or principally supported by a church or convention or association of churches.
The plaintiff appealed this ruling to a state unemployment compensation board of review, which reversed the agency's determination that the plaintiff's services were exempt from the definition of covered employment under the unemployment compensation law. The board cited the following facts that had been established in this dispute: