Establishing an Arbitration Policy for Church Staff Disputes

Avoid costly legal battles through this increasingly popular approach.

Disputes occasionally arise between church employees, or between an employee and the church itself. These disputes can be costly and time consuming, and cause a breakdown in relationships. And if an employee sues the church, the lawsuit may not be covered under the church’s liability insurance policy as a result of an exclusion for employment practices. Church board members need to be concerned about reducing the likelihood of such disputes.

One solution to consider is mediation and arbitration. Using informal methods of dispute resolution is an idea whose time has come. The civil court system in this nation is deficient in many respects: litigants enter and leave the courtroom as enemies, delays are notorious, expenses can be substantial, and the results often seem arbitrary. As a result, many business corporations have begun using alternative methods of dispute resolution, including mediation and arbitration, and there is no reason that churches cannot do the same.

The concept is simple—parties agree in advance to resolve their disputes through nonbinding mediation. If this process fails, then they agree to present their dispute to one or more arbitrators for a binding decision. Disputes generally are resolved more quickly, with less expense, and with fairer results.

There are two excellent reasons for considering mediation and arbitration in addition to the obvious advantages of speed, lower cost, and fairness. First, the vast majority of lawsuits involving churches are brought by “insiders,” including members and employees. Arbitration is ideal for such disputes. Second, there is scriptural support for arbitration of internal church disputes. In 1 Corinthians 6:1-8, the apostle Paul urged Christians to resolve their disputes within the church rather than take them to the civil courts.

In drafting your own arbitration policy, keep the following considerations in mind:

1. How will the policy be implemented? The most effective way to adopt an arbitration policy is for the church membership to adopt one as an amendment to the church bylaws. Since all members are bound by the church bylaws, this approach will have the best chance of being binding on all members. Next, you need to address what disputes will be referred to arbitration. Disputes relating to church affairs? Disputes between members? What about disputes between a minister and other members, or between a minister and either the church board or the church itself? Or disputes between employees and the church? These are very important questions to resolve. One recommendation—don’t have the policy cover disputes between members. For example, a church member trips and falls while at another member’s home. This is not the kind of dispute that should be arbitrated.

2. How will the arbitration process be conducted? Often, each side in a dispute selects an arbitrator, and these two persons choose a third. Of course, the third arbitrator must be completely unbiased. The arbitration procedure often is quite informal, and attorneys may or may not be allowed to participate. State law should be consulted. Sometimes, a state has an arbitration statute that provides helpful guidance.

3. Consult with the church’s liability insurance company. This should be done before implementing any arbitration policy. You need to know if your insurance company will honor your arbitration policy, and pay arbitrators’ awards up to the policy limits. Here is another important point for board members to note—you should not change insurance companies without obtaining the same assurances from the new company. The arbitration policy itself should contain language conditioning its use on acceptance by the church’s liability insurer, whoever that may be. Finally, be sure to enlist the services of an attorney in drafting an arbitration policy.

Our nation is experiencing a litigation explosion, and churches are not immune. Many of these lawsuits are employment-related. If you agree that civil litigation is expensive, time-consuming, and often arbitrary, then you need to consider alternatives. As a board member, you owe it to yourself and your congregation to seriously consider arbitration for resolving disputes.

Essential Guide to Employment Issues for Church Boards.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.

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