Unemployment Benefits for Former Daycare Employees

Some states exclude church workers from unemployment benefits.

Emily worked as an assistant childcare teacher for a church’s daycare program. Following the termination of her employment, she sought unemployment benefits. Her claim was denied, and she appealed. At the unemployment compensation hearing, Emily testified that she believed the daycare was operated separately from the church, and that she did not know who owned the daycare, whether the building was used for church services, or whether the daycare was an outreach program of the church. She also testified she did not know the meaning of the term “His Kids” (the name of the daycare program).

A church officer testified that the daycare used the same federal employer ID number as the church, was governed by the church board, and was operated out of a church-owned building that was used for other church activities, and which contained pictures of Jesus and religious phrases on the walls. The officer further testified the daycare employees’ paychecks contained the names of both the church and the daycare. When asked whether the daycare was operated for religious purposes, the church officer answered, “Yes,” and testified it was an outreach ministry for the community. The officer explained that “His Kids” referred to Jesus’ kids.

An appeals commission ruled that Emily was entitled to unemployment benefits since (1) there was no evidence the church supported the daycare; and (2) the evidence failed to show the daycare was operated primarily for religious purposes. The church appealed to a state court.

A state appeals court noted that a person seeking unemployment benefits must have been paid wages for “insured work,” which is defined under Florida law to exclude service performed “in the employ of a church or a convention or association of churches or an organization that is operated primarily for religious purposes and that is operated, supervised, controlled, or principally supported by a church or a convention or association of churches.” The court concluded that this test was met, and so Emily was not entitled to unemployment benefits. His Kids Daycare v. Florida Unemployment Appeals Commission, 2005 WL 1036682 (Fla. App. 2005).

This article first appeared in Church Treasurer Alert, March 2006.

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

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