Denominations - Legal Liability

Legal Developments

Employer Not Liable for Man’s Rape of Coworker

Employers are only liable on the basis of negligent hiring if the worker’s act was foreseeable.

Richard R. Hammar, Attorney, CPA
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Key Point 10-05. A church may be liable on the basis of negligent selection for a worker's molestation of an adult if the church was negligent in the selection of the worker. Negligence means a failure to exercise reasonable care, and so negligent selection refers to a failure to exercise reasonable care in the selection of the worker. Liability based on negligent selection may be imposed upon a church for the acts of employees and volunteers.

Key Point 10-05.2. Some courts have found churches not liable on the basis of negligent selection for the sexual misconduct of a minister or other church worker involving another adult since the church exercised reasonable care in the selection of the worker.

Key Point 10-05.3. Churches can reduce the risk of liability based on negligent supervision for sexual misconduct involving adult victims by adopting risk management policies and procedures.

A South Carolina court ruled that an employer's knowledge that an employee had been convicted six years earlier for the misdemeanor offense of publicly exposing himself in a park did not make it foreseeable that the employee would rape a coworker, and therefore the employer was not liable on the basis of negligent hiring for the employee's assault. A male employee ("Mark") at an assisted living center for the mentally disabled raped a co-employee (the "plaintiff") while at work. The plaintiff sued her employer, claiming that it had been negligent in hiring Mark, and that its negligence resulted in the assault. When it hired Mark, the employer ran a criminal background check. The background check revealed one misdemeanor charge for disorderly conduct as a result of exposing himself in a public park, and one speeding violation. As company policy, the employer relies on self-disclosure by its employees to report any criminal convictions that occur after an employee is hired. Mark did not inform his employer of any criminal convictions after being hired. During his five years of employment, Mark was accused on two occasions of sexually molesting a patient. Both accusations were investigated, and later dropped due to a lack of evidence. Mark was allowed to continue his employment without restriction.

The employer asked the court to dismiss the plaintiff's lawsuit on the ground that there was no evidence that Mark would sexually assault a co-worker. In opposition, appellant argued that, and so it had not been negligent in hiring, supervising, or retaining him. The court agreed with the employer, and dismissed the lawsuit. The plaintiff appealed.

On appeal, the plaintiff argued that although the employer performed a criminal background check, it did not conduct any additional inquiry or investigation to discover that Mark's conviction for disorderly conduct was sexual in nature. She cited a detective's testimony that the disorderly conduct conviction was for public exposure in a public park that "is known for sexual activity."

The court began its opinion by noting that "in a negligent hiring context, a plaintiff must show at a minimum, that the employer knew, or should have known, of the employee's criminal propensities. When determining the foreseeability of a criminal act, a court must look at the totality of the circumstances, and only when the circumstances are somewhat overwhelming can an employer be held liable."

Criminal records check

The court concluded that the plaintiff had failed to prove that Mark's assault was reasonably foreseeable.

Before hiring him, the employer performed a criminal background check through the Ohio Bureau of Criminal Investigation. His conviction for disorderly conduct was included on the BCI report. The plaintiff argues that the employer should have conducted periodic background checks while Mark was employed. However, there is no evidence that any additional crimes would have shown up on these reports nor does appellant present any evidence that he actually committed any crime while he was employed.

In rejecting the plaintiff's claim that Mark's conviction for disorderly conduct made her rape foreseeable, the court noted that Mark's act of exposing himself in the public park "was not a physical assault that would demonstrate to his employer that he would potentially rape a fellow employee …. It would be quite a stretch to suggest that his disorderly conduct charge from 1999 demonstrates that he would be likely to commit a rape in 2005."

The two previous accusations

The court also rejected the plaintiff's claim that the two prior accusations of sexual misconduct made her rape foreseeable, and therefore the employer was liable on the basis of negligent hiring:

The plaintiff notes that the allegations were found to be "unsubstantiated," but implies that the assault actually occurred and shows that the rape was foreseeable. Her argument is unpersuasive. Both the [local and county] police investigated the matter and concluded that the allegation was unfounded. The resident had a history of making false allegations. Further, Mark had four years of experience at the time of the allegation with no prior allegations of abuse and passed a lie detector test. There is no evidence that the employer acted unreasonably during the situation.

Mental health issues

The plaintiff noted that a detective had informed the employer, prior to the rape, that she found Mark to be "odd," and that he was not taking his medicine for borderline schizophrenia and bipolar disorder. Further, the plaintiff claimed that Mark took an FMLA leave-of-absence for these issues. The plaintiff concluded that the employer should have conducted an independent evaluation of Mark's mental health before allowing him to return to work. The court disagreed, noting that "this does not show foreseeability of the rape." To the contrary, the employer testified that she never saw any signs that Mark was mentally unstable or threatening in any way. Even if he was suffering from these disorders, "there is no evidence that they would make him violent or prone to commit a sexual assault. Further, his doctor released him to return to work without restriction following his FMLA leave. Accordingly, the plaintiff fails to demonstrate that a genuine issue of material fact exists regarding negligent hiring, supervision or retention.

Application. This case is instructive for the following five reasons. First, the court correctly noted that an employer generally cannot be liable on the basis of negligent hiring for an employee's criminal act unless the act was reasonably foreseeable based on what the employer knew or in the exercise of reasonable care should have known.

Second, the court concluded that an employee's misdemeanor conviction for public exposure in a park did not make it foreseeable that the employee would rape a coworker six years later, even if the park had a reputation for illegal sexual activity. In particular, the court noted that Mark's act of exposing himself in the public park "was not a physical assault that would demonstrate to his employer that he would potentially rape a fellow employee …. It would be quite a stretch to suggest that his disorderly conduct charge from 1999 demonstrates that he would be likely to commit a rape in 2005."

Third, the court concluded that the employer's failure to conduct periodic criminal background checks on Mark did not make it negligent, since "there was no evidence that any additional crimes would have shown up on these reports" and there was no proof that Mark "committed any crime while he was employed."

Fourth, the court concluded that the two previous accusations of sexual misconduct against Mark did not make his subsequent rape of the plaintiff foreseeable, since (1) those accusations were investigated by local and county police and adjudged to be unsubstantiated, and (2) the purposed victim had a reputation for making false accusations.

Fifth, Mark's mental health problems did not make his rape of the plaintiff foreseeable, and therefore the employer could not be liable on the basis of negligent hiring. Prewitt v. Alexson Services, Inc., 2008 WL 3893575 (Ohio App. 2008).

This Recent Development first appeared in Church Law & Tax Report, July/August 2009.

Legal Developments

Defenses to Discrimination Lawsuits

Know how to defend your ministry in the event of a discrimination lawsuit.

Richard R. Hammar, Attorney, CPA
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Church Law & Tax Report

Defenses to Discrimination Lawsuits

Know how to defend your ministry in the event of a discrimination lawsuit.

Richard R. Hammar, J.D., LL.M., CPA

Key Point 8-12.8. Congress enacted the Religious Freedom Restoration Act to prevent the government from enacting any law or adopting any practice that substantially burdens the free exercise of religion unless the law or practice is supported by a compelling government interest. The compelling government interest requirement applies to any law, including neutral laws of general applicability. The objective of the Act was to repudiate the Supreme Court’s decision in the Smith case (1990) in which the Court ruled that neutral laws of general applicability that burden the free exercise of religion do not need to be supported by a compelling government interest in order to satisfy the First Amendment. In 1997, the Supreme Court ruled that the Act was unconstitutional. However, other courts have limited this ruling to state and local legislation, and have concluded that the Act continues to apply to federal laws.

A federal court in New York dismissed an age discrimination claim against a church, and based its conclusion on the federal Religious Freedom Restoration Act rather than the so-called ministerial exception. A minister was forced into retirement at age 70 by a policy of his denomination. The minister sued his church and a denominational official for violating a federal age discrimination law making it unlawful for any employer with 20 or more employees that is engaged in commerce to discriminate in any employment decision on the basis of the age of any person who is at least 40 years of age. The minister asserted that the mandatory retirement policy was a “secular” matter that was not influenced by any religious considerations. He acknowledged that most courts refuse to intervene in employment disputes between churches and clergy as a result of the so-called “ministerial exception” to employment laws, but he insisted that the ministerial exception “should not insulate a church’s non-religious regulations that discriminate against ministers on the basis of age.” A federal district court dismissed the lawsuit on the basis of the ministerial exception.

A federal appeals court ignored the ministerial exception and ruled that the lawsuit was barred by the federal Religious Freedom Restoration Act (RFRA). It noted that the ministerial exception “has no basis in statutory text, whereas RFRA, if applicable, is explicit legislation that could not be more on point. Given the absence of other relevant statutory language, the RFRA must be deemed the full expression of Congress’s intent with regard to the religion- related issues before us and displace earlier judge-made doctrines that might have been used to ameliorate the age discrimination law’s impact on religious organizations and activities.”

RFRA provides: “Government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability … [unless] it demonstrates that application of the burden to the person is in furtherance of a compelling governmental interest, and is the least restrictive means of furthering that compelling governmental interest.” The court reasoned that RFRA was broad enough to apply to a minister’s lawsuit against a church “since it applies to all federal law and the implementation of that law.” This language “easily covers the present action.”

The court rejected the minister’s claim that RFRA is unconstitutional. It concluded that RFRA represents a constitutional exercise of congressional power as it applies to the federal government. The court remanded the case back to the district court for reconsideration based on RFRA.

The district court concluded that it was compelled by the appeals court’s ruling to apply RFRA, rather than the ministerial exception, in resolving the plaintiff’s age discrimination claim. It noted that the appeals court found RFRA to be “the full expression of Congress’s intent with regard to the religion-related issues before us and displaces earlier judge-made doctrines that might have been used to ameliorate the ADEA’s impact on religious organizations and activities,” including the ministerial exception.

The district court concluded that outcome in this case was the same whether RFRA or the ministerial exception was applied, even though the denomination allegedly had made an exception to its retirement policy in at least one prior case:

The fact that the defendants may have deviated from this policy on one occasion, does not detract from the principle that it must have the right to appoint ministers without interference from the civil courts. Thus, because application of the ADEA to the defendant’s mandatory retirement policy would interfere with its right to select its own clergy, it places a substantial burden on its right to manage its own internal affairs. This conclusion is supported by the “long line of Supreme Court cases that affirm the fundamental right of churches to ‘decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine ….'” We cannot conceive how the federal judiciary could determine whether an employment decision concerning a minister was based on legitimate or illegitimate grounds without inserting ourselves into a realm where the Constitution forbids us to tread, the internal management of a church.

Application. Churches and denominations that are sued for discrimination under any federal employment law should cite both the ministerial exception and RFRA as defenses. Hankins v. The New York Annual Conference, 516 F.Supp.2d 225 (E.D.N.Y. 2007).

This Recent Development first appeared in Church Law & Tax Report, September/October 2008.

Legal Developments

Church Secretary Sues for Age Discrimination

Federal appeals court rules she has enough evidence to move case forward.

Richard R. Hammar, Attorney, CPA
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Church Law & Tax Report

Church Secretary Sues for Age Discrimination

Federal appeals court rules she has enough evidence to move case forward.

Richard R. Hammar, J.D., LL.M., CPA

KEY POINT 8-07 Employees and applicants for employment who believe that an employer has violated a federal civil rights law must pursue their claim according to a specific procedure. Failure to do so will result in the dismissal of their claim.

KEY POINT 8-09 The federal Age Discrimination in Employment Act prohibits employers with 20 or more employees, and engaged in interstate commerce, from discriminating in any employment decision on the basis of the age of an employee or applicant for employment who is 40 years of age or older. The Act does not exempt religious organizations. Many states have similar laws that often apply to employers having fewer than 20 employees.

* A federal appeals court ruled that a church secretary produced enough evidence of age discrimination to avoid a dismissal of her lawsuit. A woman (the “plaintiff”) worked as the parish secretary from 1983 until May 2003, when her position was terminated. She was 64 years old at the time of her termination, and asserted that the pastor made a specific reference to her age and “retirement” when he informed her that her position was being terminated. The church insisted that the plaintiff’s position was eliminated due to budgetary reasons to allow for the creation of a new position of parish office manager by combining the tasks previously performed by the plaintiff with those of a 47-year-old employee whose part-time bookkeeper position was also being eliminated. The bookkeeper was selected to be the parish office manager, at which point she assumed the duties previously performed by the plaintiff. The plaintiff thereafter sued the church, claiming that it violated the Age Discrimination in Employment Act by terminating her. A federal district court ruled that the plaintiff failed to prove a “prima facie” case of discrimination, and dismissed the lawsuit. The plaintiff appealed.

A federal appeals court began its opinion by noting that in any age discrimination lawsuit the plaintiff has the initial burden of proving, by a preponderance of the evidence, a prima facie case of discrimination. To do so, the plaintiff was required to demonstrate that (1) she was 40 years of age or older at the time of the allegedly discriminatory action; (2) she suffered an adverse employment action; (3) she was qualified for the job from which she was terminated; and (4) she was replaced by a sufficiently younger person, creating an inference of discrimination.

If a plaintiff succeeds in establishing a prima facie case, “the burden shifts to the defendant to articulate a legitimate, nondiscriminatory reason” for the employee’s termination. If it cannot do so, the plaintiff wins. But if the defendant is able to prove a legitimate, nondiscriminatory reason for its action, the burden shifts back to the plaintiff to submit evidence from which a jury could reasonably either “(1) disbelieve the employer’s professed legitimate reasons; or (2) believe that an invidious discriminatory reason was more likely than not a motivating or determinative cause of the employer’s action.”

The court concluded that the district court erred in ruling that the plaintiff failed to prove a prima facie case of age discrimination. It noted that the plaintiff presented evidence that “(1) at age 64, she was a member of the protected class, (2) she was terminated from her position as office secretary and for that reason suffered an adverse action, (3) she was qualified for the job of office secretary, and (4) she was replaced in the performance of her previous duties by [the bookkeeper] who is significantly younger.” The court also ruled that there was sufficient evidence that the church’s professed “non-discriminatory” reason for dismissing the plaintiff (i.e., the elimination of her job, for budgetary reasons) was not worthy of belief. It noted that: “The church argues that its decision to consolidate the two positions was motivated by considerations of economics and efficiency, considerations which may prove to be legitimate in the final analysis, but which are at this point open to reasonable dispute. The plaintiff suggests that the pastor’s statements during their first meeting about her age and his raising the possibility that she might retire provide sufficient evidence of discriminatory animus to undermine the legitimacy of the after-the-fact stated reasons for the job elimination. Indeed, a jury may conclude that these reasons may well only have suggested themselves once the plaintiff’s ‘retirement’ appeared to [the pastor] to be imminent.”

One judge on the three-judge panel dissented, noting that “this case presents unfortunate circumstances in which a dedicated church employee felt that she was unjustly let go because of her advancing age.” However, this judge felt that the district court correctly concluded that the plaintiff failed to prove a prima facie case of age discrimination. Williams v. St. Joan of Arc Church, 2007 WL 979653 (3rd Cir. 2007).

Legal Developments

Sexual Harassment Suit Proceeds Against Local Church, but Not Denomination

Denominations are not held liable for acts of individual churches.

Richard R. Hammar, Attorney, CPA
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Church Law & Tax Report

Sexual Harassment Suit Proceeds Against Local Church, but Not Denomination

Denominations are not held liable for acts of individual churches.

Richard R. Hammar, J.D., LL.M., CPA

KEY POINT 8-09.1 Many federal employment and civil rights laws apply only to those employers having a minimum number of employees. In determining whether or not an employer has the minimum number of employees, both full-time and part-time employees are counted. In addition, employees of unincorporated subsidiary ministries of a church are counted. The employees of incorporated subsidiary ministries may be counted if the church exercises sufficient control over the subsidiary.

KEY POINT 8-12.5 Sexual harassment is a form of sex discrimination prohibited by Title VII of the Civil Rights Act of 1964. It consists of both “quid pro quo” harassment and “hostile environment” harassment. Religious organizations that are subject to Title VII are covered by this prohibition. An employer is automatically liable for supervisory employees’ acts of harassment, but a defense is available to claims of hostile environment harassment if they have adopted a written harassment policy and an alleged victim fails to pursue remedies available under the policy. In some cases, an employer may be liable for acts of sexual harassment committed by nonsupervisory employees, and even nonemployees.

* A North Carolina federal court ruled that a female church employee could proceed with a sexual harassment lawsuit against her church, but it dismissed her claims against a denominational agency. A female employee (the “plaintiff”) of a Methodist church sued her church and the Annual Conference (“Conference”) alleging sexual harassment and discrimination in violation of Title VII of the Civil Rights Act of 1964. Title VII prohibits any employer, including a church, that is engaged in commerce and that has 15 or more employees from discriminating in any employment decision as a result of a person’s race, color, national origin, sex (including sexual harassment), or religion. The plaintiff alleged that a church employee “engaged in a pattern of sexual harassment, verbal abuse, and physical threats directed towards her, and false statements to church members and staff about her, that created a hostile and unsafe work environment.”

Liability of the Conference

The Conference asked the court to dismiss it from the lawsuit on the ground that it was not the plaintiff’s employer and therefore could not be liable for violating Title VII. The plaintiff insisted that the Conference was her employer because it exercised sufficient control over her employment through its supervision of her employing church and through its authority to direct the pastor of the church. The plaintiff asserted that her church, and the Conference, should be viewed as a single employer under the “integrated employer” theory. Under the “integrated employer” theory several entities may be considered so interrelated that they constitute a single employer. The court applied the following factors to determine whether various entities were an “integrated employer”: (1) common management; (2) interrelation between operations; (3) centralized control of employment relations; and (4) degree of common ownership or financial control. The integrated employer test “instructs a court to determine what entity made the final decisions regarding employment matters related to the person claiming discrimination.” As a result, in order for the Conference to be considered the plaintiff’s employer, “there must be evidence that the Conference made the final decisions regarding employment matters related to her.”

In support of her argument that the Conference was her employer, the plaintiff focused on the hierarchical nature of the United Methodist Church, particularly the annual charge conference. She asserted that the Conference assigns pastors to churches, monitors the performance of pastors by ensuring that the local church adheres to the Book of Discipline, and reviews the annual budget of the local church. The court noted that “although the evidence demonstrates that the district superintendent, and thus the Conference, has general awareness and oversight regarding the activities of the local church, the undisputed evidence is that neither the Conference nor the district superintendent manage or are even involved in the day-to-day operations of the church.” For example, there was no evidence that the Conference “made the final decisions regarding employment matters related to” the plaintiff.

The court concluded: “In sum, there is nothing in the record suggesting that the Conference exerted any control over the plaintiff’s employment. On these facts, it can be determined as a matter of law that the Conference was not the plaintiff’s employer.” As a result, the court granted the Conference’s motion to dismiss it from the case.

Liability of the church—the 15-employee requirement

The church asked the court to dismiss the plaintiff’s Title VII claims against it on the ground that it was not subject to Title VII since it had fewer than 15 employees. Title VII applies to any employer who “has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year.” The conduct that the plaintiff alleged constituted a violation of Title VII occurred between December 2003 and April 2005. As a result, the court noted that the “current” and “preceding” years for purposes of the Title VII claim are 2002 to 2005. The church asserted that it did not have 15 or more employees for twenty weeks in each of those years. In particular, it noted that (1) in 2002, it had no more than 12 employees employed for more than 20 weeks; (2) in 2003, it had no more than 12 employees employed for more than 20 weeks; (3) in 2004, it had no more than 14 employees employed for more than 20 weeks; and (4) in 2005, although it had 15 or more employees for at least 20 weeks, there were not twenty calendar weeks in 2005 in which at least 15 of those employees were employed at the same time. The church based its calculations on the “payroll method” utilized by the Supreme Court in Walters v. Metro. Educ. Enters., Inc., 519 U.S. 202 (1997). Under this test, only those persons who appear on an employer’s payroll, and who meet the test of an employee, are included in applying the 15-employee test. Persons who appear on an employer’s payroll, but who are not employees, “do not count toward the 15-employee minimum.”

The plaintiff claimed that in addition to the employees listed on the church’s payroll, the church had an employment relationship with two seminary interns. The plaintiff conceded that the interns were not listed on the church’s payroll, but she asserted that they should be considered employees because they worked at the church and the church paid some of their seminary tuition as compensation for their services. The court noted that one of the interns worked at the church for most of 2004, and that the church paid $13,200 toward his seminary tuition in that year. If the payment of this intern’s compensation constituted “indirect but significant remuneration” paid by church in exchange for his services, then he could be considered an employee of the church for 2004, which would have increased the church’s “payroll” to 15 employees for that year, thereby subjecting it to Title VII coverage. On this basis, the court refused to dismiss the plaintiff’s claims against the church, and ordered the case to proceed to trial.

The plaintiff also contended that the individuals who work at the church’s preschool should be considered church employees for purposes of Title VII. The church objected, noting that while the preschool was located on church premises it was “organizationally separate from the church and its employees.” In support of its argument, the church noted that the preschool “has a separate federal income tax identification number, maintains its own budgets, funds and personnel functions, and pays rent to [the church] for use of the church’s facilities pursuant to a written Use of Shared Space Agreement.”

The plaintiff countered by noting that (1) according to its bylaws, the preschool was “under the jurisdiction of” of the church council; (2) the preschool was designated by the church as one of its “nurturing ministries”; (3) the church newsletter reports news of the preschool; (4) the preschool director attends church staff meetings and prepares an annual report for the Conference; and (5) preschool employees are listed as church employees on an annual workers compensation form.

The court concluded that the plaintiff’s arguments regarding the preschool employees were sufficient to raise a legitimate question regarding the number of church employees and its coverage under Title VII, and on this basis it declined the church’s motion to dismiss the plaintiff’s Title VII claims against the church.

Application. This case is significant for three reasons.

  1. It demonstrates the potential liability of churches for acts of sexual harassment. This important topic is addressed fully in section 8-12.5 in Richard Hammar’s book, Pastor, Church & Law, Volume 3 (The Church Guide to Employment Law) (4th edition 2007).
  2. The case is yet another repudiation of the “single employer” or “single enterprise” theory in the context of denominational agencies and their affiliated churches. If these doctrines are ever successfully applied to denominational agencies and their affiliated churches, this would have the following consequences: (1) In applying Title VII’s 15-employee requirement, the employees of denominational agencies would be combined with employees of affiliated churches. This would have the effect of making Title VII applicable to virtually every church, no matter how small. Churches with only one or two employees would be subject to Title VII and EEOC scrutiny. (2) Denominational agencies, both national and regional, would be deemed responsible for many if not most of the obligations and liabilities of affiliated churches, including employment claims and sexual misconduct claims. The effect would be nothing short of catastrophic. Many denominational agencies would face liability for the acts and omissions of affiliated churches over whom they exercise little if any oversight. Fortunately, no court has reached this radical conclusion, and many have repudiated it.
  3. The court’s analysis of the 15-employee requirement was instructive. Wooten v. Epworth United Methodist Church, 2007 WL 2049011 (M.D.N.C. 2007).

Legal Developments

The “Bar Association” Analogy

A Minnesota court recognizes an important principle.

Richard R. Hammar, Attorney, CPA
Bio

A Minnesota court recognizes an important principle, C.B. ex rel. L.B. v. Evangelical Lutheran Church in America, 726 N.W.2d 127 (Minn. App. 2007)

• Article summary. In a case of enormous importance to denominational agencies, a Minnesota appeals court applied the "bar association analogy" in concluding that a regional and national church were not liable for the sexual misconduct of a pastor since the relationship between the church entities and credentialed clergy (which resembled the relationship between state bar associations and licensed attorneys) was too attenuated to justify the imposition of liability on the church entities for clergy misconduct. This case is the second court to recognize this important analogy. The court's ruling also addressed a number of other significant issues. This article will summarize the facts of the case, review the court's opinion, and assess its significant.

• Key point 10-02.1. Employers may be liable on the basis of respondeat superior only for the acts of employees.

• Key point 10-02.3. Churches can be legally responsible on the basis of the respondeat superior doctrine for the actions of their employees only if those actions are committed within the course of employment and further the mission and functions of the church. Intentional and self-serving acts of church employees often will not satisfy this standard.

• Key point 10-09.2. Some courts have found churches not liable on the basis of negligent supervision for a worker's acts of child molestation on the ground that the church exercised reasonable care in the supervision of the victim and of its own programs and activities.

• Key point 10-18.3. There are several legal defenses available to a denominational agency that is sued as a result of the acts or obligations of affiliated clergy and churches. These include a lack of temporal control over clergy and churches; a lack of official notice of a minister's prior wrongdoing in accordance with the denomination's governing documents; lack of an agency relationship; the prohibition by the First Amendment of any attempt by the civil courts to impose liability on religious organizations in a way that would threaten or alter their polity; and elimination or modification of the principle of joint and several liability.

A Minnesota appeals court ruled that a local church, as well as regional and national denominational agencies, were not liable for the sexual molestation of a young girl by a retired pastor. The court's ruling addressed several key issues, all of which are summarized in this feature article.

Facts

A pastor (Pastor Owen) and his wife returned to their farm following his retirement. Shortly after returning to his home community, Pastor Owen occasionally conducted worship services in his former church for a fixed fee when the current pastor was unavailable. He also resumed a close friendship with a former parishioner and her husband and two young children. The two families often spent Christmas and birthdays together, and Pastor Owen and his wife regularly babysat the two children. The children frequently visited the farm to play with the animals. Eventually, the children began referring to Pastor Owen and his wife as "grandpa" and "grandma."

Eventually, one of the two children, a young girl (the "victim"), started spending the night at the farm. At about the same time, the victim was having difficulty with her school work. Because Pastor Owen's wife was a retired teacher, she began helping the child improve her grades.

One morning, after having spent the previous evening at the farm, the victim told her mother that she had been sexually abused by Pastor Owen. The parents sought the advice of their current pastor, who they claim instructed them to "stay silent." The police were not informed of the abuse until several months later when an unnamed person made a report. Pastor Owen was charged with child abuse, and pleaded guilty to second-degree criminal sexual conduct. Both Pastor Owen, and the pastor who advised the family to "stay silent," were asked to resign their ministerial credentials by their denomination (the "regional church").

The victim, through her parents, sued Pastor Owen. She also sued the local church and regional and national denominational offices (the "church defendants"). The victim claimed that the church defendants were responsible for Pastor Owen's misconduct on the basis of respondeat superior, negligent supervision, and ratification. Under the legal doctrine of respondeat superior, an employer generally is responsible for the negligent acts of its employees committed within the course of their employment. A trial court dismissed the victim's claims against the church defendants, but allowed her claims against Pastor Owen to proceed. The victim appealed the dismissal of her claims against the church defendants.

The Court's Ruling

Summarized below are the court's responses to each of the victim's three theories of liability—respondeat superior, negligent supervision, and ratification.

(1) Respondeat superior

The appeals court noted that under the respondeat superior doctrine, "an employer is vicariously liable for the acts of an employee committed within the course and scope of employment." The victim argued that an employment relationship existed between Pastor Owen and the church defendants because he was an ordained minister in good standing and his name was on the "clergy roster." Further, she claimed that the regional and national churches exercised enough control over a pastor's ministry to give rise to an employment relationship. In particular, she noted that the regional and national churches (1) determine who is qualified to be a minister; (2) demand that ministers agree and abide by their constitutions and bylaws; and (3) retain the authority to discipline ministers, including the authority to remove them from their pastoral ministry. Such evidence, the victim concluded, was sufficient evidence of control by the regional and national churches to establish an employment relationship between them and all ordained clergy.

The court acknowledged that there was evidence tending to support the existence of an employment relationship between the regional and national churches and ordained clergy:

Both the [regional and national churches] have constitutions under which a minister must abide. There is evidence in the record that both the [regional and national churches] can be involved in the disciplinary process. For example, testimony by church officials indicated that if the [regional and national churches] became aware of inappropriate behavior by a minister, the church entities could request that the minister resign. If the pastor declined to resign, the [regional and national churches] could use the process of discipline outlined in the constitutions to force his or her resignation.

Nevertheless, the court concluded that the fact that the regional and national churches "set certain standards for ministers, and can be involved in disciplinary proceedings, does not automatically mean a true employment relationship exists" that would support the imposition of liability on the church entities for the misconduct of ministers.

The court drew an analogy to the relationship between attorneys and the state supreme court. In Minnesota, the supreme court "through the Rules of Professional Conduct, sets forth the rules and standards by which lawyers must adhere. If these rules are violated, the court may discipline the responsible attorney. But this relationship between the supreme court and the disciplined attorney is not an employment relationship. There has to be something more." Similarly, the regional and national churches in this case had "limited control over the pastor." But, "the congregation, not the umbrella entity, has the responsibility for hiring and firing the pastor, setting forth the terms and conditions of employment, supplying the pastor with parsonage, vacation and supplies, and paying the pastor. [It] is the congregation, not the [regional or national churches], which employs the minister."

The court further concluded that Pastor Owen was not an employee of the local church where he occasionally filled in: "When the church needed a fill-in pastor because the full-time pastor was unavailable, the church would contact a retired pastor, such as Pastor Owen, and request that he fill in. When Pastor Owen filled in as a retired pastor, he was paid approximately $60-80 for each day that he provided his service. The church did not withhold taxes from his paycheck and he was not provided with vacation or health benefits. The record shows that he occasionally served as a fill-in pastor at other churches …. As a retired minister, he was more of an independent contractor than an employee of the church."

The court concluded that the church defendants were not liable on the basis of respondeat superior for Pastor Owen's acts of molestation because an employment relationship did not exist. In addition, his wrongful acts were not committed in the course of his employment, as required by the respondeat superior doctrine. Rather, the occurred at Pastor Owen's farm where the victim was visiting to obtain tutoring assistance from Pastor Owen's wife. The victim never alleged that she went to visit Pastor Owen "for any type of religious counseling or any other reason connected to his status as a retired minister." In fact, she testified that she never attended any religious service conducted by Pastor Owen, and knew him only as a family friend.

(2) Negligent supervision

The court noted that for the victim to prevail on her negligent supervision claim, she had to prove that Pastor Owen's conduct was foreseeable, and that the church defendants failed to exercise reasonable care in supervising him. The court defined foreseeability as "a level of probability that would lead a prudent person to take effective precautions." If Pastor Owen's abusive behavior was objectively foreseeable, then the inquiry must focus on whether the employer took reasonable precautions to prevent the abuse.

The victim claimed that Pastor Owen's abuse was foreseeable because of the following "red flags": (1) the victim's frequent overnight visits with Pastor Owens and his wife; (2) the lavishing of inappropriate and expensive gifts on the victim by both Pastor Owens and his wife; and (3) on at least one occasion, the victim had to be dragged, kicking and screaming, by her parents to Pastor Owen's car to spend time with him and his wife.

The court concluded that the victim failed to establish that the church defendants were responsible for Pastor Owen's acts on the basis of negligent supervision, because (1) Pastor Owen was not an employee of any of the church defendants, and (2) his abusive acts were not foreseeable. The court observed:

[The victim has] failed to provide any evidence that any of the church entities were aware of the alleged "red flags." Even if they were aware of the alleged "red flags," [the victim] fails to establish how these "red flags" should have put [the church defendants] on notice of the abuse. In light of [victim's] relationship with [Pastor Owen and his wife] it would not be abnormal for her to spend the night at [their home] or for [them] to buy nice gifts for somebody they considered to be their granddaughter. It is not abnormal for a teenager to put up a fuss when instructed that she spend time with a tutor to work on her school work. There is nothing in these "red flags" to indicate that Pastor Owen was abusing the vicitm, or that [the church defendants] were aware of the existence of these "red flags."

Ratification

The victim asserted that the church defendants were responsible for her injuries as a result of their "ratification" of Pastor Owen's behavior. Specifically, she claimed that by not taking immediate disciplinary action against him when they learned of the abuse, the church defendants ratified his behavior. The court acknowledged that an employer can be liable for the wrongful acts of an employee "by approving and ratifying such conduct, irrespective of whether that conduct is intentional or negligent." However, the court concluded, "ratification is inapplicable here because ratification has only been found in the context of an employer-employee relationship."

Relevance to other churches and ministers

What is the relevance of this case to church leaders? Consider the following points:

1. In general. A decision by a Minnesota appeals court is not binding in any other state, and may be reversed by the state supreme court. However, there are some aspects to the court's decision that are instructive for all churches.

2. The significance of employee status. The court concluded that the victim's lawsuit had to be dismissed because Pastor Owen was not an employee of any of the church defendants. Without an employment relationship, the court observed, there could be no liability based on respondeat superior, negligent supervision, or ratification. The court acknowledged that each of the church defendants had some ties with Pastor Owen, but nothing close to the level of control required for an employer-employee relationship.

• Key point. The court's decision would have been quite different had Pastor Owen been an employee of the local church rather than a "fill-in" pastor. The church may well have been found liable on the grounds of respondeat superior or ratification. The court's conclusion that Pastor Owen's abusive conduct was not foreseeable would have precluded liability based on negligent supervision.

3. Negligent supervision. The court noted that an employer's liability based on negligent supervision requires not only an employer-employee relationship, but also an injury that was reasonably foreseeable. The court concluded that the following "red flags" did not render Pastor Owen's abusive acts foreseeable: (1) the victim's frequent overnight visits with Pastor Owen and his wife; (2) the lavishing of inappropriate and expensive gifts on the victim by both Pastor Owen and his wife; and (3) on at least one occasion the victim had to be dragged, kicking and screaming, by her parents to Pastor Owen's car to spend time with him and his wife. However, the court stressed that it was the long-standing, close relationship between Pastor Owen and the victim's family that prevented these "red flags" from making Pastor Owen's abusive acts foreseeable.

• Key point. Without Pastor Owen's long and close relationship with the victim's family, the "red flags" cited by the victim may well have been sufficiently suspicious to make his abusive acts reasonably foreseeable. Many cases of child molestation have occurred while minors are spending the night in a staff member's home. Many of these cases have been addressed in previous issues of this newsletter. Church leaders should view this as a high risk practice that should be prohibited except in the most limited circumstances (i.e., the staff member is a close relative of the minor).

4. The "bar association analogy." Perhaps the most significant aspect of the court's decision was its use of the "bar association analogy." In recent years several plaintiffs have attempted to hold denominational agencies liable for the acts of ministers that they ordain or license. The argument is that the act of ordaining or licensing to a minister, and the retention of authority to discipline or dismiss a minister for misconduct, constitutes sufficient "control" to make the denomination liable for the minister's actions.

It is true that many denominational agencies ordain or license ministers; require ministerial credentials to be renewed annually; and reserve the authority to discipline or dismiss ministers whose conduct violates specified standards. In some cases, ministers are required or expected to provide annual contributions to the denomination. However, in most cases, the denomination retains no authority to supervise or control the day-to-day activities of ministers. It may be authorized to discipline or dismiss a minister following an investigation, but ordinarily it has no authority to independently monitor or supervise the day-to-day conduct of ministers, and no such authority is ever exercised.

The authority of many denominations to license and ordain clergy, require annual renewals of ministerial credentials, and discipline or dismiss clergy found guilty of specified misconduct, is precisely the same authority that is exercised by state professional accrediting organizations, such as bar associations. Like denominational agencies, the bar association (or, in some states, the state supreme court) has the authority to license attorneys, require annual renewals, and discipline or dismiss attorneys for violations of professional standards. In addition, many require annual contributions. However, this limited authority does not give the bar association any right to control or supervise the day-to-day activities of attorneys, and it is for this reason that no bar association has ever been sued on account of a licensed attorney's malpractice, much less been found liable, and religious organizations should be treated no differently.

An identical analogy can be made to any professional licensing organization (e.g., physicians, CPAs, veterinarians, dentists, nurses, morticians), since they all exercise about the same degree of control—they issue licenses and retain the right to discipline or dismiss licensees for violations of a professional code of conduct, but they have no authority to supervise licensees' day-to-day activities.

The civil courts are beginning to recognize the bar association analogy. The first court to do so was a federal appeals court in the case of Alford v. Commissioner, 116 F.3d 334 (8th Cir. 1997). The court, in addressing the question of whether Pastor Alford, an Assemblies of God minister, was an employee of the national church ("General Council") and one of its regional agencies ("District Council"), made the following observation:

The General Council's and District Council's right to control Alford during the relevant years extended primarily to their function in awarding credentials to ministers like himself. Generally, the church has established certain criteria that must be met for an individual such as Alford to obtain credentials initially and to renew that status annually. There are standards for the education a minister must acquire (which he must obtain and pay for himself) and for his performance on certain tests. Other requirements include subscribing to the doctrinal statement of the Assemblies of God, which sets forth the religious beliefs of the church, its ministers, and its members, and to the form of church government. Ordained ministers must preach thirteen times a year, but topics are not decreed by the regional or national organizations. Ministers holding credentials cannot preach in churches other than Assemblies of God churches without permission of the District Council. Ministers may be disciplined for what the church considers failure to follow church doctrine and for lapses in personal conduct, and may, in fact, have their credentials revoked. With some exceptions not relevant here, a minister must tithe to both the regional and national organizations. Attendance at certain meetings is expected, but not required. Thus it is apparent that, while the regional and national churches had doctrinal authority to exercise considerable control over Alford as regards his beliefs and his personal conduct as a minister of the church, they did not have "the right to control the manner and means by which the product [was] accomplished."

The [trial court] and the United States make much of the fact that Alford, as a minister holding credentials, was "amenable" to the General Council and to the District Council in matters of doctrine and conduct. But this is not unusual in such a profession, and actually is merely a shorthand way of describing the parent church's doctrinal and disciplinary control discussed above. The control exercised by the regional and national organizations, and their right to control Alford, was no more nor less than most professions require of individuals licensed or otherwise authorized to work in the profession. State bar associations, for example, have certain education requirements and demand a certain level of performance on a bar examination before an individual can be licensed to practice law. On an annual basis, such associations require the payment of dues and often the completion of continuing legal education in order for an attorney to retain his license. State bar associations are empowered to monitor attorneys' behavior and to discipline them as they see fit, including the revocation of an attorney's license to practice law (disbarment). Yet no one would suggest that, by virtue of this right to control an attorney's working life, the bar association is his employer, or even one of his employers.

Obviously, the importance of this case cannot be overstated. It will effectively refute, in many cases, attempts by plaintiffs to hold denominational agencies accountable for the acts of their ordained and licensed ministers.

The second reference to the bar association analogy was the Minnesota appeals court decision addressed in this article. The court compared a religious denomination's ordination and discipline of ministers to similar functions performed by the state supreme court. In Minnesota, the state supreme court licenses attorneys and retains the authority to discipline those who violate a code of professional ethics. The appeals court concluded that this relationship was too attenuated to establish an employment relationship, and as a result the regional and national churches could not be liable for Pastor Owen's abusive acts.

• Key point. Any regional or national church that issues ministerial credentials, and that disciplines ministers who violate a code of conduct, can use the bar association analogy. It is a powerful and compelling argument. The bottom line is this—no bar association has ever been sued, much less found liable, for the malpractice of an attorney; why should religious organizations be treated differently?

• Example. The Alabama Supreme Court compared an attempt to impute legal liability to a denomination as a result of the misconduct of a minister "to situations where a young man may be in a seminary and the seminary is asked to supply a preacher or a minister for a congregation. The fact that the young minister may have some alma mater does not make the seminary responsible for his behavior in the event he elects to commit a burglary or some other act which he might consider to be ordained by divine aegis or providence. It would not in and of itself make the seminary responsible for his behavior." Wood v. Benedictine Society of Alabama, Inc., 530 So.2d 801 (Ala. 1988).

© Church Law & Tax Report is published six times a year by Christianity Today International, 465 Gundersen Dr. Carol Stream, IL 60188. (800)222-1840. © 2007 Christianity Today International. editor@churchlawandtax.com All rights reserved. This publication 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." Annual subscription: $69. Subscription correspondence: Church Law & Tax Report, PO Box 37012, Boone, IA 50037-0012.

Legal Developments

Discrimination Liability for Churches of Less Than 15 Employees

A federal district court in South Carolina ruled that only employers with at least 15 employees are subject to the nondiscrimination provisions of Title VII of the Civil Rights Act of 1964.

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Discrimination Liability for Churches of Less Than 15 Employees

A federal district court in South Carolina ruled that only employers with at least 15 employees are subject to the nondiscrimination provisions of Title VII of the Civil Rights Act of 1964.

Richard R. Hammar, J.D., LL.M., CPA

Key point 8-05.1. Many federal employment and civil rights laws apply only to those employers having a minimum number of employees. In determining whether or not an employer has the minimum number of employees, both full-time and part-time employees are counted. In addition, employees of unincorporated subsidiary ministries of a church are counted. The employees of incorporated subsidiary ministries may be counted if the church exercises sufficient control over the subsidiary.

* A federal district court in South Carolina ruled that only employers with at least 15 employees are subject to the nondiscrimination provisions of Title VII of the Civil Rights Act of 1964, and that the 15 employee requirement could not be achieved by combining a local church’s employees with the employees of a Diocese. A woman (Nancy) was employed by a church as a secretary. The church choir director used a sexually offensive term in speaking with Nancy on one occasion. When she complained, a member of the church board told her that the church could not guaranty that language offensive to her would not be used in the church office and suggested that she resign if she could not work without such a guaranty. Nancy quit shortly after this conversation, and later sued the church for sexual harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964 (Title VII). At the time of Nancy’s resignation, the church had three other paid employees (the pastor, choir director, and a Sunday nursery worker).

Title VII prohibits employers that have at least 15 employees, and are engaged in interstate commerce, from discriminating in any employment decision on the basis of race, color, national origin, sex (including sexual harassment), and religion. Nancy conceded that Title VII only applied to employers having at least 15 employees, but she claimed that this requirement was met under the so-called “integrated employer” test by combining the church’s employees with those of the Diocese with which the church was affiliated.

The court conceded that under the integrated employer test, “several companies may be considered so interrelated that they constitute a single employer.” In deciding whether to treat separate corporate entities as an integrated employer, “the factors courts have considered include: (1) common management; (2) interrelation between operations; (3) centralized control of labor relations; and (4) degree of common ownership/financial control. However, no single factor is conclusive and the test is not uniformly applied.”

The court concluded that the facts in this case did not support application of the integrated employer test:

Taken in the light most favorable to the plaintiff the only evidence is that the church is part of the Diocese, the Diocese provides funding to the church and the church provides funding to the Diocese, the Diocese currently employs over 15 employees at the Diocese office, plaintiff was provided health insurance through the Diocese office, the Diocese provides resolutions to the church, and the church is organized under the Diocese.

More specifically the undisputed facts are that the rector manages the day-to-day operations of the church by supervising the staff as well as conducting planning and looking after the well-being of the parish. Plaintiff was hired by the church vestry, not the Diocese. Plaintiff has always been supervised by the current or former rector of the church. Plaintiff’s job essentially entailed performing whatever tasks the rector asked of her. The rectors of the church are hired by the church and not the Diocese. The vestry is a twelve member board of directors elected by members of the church. Each Episcopal church, or parish, operates pursuant to its own bylaws, and every parish’s bylaws are different. The rector, and not the Diocese, was responsible for supervising the staff of [the church]. Finally while the Diocese provided the church with income to finish a renovation, since then, the church has been fully self supporting but does send money each year to the Diocese.

The court concluded that “these facts fail to support the plaintiff’s claim of an integrated employer in order to meet the numerosity requirements of [Title VII].”

Application. This case is of great importance. If the employees of regional and national denominational agencies can be added to those of local churches in meeting Title VII’s 15-employee requirement, this would expose virtually every church in America with a denominational affiliation, regardless of size, to the proscriptions and potential liabilities of Title VII. Churches with only one or two employees would be subject to Title VII and EEOC scrutiny. The court’s decision in this case is reasonable and correct. The limited ties that generally characterize the relationship between churches and denominational agencies is far short of the “domination and control” needed to trigger “integrated employer” status. This case will be directly relevant to any church in defending against Title VII coverage based on the integrated employer doctrine. This doctrine is sometimes called the “single entity” or “single employer” doctrine. Cox v. St. Stephen’s Episcopal Church, 2006 WL 2668782 (D.S.C. 2006).

Legal Developments

Discrimination Lawsuit Time Limits

Federal courts will not resolve Title VII discrimination claims unless the aggrieved employee files a claim of discrimination with the EEOC within 180 days of the last discriminatory act.

Richard R. Hammar, Attorney, CPA
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Discrimination Lawsuit Time Limits

Federal courts will not resolve Title VII discrimination claims unless the aggrieved employee files a claim of discrimination with the EEOC within 180 days of the last discriminatory act.

Richard R. Hammar, J.D., LL.M., CPA

Key point 8-07. Employees and applicants for employment who believe that an employer has violated a federal civil rights law must pursue their claim according to a specific procedure. Failure to do so will result in the dismissal of their claim.

Key point 8-08.2. Sexual harassment is a form of sex discrimination prohibited by Title VII of the Civil Rights Act of 1964. It consists of both “quid pro quo” harassment and “hostile environment” harassment. Religious organizations that are subject to Title VII are covered by this prohibition. An employer is automatically liable for supervisory employees’ acts of harassment, but a defense is available to claims of hostile environment harassment if they have adopted a written harassment policy and an alleged victim fails to pursue remedies available under the policy. In some cases, an employer may be liable for acts of sexual harassment committed by non-supervisory employees, and even non-employees.

* A federal appeals court ruled that a female church employee’s lawsuit alleging sexual harassment and retaliation against her employer had to be dismissed because she failed to file a claim of discrimination with the EEOC within 180 days of the last offending act. A female church employee (Beth) alleged that she had been sexually harassed by the church’s senior pastor, who was her supervisor. She claimed that the last discriminatory act occurred on April 30, 2002, when she was terminated from her employment in retaliation for reporting the pastor’s sexual harassment. She filed charges of discrimination with the EEOC and a state agency more than 180 days, but less than 300 days, after the last act of alleged discrimination. On July 2, 2003, the EEOC dismissed the charges. Beth later sued her church, and regional and national denominational agencies (the “church defendants”), in federal court alleging sex discrimination and retaliation under Title VII of the Civil Rights Act of 1964. She claimed that all three church defendants were her “employer” under Title VII, which prohibits covered employers from engaging in sex discrimination (including sexual harassment and retaliation).

A federal district court dismissed all of Beth’s VII claims. It dismissed her Title VII claims on the ground that she failed to file her charge of discrimination with the EEOC within 180 days of the last alleged discriminatory employment practice. The district court held that a longer 300-day filing period available under state law did not apply since “nonprofit religious organizations are exempt from the Washington Law Against Discrimination’s employment discrimination provisions.” Beth appealed.

Title VII time limits for filing charges with the EEOC

Title VII establishes two potential time limitations periods within which a plaintiff must file a claim of discrimination with the EEOC. Generally, a Title VII plaintiff must file a claim with the EEOC within 180 days of the last act of discrimination. However, the limitations period is extended to 300 days if the plaintiff first institutes proceedings with a “state or local agency with authority to grant or seek relief from such practice.” 42 U.S.C. § 2000e-5(e)(1).

EEOC regulations provide that the 180-day time limit applies if the state or local “fair employment practices” agency lacks subject matter jurisdiction over a charge. In other words, a state having a fair employment practices agency having no jurisdiction over a religious employer “is equivalent to a jurisdiction having no fair employment practices agency. Charges over which a fair employment practices agency has no jurisdiction are … timely filed if received by the EEOC within 180 days from the date of the alleged violation.” 29 C.F.R. § 1601.13(a)(2).

The court concluded that the 180-day limit applied since the Washington State employment discrimination law does not apply to religious organizations. And, since Beth filed her claim with the EEOC more than 180 days after the last alleged discriminatory act, her lawsuit had to be dismissed.

Constitutionality of the religious exemption under state law

Beth argued that the exemption of nonprofit religious organizations from employment discrimination claims under the Washington Law Against Discrimination violated the First Amendment’s ban on the establishment of religion; and, since it was unconstitutional, the 300-day filing period applied and her claim was not late.

The court refused to address this claim since it had been raised for the first time on appeal, and not in the trial court.

Conclusion

The court concluded: “We read Washington State case law as exempting nonprofit religious employers, such as the defendants, from sexual harassment and retaliation charges under the Washington Law Against Discrimination. Thus, the Washington fair employment practices agency did not have jurisdiction over Beth’s charges. Accordingly, the 180-day time limit applies … and Beth is not entitled to the longer 300-day filing deadline. We affirm the district court’s dismissal of her Title VII claims.”

Application. This case illustrates two important points:

1. Churches and other religious organizations having at least 15 employees (including part-time employees), and engaged in interstate commerce, are subject to Title VII of the Civil Rights Act of 1964. Title VII prohibits covered employers from discriminating in any employment decisions on the basis of race, color, national origin, sex, or religion. Sex discrimination is defined to include both sexual harassment and retaliation.

Churches may be liable for acts of sexual harassment in various ways. When supervisory employees create an offensive working environment through unwelcome verbal or physical conduct of a sexual nature, this is “hostile environment” sexual harassment for which the employer will be legally responsible if the supervisor takes any “tangible employment action” against the employee. A tangible employment action includes “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.” The employer is liable under such circumstances whether or not it was aware of the harassment. In this case, Beth alleged that her supervisor (the senior pastor) engaged in a tangible employment action against her by terminating her employment.

2. Federal courts will not resolve Title VII discrimination claims unless the aggrieved employee files a claim of discrimination with the EEOC within 180 days of the last discriminatory act. A 300-day time limit applies if the employee first institutes proceedings with a “state or local agency with authority to grant or seek relief from such practice.” However, EEOC regulations specify that the 180-day time limit applies if the state or local fair employment practices agency lacks jurisdiction over the alleged discrimination. This can occur in two ways. First, the type of discrimination an employee alleges is not prohibited under state law. Second, religious employers are exempt from the state nondiscrimination law. This is exactly what happened in this case. Washington law exempts religious employers from employment discrimination claims, and so the 180-day time limit (rather than the 300-day limit) applied to Beth’s claims. Since she failed to file her claim with the EEOC within 180 days, the courts were required to dismiss her claim.

Many state employment discrimination laws exempt religious employers. In such states, aggrieved employees must file a claim of discrimination with the EEOC within 180 days. If they fail to do so, the federal courts will be barred from resolving their Title VII claims. MacDonald v. Grace Church, 457 F.3d 1079 (9th Cir. 2006).

Legal Developments

Denominational Legal Responsibility for Local Churches

There are several legal defenses available to a denominational agency that is sued as a result of the acts or obligations of affiliated clergy and churches.

Richard R. Hammar, Attorney, CPA
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Denominational Legal Responsibility for Local Churches

There are several legal defenses available to a denominational agency that is sued as a result of the acts or obligations of affiliated clergy and churches.

Richard R. Hammar, J.D., LL.M., CPA

Key point 10-18.3. There are several legal defenses available to a denominational agency that is sued as a result of the acts or obligations of affiliated clergy and churches. These include a lack of temporal control over clergy and churches; a lack of official notice of a minister’s prior wrongdoing in accordance with the denomination’s governing documents; lack of an agency relationship; the prohibition by the First Amendment of any attempt by the civil courts to impose liability on religious organizations in a way that would threaten or alter their polity; and elimination or modification of the principle of joint and several liability.

* A New York court ruled that the national Boy Scouts of America was not legally responsible for the drowning death of a scout because it did not exercise supervision or control over the activities of local troops. A 15-year-old Boy Scout drowned while on an overnight camping trip as he attempted to cross a rain-swollen river. The boy’s parents sued the BSA and a local council, claiming that they were responsible for the boy’s death based upon negligent supervision. The BSA insisted that it did not supervise or control the day-to-day activities of the scout troop or the scoutmasters. A trial court dismissed the BSA from the lawsuit, and a state appeals court affirmed. It concluded, “The BSA did not exercise supervisory control over the troop or the adult leaders who accompanied the boy scouts on the trip …. The plaintiffs failed to raised a triable issue of fact in this regard.” O’Lear v. Boy Scouts of America, 821 N.Y.S.2d 903 (N.Y. Sup. Ct. 2006).

Legal Developments

Breach of Fiduciary Duty

Several courts have refused to hold churches and denominational agencies liable on the basis of a breach of a fiduciary duty for the sexual misconduct of a minister.

Richard R. Hammar, Attorney, CPA
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Breach of Fiduciary Duty

Several courts have refused to hold churches and denominational agencies liable on the basis of a breach of a fiduciary duty for the sexual misconduct of a minister.

Richard R. Hammar, J.D., LL.M., CPA

Key point 10-13.2. Several courts have refused to hold churches and denominational agencies liable on the basis of a breach of a fiduciary duty for the sexual misconduct of a minister. In some cases, this result is based on First Amendment considerations.

* A Connecticut court ruled that a priest and archdiocese were not liable on the basis of a breach of a fiduciary duty for the priest’s sexual relationship with an adult woman since no fiduciary duty arose under the circumstances. A 40-year-old woman (the “plaintiff”) with a long history of psychiatric and emotional problems sought out the “advice, counsel and friendship” of a priest. At the time, the priest was serving as an associate priest at a local church and was also an employee of the archdiocese. The plaintiff did not engage in formal counseling with the priest; rather, their relationship involved mainly recreational activities such as home visits, lunch and dinner dates, shopping trips, walks on the beach and trips to see movies. According to the plaintiff, the priest provided her emotional, spiritual and friendly support and that her “whole relationship” with him was one of counseling. At some point during their association, the priest became aware of her emotional problems and, nevertheless, engaged in a sexual relationship with her. The plaintiff alleged that she eventually ended the sexual aspect of their relationship after which the priest terminated all involvement with her.

The plaintiff sued the priest claiming that a fiduciary duty arose by virtue of the priest-parishioner relationship, and the priest breached this duty when, despite knowledge of her emotional problems, he engaged in “a close physical and intimate relationship” with her. The plaintiff also sued the archdiocese, claiming that it breached its duty to supervise the priest. Specifically, the plaintiff alleged that the archdiocese “knew or should have known that the priest had engaged in inappropriate behavior with the plaintiff” and, as a result, the archdiocese was liable for the priest’s breach of a fiduciary duty. A trial court dismissed the claims against the priest and archdiocese, and the plaintiff appealed.

Breach of a fiduciary duty

The appeals court defined a fiduciary or confidential relationship as “a relationship that is characterized by a unique degree of trust and confidence between the parties, one of whom has superior knowledge, skill or expertise and is under a duty to represent the interests of the other. The superior position of the fiduciary or dominant party affords him great opportunity for abuse of the confidence reposed in him.” The court acknowledged that “various state and federal courts” have concluded that a clergy-parishioner relationship may constitute a fiduciary relationship, but in each of those cases “something more than a general clergy-parishioner relationship was present.” For example, “the existence of a formal pastoral counseling relationship between a clergy member and a parishioner has been deemed significant in determining whether a fiduciary relationship was created. The court summarized the following precedent:

  • Colorado. (1) Court found that a fiduciary relationship existed between a clergyman and plaintiff, in part, because the clergyman had served as counselor to plaintiff. Moses v. Diocese of Colorado, 863 P.2d 310 (Colo. 1993). (2) A fiduciary duty was created when a priest undertook to counsel plaintiffs. Destefano v. Grabrian, 763 P.2d 275 (Colo. 1988).
  • Federal district court in Iowa. Court dismissed plaintiff’s breach of fiduciary duty claim because plaintiff simply alleged clergy-parishioner relationship, not counseling relationship. Doe v. Hartz, 52 F. Supp.2d 1027 (N.D. Iowa 1999).
  • New Jersey. The New Jersey Supreme Court concluded that a breach of fiduciary duty claim arising out of the sexual relationship between a clergyman and a parishioner who was seeking marital counseling was permissible under New Jersey law. In so doing, the court placed considerable weight on the fact that the plaintiff was engaged in a specific pastoral counseling relationship with the clergyman. According to that court, “trust and confidence are vital to the counseling relationship between parishioner and pastor. By accepting a parishioner for counseling, a pastor also accepts the responsibility of a fiduciary.” The court explained that “establishing a fiduciary duty essentially requires proof that a parishioner trusted and sought counseling from the pastor.” F.G. v. MacDonell, 696 A.2d 697 (1997).
  • Federal appeals court. A federal appeals court permitted a breach of fiduciary duty claim to proceed against a clergyman because the fiduciary duty allegedly arose out of a counseling relationship, not simply a clergy-parishioner relationship. Sanders v. Casa View Baptist Church, 134 F.3d 331 (5th Cir. 1998).

The court concluded that “something more” than the general clergy-parishioner relationship must be present to establish a fiduciary relationship, and it declined the plaintiff’s invitation to establish a fiduciary relationship “between all clergy and their congregants.” The court concluded that the plaintiff’s relationship with the priest in this case was not fiduciary in nature because it “was not characterized by the unique degree of trust and confidence required of a fiduciary relationship.” In particular, the court noted that the plaintiff had not alleged a formal pastoral counseling relationship between herself and the priest. Rather, she claimed that her “whole association” with the priest was one of “counseling.” The court disagreed:

The plaintiff’s interactions with the priest were largely social. She did not meet him for specific counseling appointments, but, rather, the two went on lunch and dinner dates, shopping trips, walks on the beach and trips to see movies. Also, the plaintiff has admitted that many of the conversations she considered counseling took place immediately after mass with other congregants present and that the counseling primarily involved discussions about their relationship …. While the priest may have counseled the plaintiff from time to time, as a priest may for any parishioner, he was not her counselor. Moreover … the plaintiff was well over the age of majority throughout the time of their consensual interactions. While we do not condone the defendant’s behavior, we conclude that no fiduciary relationship existed between him and the plaintiff; consequently, no fiduciary duty was breached.

Archdiocese

The court also dismissed the plaintiff’s negligent supervision claim against the archdiocese on the ground that there can be no negligent supervision if an employee does not engage in wrongful behavior. Since the priest had not breached a fiduciary duty, the archdiocese could not be liable on the basis of negligent supervision for his actions.

Application. This case is important because it is one of the most extensive discussions of the liability of ministers and churches for acts of sexual misconduct on the basis of a breach of a fiduciary duty. The court refused to find that a priest who was not involved in a counseling relationship with a church member has a fiduciary duty toward that person, and therefore the priest could not be liable on the basis of a breach of such a duty for any inappropriate sexual conduct. There may be other bases of liability, but not this one. Further, since the priest was not liable, the archdiocese could not be liable since its liability (whether on the basis of negligent hiring or supervision, or breach of a fiduciary duty) required that the priest’s acts be wrongful. Ahern v. Kappalumakkel, 903 A.2d 266 (Conn. App. 2006).

Legal Developments

Application of Laws to Specified Number of Employees

Some federal employment laws apply only to employers having a specified number of employees.

Richard R. Hammar, Attorney, CPA
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Church Law & Tax Report

Application of Laws to Specified Number of Employees

Some federal employment laws apply only to employers having a specified number of employees.

Richard R. Hammar, J.D., LL.M., CPA

Key point 8-05.1. Many federal employment and civil rights laws apply only to those employers having a minimum number of employees. In determining whether or not an employer has the minimum number of employees, both full-time and part-time employees are counted. In addition, employees of unincorporated subsidiary ministries of a church are counted. The employees of incorporated subsidiary ministries may be counted if the church exercises sufficient control over the subsidiary.

* The United States Supreme Court ruled that the “15 employee” requirement for employer coverage under Title VII of the Civil Rights Act of 1964 is not “jurisdictional,” and so employers with fewer than 15 employees lose this defense if they fail to raise it before the end of a trial. Title VII of the Civil Rights Act of 1964 prohibits employers engaged in interstate commerce and having at least 15 employees from discriminating in any employment decisions on the basis of race, color, national origin, gender, or religion. Some courts have ruled that the 15 employee requirement is “jurisdictional,” meaning that a court does not have the legal authority to resolve a Title VII case involving an employer with fewer than 15 employees. As a result, an employer can raise the “less than 15 employees” defense at any time, even after a court renders a judgment. Other courts have ruled that the 15 employee requirement is not jurisdictional, but rather is simply a requirement for a Title VII claim. Under this interpretation, the “less than 15 employees” defense must be asserted in an employer’s response to a lawsuit or it will be waived.

In a recent case, the United States Supreme Court ruled that the 15 employee requirement under Title VII is not jurisdictional, but rather is a requirement of a Title VII claim. As a result, it is waived if not raised in response to a lawsuit. The case involved a woman who was employed by a restaurant as a server. She sued her employer for sexual harassment (a form of sex discrimination prohibited by Title VII). A jury awarded her $40,000 in damages. After the jury’s verdict, the employer asked the court to dismiss the lawsuit and verdict on the ground that it had fewer than 15 employees and so was not subject to Title VII. This was the first time the employer had raised this defense. The trial court granted the employer’s request on the ground that the 15 employee requirement was jurisdictional rather than simply a requirement of a Title VII claim, and therefore the court had no authority to resolve the case.

The United States Supreme Court reversed the trial court’s ruling, and held that the 15 employee requirement is simply a requirement of a Title VII case that must be raised in response to a lawsuit. It found no language in Title VII making this a jurisdictional requirement that can be raised at any time, and concluded that “when Congress does not rank a statutory limitation on coverage as jurisdictional, courts should treat the restriction as non-jurisdictional in character.”

Application. Some federal employment laws apply only to employers having a specified number of employees. To illustrate, employers must have 15 or more employees to be subject to Title VII of the Civil Rights Act of 1964 and the Americans with Disabilities Act. An employer must have at least 20 employees to be subject to the federal age discrimination law, and 50 employees to be subject to the Family Medical Leave Act. According to the Supreme Court’s recent decision, churches that are sued for violations of any of these laws must assert in their answer to the original lawsuit the “affirmative defense” that they have fewer than the required number of employees. A failure to do so will constitute a waiver of this defense. Arbaugh v. Y&H Corporation, 126 S.Ct. 1235 (2006).

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Legal Developments

The Ministerial Exception and Lawsuits

A federal court in Washington ruled that the “ministerial exception” prevented it from resolving several claims against a religious organization.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

The Ministerial Exception and Lawsuits

A federal court in Washington ruled that the “ministerial exception” prevented it from resolving several claims against a religious organization.

Richard R. Hammar, J.D., LL.M., CPA

Key point 8-06. The civil courts have consistently ruled that the First Amendment prevents the civil courts from applying civil rights laws to the relationship between a church and a minister.

Key point 8-08.2. Sexual harassment is a form of sex discrimination prohibited by Title VII of the Civil Rights Act of 1964. It consists of both “quid pro quo” harassment and “hostile environment” harassment. Religious organizations that are subject to Title VII are covered by this prohibition. An employer is automatically liable for supervisory employees’ acts of harassment, but a defense is available to claims of hostile environment harassment if they have adopted a written harassment policy and an alleged victim fails to pursue remedies available under the policy. In some cases, an employer may be liable for acts of sexual harassment committed by nonsupervisory employees, and even non-employees.

Key point 8-17. The Fair Labor Standards Act mandates that employers pay the minimum wage, and overtime compensation, to employees who work for an enterprise engaged in commerce. There is no exception for religious organizations, but there are exceptions for certain classifications of employees.

* A federal court in Washington ruled that the “ministerial exception” prevented it from resolving several claims brought by a seminary student against a religious organization, including sexual harassment; retaliation; negligent hiring, retention, and supervision; violation of a state minimum wage law; and emotional distress. A seminary student from Mexico (the “victim”) was assigned to a parish in Washington to assist the officiating priest. He performed several duties including assisting the officiating priest in the conduct of worship services, answering the phone for the church, working with the church youth group, and setting appointments for couples seeking marriage counseling. The victim claimed that he was sexually harassed on numerous occasions by the officiating priest. To illustrate, he alleged that the priest frequently sent him sexually explicit emails and videos, repeatedly asked him to have dinner with him, told him that he was very handsome, dedicated songs to him, told him that he believed the church should accept homosexuals, and made sexual advances toward him during two spiritual retreats. The victim complained of this behavior to the archdiocese, which resulted in an internal investigation and the transfer of the victim to another parish. The victim claimed that the archdiocese took additional adverse actions against him on account of his accusations, and as a result he sued the archdiocese in federal court. The lawsuit asserted several grounds for relief, including (1) sexual harassment and retaliation in violation of Title VII of the Civil Rights Act of 1964; (2) negligent hiring, retention and supervision of employees; (3) violations of the state minimum wage law; and (4) emotional distress.

Title VII

Title VII of the Civil Rights Act of 1964 bars “covered employers” from discriminating in employment decisions on the basis of the race, color, national origin, sex (including sexual harassment), or religion of an employee or applicant for employment. Covered employers are those engaged in commerce and employing 15 or more employees.

The court acknowledged that the First Amendment guaranty of religious freedom has created a “ministerial exception” to Title VII, and that this exception prohibits a court from “inquiring into the decisions of a religious organization concerning the hiring, firing, promotion, rate of pay, placement or any other employment related decision concerning ministers and other non-secular church employees.” Further, the courts may make “a factual evaluation of the function of the position, rather than looking solely to ordination, in deciding whether the ministerial exception applies to a particular employee.” The court noted that the victim was directly engaged in the spiritual functions of the church, and so the ministerial exception applied even though he was not an ordained minister.

However, the court cautioned that ministerial exception “does not foreclose all employment claims against a religious employer, but simply limits them.” When a sexual harassment claim is made against a religious employer, “a plaintiff must show that he was sexually harassed and that the harassment created a hostile work environment. Because the evaluation of a sexual harassment claim involves an entirely secular inquiry that does not intrude into areas concerning the doctrines of a religious organization, it is allowed.”

If an employee creates a “hostile work environment” due to acts of sexual harassment, his or her employer may be liable in two situations:

First, if the hostile work environment results in an adverse employment action (i.e., discipline, dismissal) against a victim of the harassment, the employer may be held liable. The court concluded that the First Amendment prohibited a religious organization from being liable on this basis for sexual harassment committed by a member of the clergy. It observed, “The archdiocese is able to choose its representatives free from government interference and in accordance with the dictates of its faith and conscience. Because the federal judiciary cannot evaluate whether its employment decision was based on legitimate or illegitimate reasons without offending the First Amendment, such an inquiry is forbidden.”

Second, liability can be imposed on an employer for allowing a hostile work environment to exist. However, to avoid liability in this second scenario, an employer can assert a special affirmative defense. This affirmative defense has two elements. First, the employer exercised reasonable care to prevent and correct promptly any sexually harassing behavior. Second, a victim of the harassment unreasonably failed to take advantage of any preventative or corrective opportunities provided by the employer, or otherwise failed to avoid the alleged harm. The court noted that “the success of this defense requires a court to perform an inquiry into the actions of both the employer and the employee. However, the power of a court to conduct this inquiry is limited when a sexual harassment claim is made against a religious employer by an employee covered by the ministerial exception.” The court may only consider the following three questions: (1) Was the victim subjected to a hostile work environment? (2) If so, did he exercise reasonable care to correct that environment? (3) Did he unreasonably fail to avail himself of those measures?

Retaliation

Title VII prohibits employers from “retaliating” against victims of employment discrimination who challenge the discrimination. The victim in this case claimed that the archdiocese retaliated against him after he complained of the priest’s conduct by transferring him to another parish and reducing his duties. The court noted that a retaliation claim requires a victim of discrimination to prove that he or she suffered an “adverse employment action” as a result of disclosing the discrimination to the employer. However, the court concluded that “decisions concerning promotions, transfers, rates of pay, selection of assignments, and duties performed are all protected choice matters of church administration, and the court is prohibited from evaluating them. The victim is foreclosed, as a matter of law, from relying on these protected decisions as acts of retaliation.”

Negligent hiring, retention, and supervision

The victim claimed that the ministerial exception applied only to Title VII claims, and did not prevent him from suing the archdiocese for negligent hiring, retention, and supervision. The court disagreed:

The ministerial exception to Title VII is based not upon Title VII but, rather, on the First Amendment. Just as there is a ministerial exception to Title VII, there must also be a ministerial exception to any state law cause of action that would otherwise impinge on the church’s prerogative to choose its ministers or to exercise its religious beliefs in the context of employing its ministers.

The court pointed out that the very nature of the victim’s negligence claim would require it to evaluate the reasonableness of the archdiocese’s protected employment choices in order to ascertain if it acted negligently in hiring, retaining, or supervising the offending priest. It concluded that “this type of inquiry is prohibited by the First Amendment’s ministerial exception.”

Minimum wage claim

The court dismissed the victim’s claim that the archdiocese violated a state minimum wage law. It concluded:

This claim concerns decisions regarding the rate of pay for non-secular church employees and must also be dismissed under the ministerial exception. The … ministerial exception applies to both state and federal claims, and prohibits a court from inquiring into the decisions of a religious organization concerning the hiring, firing, promotion, rate of pay, placement or any other employment related decision concerning ministers and other non-secular church employees. This most certainly includes questions concerning the amount of compensation owed a visiting seminarian student. Bollard v. California Province of the Society of Jesus, 196 F.3d 940 (9th Cir.1999).

Intentional infliction of emotional distress

The victim claimed that the archdiocese was guilty of intentionally inflicting emotional distress upon him by reporting him to immigration authorities. The court noted that a claim of intentional infliction of emotional distress requires conduct that is “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.” The court concluded that this high standard was not met by the reporting of the victim to immigration authorities:

There is no possibility that reasonable minds could find that the archdiocese’s reporting of the victim to immigration authorities could be seen as conduct that is beyond all possible bounds of decency. Reporting persons who may be in this country illegally to the authorities is not conduct so extreme as to be unacceptable in civilized society. As a matter of law, reasonable minds could not differ as to whether providing notice to the proper authorities concerning suspected immigration violations rises to a level of outrage.

Application. This case is significant for the following reasons:

1. The court broadly construed the ministerial exception, and applied it not only to a sexual harassment and retaliation claim by a seminary student under Title VII, but also to (1) negligent hiring, retention, and supervision claims involving ministers, and (2) claims by ministers regarding compensation, including their entitlement to minimum wage and overtime under state or federal law.

2. The court ruled that the reporting of a foreign worker to immigration officials did not amount to an infliction of emotional distress for which the employer could be found liable. Alcazar v. Corporation of Catholic Archbishop of Seattle, 2006 WL 3791370 (W.D. Wash. 2006).

Legal Developments

Church Liability for Sexual Harassment

A federal court in Oklahoma ruled that a church was not liable on the basis of sexual harassment for the conduct of a minister.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

Church Liability for Sexual Harassment

A federal court in Oklahoma ruled that a church was not liable on the basis of sexual harassment for the conduct of a minister.

Richard R. Hammar, J.D., LL.M., CPA

Key point 8-08.2. Sexual harassment is a form of sex discrimination prohibited by Title VII of the Civil Rights Act of 1964. It consists of both “quid pro quo” harassment and “hostile environment” harassment. Religious organizations that are subject to Title VII are covered by this prohibition. An employer is automatically liable for supervisory employees’ acts of harassment, but a defense is available to claims of hostile environment harassment if they have adopted a written harassment policy and an alleged victim fails to pursue remedies available under the policy. In some cases, an employer may be liable for acts of sexual harassment committed by non-supervisory employees, and even non-employees.

* A federal court in Oklahoma ruled that a church was not liable on the basis of sexual harassment for the conduct of a minister. A woman (Karen) was employed as an administrative assistant at a regional denominational office. Her supervisor was one of the regional church’s officers. Karen sued the regional church for unlawful sexual harassment based on the following conduct of her supervisor: (1) Karen claimed that her supervisor offered to boost her husband’s compensation if she would “cooperate” with him, which she interpreted to mean a sexual relationship. Her husband was a pastor of a local church affiliated with the regional church. (2) Karen alleged that on another occasion her supervisor blocked her path by standing in a doorway, and began rubbing her shoulders while saying that “I’m sorry it has to be this way.” (3) She further alleged that her supervisor continued to sexually harass her for the next few months by brushing against her as he took things from her or handed them to her. Karen’s supervisor terminated her, and she sued the supervisor and regional church for sexual harassment.
Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment on the basis of several grounds, including sex. Sex discrimination includes sexual harassment. Title VII applies to any employer engaged in commerce and having at least 15 employees. There are two kinds of sexual harassment under Title VII: (1) “hostile work environment” harassment, which consists of offensive conduct of a sexual nature that is severe or pervasive; or (2) “quid pro quo” harassment, which “occurs when submission to sexual conduct is made a condition of employment benefits.” Karen claimed that she was subjected to both forms of harassment.

Hostile environment

The court noted that for the regional church to be liable for the supervisor’s “hostile environment” sexual harassment, Karen had to show that “the workplace was permeated with discriminatory intimidation, ridicule and insult, that was sufficiently severe or pervasive to alter the conditions of her employment and create an abusive working environment.” The court quoted from a Supreme Court decision:

A sexually objectionable environment must be both objectively and subjectively offensive, one that a reasonable person would find hostile and abusive, and one that the victim in fact did perceive to be so …. Simple teasing, offhand comments and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment. Faragher v. City of Boca Raton, 524 U.S. 775 (1998).

The court concluded that Karen failed to show that the conduct of her supervisor was “so extreme as to change the terms and conditions of her employment.” It concluded, “While no woman should be made to feel uncomfortable in the workplace by virtue of a male supervisor leaning into her and brushing against her, because Karen can point to only two incidents, her work environment cannot be perceived as being pervaded by hostility toward women. Consequently, there is insufficient evidence to support a hostile work environment claim.”

Quid pro quo

The essence of quid pro quo harassment is that “job benefits are conditioned on an employee’s submission to conduct of a sexual nature and that adverse job consequences result from the employee’s refusal to submit to the conduct.” Karen argued that her supervisor’s invitation to prevent financial harm to her family in exchange for sexual favors amounted to quid pro quo harassment in violation of Title VII. Once again, the court disagreed, noting that Title VII makes it unlawful for a covered employer to discriminate on the basis of sex against any individual with respect to his [or her] compensation, terms, conditions, or privileges of employment.” The court concluded that “the plain text of Title VII requires that the person whose employment conditions are adversely affected also be the person who is discriminated against on the basis of sex.” Bolin v. Oklahoma Conference, 397 F.Supp.2d 1293 (D. Okla. 2005).

Legal Developments

Negligent Supervision and Sexual Offenses

A court rejected a plaintiff’s attempt to treat national, regional, and local churches as a “single employer” for liability purposes.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

Negligent Supervision and Sexual Offenses

A court rejected a plaintiff’s attempt to treat national, regional, and local churches as a “single employer” for liability purposes.

Richard R. Hammar, J.D., LL.M., CPA

Key point 10-10.2. Many courts have ruled that the First Amendment prevents churches from being legally responsible on the basis of negligent supervision for the sexual misconduct of ministers.

Key point 10-18.2. Most courts have refused to hold denominational agencies liable for the acts of affiliated ministers and churches, either because of First Amendment considerations or because the relationship between the denominational agency and affiliated church or minister is too remote to support liability.

* A federal court in Washington ruled that it was barred by the First Amendment guaranty of religious freedom from resolving a former church office administrator’s claim that a denominational agency was responsible on the basis of negligent supervision for sexual offenses made toward her by the church’s senior pastor. Sarah was employed as a church’s office administrator by a “missions” church that had recently been started by a denominational agency (the “national church”). Due to its missions status, the church was administered and supported by the national church. Sarah’s responsibilities included assisting in church organization, providing administrative support for the church’s senior and associate pastors, managing the office assistant and the music director, and handling church correspondence. Sarah alleged that a few months after she was hired, the church’s senior pastor began to make romantic advances toward her. These advances increased in intensity and persistence, ultimately culminating in the church’s dismissal of both Sarah and the senior pastor. Sarah sued the national church, and a regional church, for wrongful dismissal as well as negligent supervision of the pastor. The court dismissed both claims.

Wrongful discharge

The court acknowledged that the state of Washington has “a clear, well-defined public policy against sex discrimination and retaliation.” However, it noted that the courts “do not impose liability for wrongful discharge on parties not properly considered employers of the complaining party.” Since neither the national church nor regional church was Sarah’s “employer,” neither could be liable on the basis of wrongful discharge.

The court rejected Sarah’s argument that the local church, regional church, and national church should all be considered a “single employer” that could be sued for wrongful discharge. It noted:

Even if the court had found that the defendants could be exposed to liability under a single employer or an indirect employer theory, the plaintiff has failed to show that there is a genuine issue of material fact that either the [national church or regional church] are properly considered a single employer (together with the local church). With respect to plaintiff’s single employer theory, many of allegations regarding the intertwining of the [national, regional, and local churches] have to do with the two umbrella organizations’ involvement with the pastors of affiliated churches. However, involvement with and even complete control over the pastors of the churches does not rise to the level of “interrelation of operations” and “centralized control of labor relations” [required by the single employer theory].

The court referred to a federal appeals court decision finding that a parent corporation and a subsidiary corporation were an “integrated enterprise” for liability purposes because, among other things, the parent kept the subsidiary’s accounts, issued its paychecks and paid its bills; the parent’s vice president was the subsidiary’s president; and, the parent had the authority to hire and fire the subsidiary’s employees. Kang v. U. Lim America, Inc. 296 F.3d 810, 815 (9th Cir. 2002). This “interrelation of operations” and “centralized control of labor relations” was sufficient to treat the two corporations as a single employer or “integrated enterprise” for liability purposes. But, the Washington court pointed out that the relationship between the national, regional, and local churches was far from the level of interrelationship required for them to be treated as a single employer, and therefore the national and regional churches were not liable for the local church’s dismissal of Sarah.

Negligent supervision

The court noted that Sarah’s lawsuit alleged that the national and regional churches had a duty to supervise the senior pastor in his interactions with her, and “knew or should have known that he was engaging in conduct that was causing severe emotional distress to her.” These allegations, the court concluded, challenged national and regional churches’ supervision of the pastor, and as such “fell within the scope of the ministerial exception, a constitutionally-derived exception to civil rights legislation that insulates a religious organization’s employment decisions regarding its ministers from judicial scrutiny.” The court concluded: “Plaintiff’s negligent supervision claim specifically challenges the [national and regional churches’] supervision of [the pastor] rather than a decision not to intervene to stop or curtail the sexual harassment. Judicial scrutiny of the defendants’ supervision of [a pastor] would require the court to examine the church’s decisions regarding its pastor. As a result, the court finds that the First Amendment bars plaintiff’s negligent supervision claim against the [national and regional churches].”

Application. This case is significant for two reasons. First, the court rejected the plaintiff’s attempt to treat national, regional, and local churches as a “single employer” for liability purposes. Every other court that has addressed this issue has reached the same conclusion. A judicial recognition of the single employer theory would make every national religious denomination automatically liable for every employment-related offense committed by an affiliated church. Such a rule of absolute liability would force denominational agencies to assume risks of catastrophic proportion that would jeopardize their viability. While this court did not address the issue, it is likely that such a result would violate the First Amendment guaranty of religious freedom. 2006 WL 1009283 (W.D. Wash. 2006)

Legal Developments

Age Discrimination and Denomination Policy

A minister’s age discrimination lawsuit challenging a denominational policy requiring the retirement of ministers at 70 years of age was barred by the federal Religious Freedom Restoration Act.

Richard R. Hammar, Attorney, CPA
Bio

Church Law & Tax Report

Age Discrimination and Denomination Policy

A minister’s age discrimination lawsuit challenging a denominational policy requiring the retirement of ministers at 70 years of age was barred by the federal Religious Freedom Restoration Act.

Richard R. Hammar, J.D., LL.M., CPA

Key point 8-06. The civil courts have consistently ruled that the First Amendment prevents the civil courts from applying civil rights laws to the relationship between a church and a minister.

Key point 13-02.2. Congress enacted the Religious Freedom Restoration Act to prevent the government from enacting any law or adopting any practice that substantially burdens the free exercise of religion unless the law or practice is supported by a compelling government interest. The compelling government interest requirement applies to any law, including neutral laws of general applicability. The objective of the Act was to repudiate the Supreme Court’s decision in the Smith case (1990) in which the Court ruled that neutral laws of general applicability that burden the free exercise of religion do not need to be supported by a compelling government interest in order to satisfy the First Amendment. In 1997, the Supreme Court ruled that the Act was unconstitutional. However, other courts have limited this ruling to state and local legislation, and have concluded that the Act continues to apply to federal laws.

* A federal appeals court ruled that a minister’s age discrimination lawsuit challenging a denominational policy requiring the retirement of ministers at 70 years of age was barred by the federal Religious Freedom Restoration Act. A minister was forced into retirement at age 70 by a policy of his denomination. The minister sued his church and a denominational official for violating a federal age discrimination law making it unlawful for any employer with 20 or more employees that is engaged in commerce to discriminate in any employment decision on the basis of the age of any person who is at least 40 years of age. The minister asserted that the mandatory retirement policy was a “secular” matter that was not influenced by any religious considerations. He acknowledged that most courts refuse to intervene in employment disputes between churches and clergy as a result of the so-called “ministerial exception” to employment laws, but he insisted that the ministerial exception “should not insulate a church’s non-religious regulations that discriminate against ministers on the basis of age.” A federal district court dismissed the lawsuit on the basis of the ministerial exception.

A federal appeals court ignored the ministerial exception and ruled that the lawsuit was barred by the federal Religious Freedom Restoration Act (RFRA). It noted that the ministerial exception “has no basis in statutory text, whereas RFRA, if applicable, is explicit legislation that could not be more on point. Given the absence of other relevant statutory language, the RFRA must be deemed the full expression of Congress’s intent with regard to the religion-related issues before us and displace earlier judge-made doctrines that might have been used to ameliorate the age discrimination law’s impact on religious organizations and activities.”

RFRA provides: “Government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability … [unless] it demonstrates that application of the burden to the person is in furtherance of a compelling governmental interest, and is the least restrictive means of furthering that compelling governmental interest.” The court reasoned that RFRA was broad enough to apply to a minister’s lawsuit against a church “since it applies to all federal law and the implementation of that law.” This language “easily covers the present action.”

The court rejected the minister’s claim that RFRA is unconstitutional. It concluded that RFRA represents a constitutional exercise of congressional power as it applies to the federal government.

One dissenting judge argued that RFRA has no application to disputes between private parties, such as the present case, and that the case should have been dismissed on the basis of the ministerial exception.

Application. This case suggests that the Religious Freedom Restoration Act can be used by churches to defend against discrimination claims under federal employment laws. This is the first court to reach such a conclusion. Other courts, and the dissenting judge in this case, apply the “ministerial exception” to such disputes. Hankins v. Lyght, 441 F.3d 96 (2nd Cir. 2006).

* See also (1) “Clergy—removal,” Fassl v. Our Lady of Perpetual Help Roman Catholic Church, 2005 WL 3135921 (E.D. Pa. 2006); (2) “Clergy—removal,” Celnik v. Congregation B’Nai Israel, 131 P.3d 102 (N.M. 2006), in the recent developments section of this newsletter.

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