Associate Pastor Sues Church for Senior Pastor’s Sexual Harassment

Employer is liable for supervisory employees’ acts of harassment

Richard R. Hammar, Attorney, CPA

Bio

State: New York
Categories: Employment Practices

Church Law and Tax Report

Associate Pastor Sues Church for Senior Pastor’s Sexual Harassment

Employer is liable for supervisory employees’ acts of harassment

Richard R. Hammar

Employment practices

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 federal court in New York ruled that a church’s associate pastor could sue the church as a result of the senior pastor’s sexual harassment. A church employed an adult male (the “plaintiff) as a part-time pastor to assist the church’s senior pastor. The plaintiff claimed that the senior pastor engaged in both sexual discrimination and sexual harassment against him. Specifically, he claimed that she: (1) changed the format of the service to restrict his participation and work responsibilities in weekly services and to increase the participation of a less senior female associate pastor; (2) limited his raises to the minimum allowed by denominational guidelines while at the same time giving the church’s female associate pastor additional responsibilities and significant pay raises; (3) belittled and embarrassed him in front of other pastors and the congregation for his disabilities; (4) berated him in her office; and (5) sexually harassed him by complimenting his appearance, calling him “hot,” saying how they would look good as a couple despite being asked to stop. The plaintiff alleged that he informed the church and a regional denominational agency of the abusive treatment but they failed to take any protective action. He further claimed that when he complained about the discrimination he was threatened with the loss of his pastoral license.

The plaintiff sued the church for sex discrimination and sexual harassment. The court’s decision is summarized below.

gender discrimination

The court denied the church’s motion to dismiss the gender discrimination claim. It noted that the plaintiff alleged circumstances that gave rise to an inference of discrimination. In particular, he alleged that when the new senior pastor assumed her duties he began to experience a decrease in his work responsibilities and did not receive pay increases while a less experienced female associate pastor received raises and increased responsibilities. This treatment continued until he took medical leave and was fired. The court concluded: “Because the plaintiff alleges disparate treatment based on his gender by his direct supervisor which lead (sic) to a decrease in his job responsibilities and eventually his termination, he has sufficiently alleged gender discrimination.”

sexual harassment

The plaintiff also alleged that the senior pastor’s actions amounted to sexual harassment. Sexual harassment is a form of gender discrimination prohibited by Title VII of the Civil Rights Act of 1964. Equal Employment Opportunity Commission (EEOC) regulations define sexual harassment as follows:

(a) Harassment on the basis of sex is a violation of Sec. 703 of Title VII. Unwelcome sexual advances, requests for sexual favors, and other verbal or physical conduct of a sexual nature constitute sexual harassment when (1) submission to such conduct is made either explicitly or implicitly a term or condition of an individual’s employment, (2) submission to or rejection of such conduct by an individual is used as the basis for employment decisions affecting such individual, or (3) such conduct has the purpose or effect of unreasonably interfering with an individual’s work performance or creating an intimidating, hostile, or offensive working environment.

According to this definition there are at least two separate types of sexual harassment:

(1) “quid pro quo” harassment, which refers to conditioning employment opportunities on submission to a sexual or social relationship, and

(2) “hostile environment” harassment, which refers to the creation of an intimidating, hostile, or offensive working environment through unwelcome verbal or physical conduct of a sexual nature.

The plaintiff claimed that the senior pastor was guilty of hostile environment harassment. The court noted that a claim of hostile work environment requires showing: “(1) that the harassment was sufficiently severe or pervasive to alter the conditions of the victim’s employment and create an abusive working environment, and (2) that a specific basis exists for imputing the objectionable conduct to the employer.”

The court noted that a plaintiff “can make a showing of hostile work environment by demonstrating either that a single incident was extraordinarily severe, or that a series of incidents were sufficiently continuous and concerted to have altered the conditions of the working environment.” The court recounted the plaintiff’s evidence supporting his claim of hostile environment sexual harassment, and concluded that it was “not sufficiently linked to gender and does not rise to the level of a hostile working environment.”

Application. This case is important for two reasons. First, it illustrates that “hostile environment” sexual harassment is not implicated by every offensive comment or act. Rather, the harassment must be “severe or pervasive enough to create an environment that a reasonable person would find hostile or abusive, and the victim must subjectively regard that environment as abusive.”

Second, this case illustrates that sexual harassment is gender-neutral, and exists regardless of the gender of the perpetrator. 2010 WL 980708 (N.D.N.Y. 2010).

* See also “Clergy—selection,” Thibodeau v. American Baptist Churches, 994 A.2d 212 (Conn. App. 2010), in the Recent Developments section of this newsletter.

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Legal Developments

The “Single Employer” Doctrine

Determining the degree of separateness between a church and an affiliated ministry.

Richard R. Hammar, Attorney, CPA

Bio

State: Kentucky
Categories: Employment Practices

Church Law & Tax Report

The “Single Employer” Doctrine

Determining the degree of separateness between a church and an affiliated ministry.

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 fulltime 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. Title VII of the Civil Rights Act of 1964 prohibits employers engaged in commerce and having at least fifteen employees from discriminating in any employment decision on the basis of race, color, national origin, gender, or religion.

A federal district court in Kentucky ruled that only employers with at least fifteen employees are subject to the nondiscrimination provisions of Title VII of the Civil Rights Act of 1964, and that the fifteen-employee requirement could not be achieved by combining a church’s employees with the employees of a retirement home that it owned. A male employee (the “plaintiff”) of a church-affiliated retirement home sued his employer, 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 fifteen 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 he was sexually harassed over a period of five years by a female supervisor.

The retirement home employed no more than six employees for twenty weeks or more during the years of the alleged harassment. Its board of directors consisted of eleven unpaid volunteers with paid occupations separate from their volunteer duties on the board. The plaintiff sued the retirement home, claiming that the supervisor’s acts constituted sexual harassment in violation of Title VII for which the home was liable. The home asked the court to dismiss the case on the ground that it did not employ a sufficient number of employees to satisfy either the fifteen-employee requirement for Title VII or the eight-employee requirement under a similar state civil rights law. In response, the plaintiff insisted that the retirement home and church are so “interrelated” that they were a “single employer” with a sufficient number of employees to satisfy the employee requirements.

the “single employer” doctrine

The court noted that the single employer doctrine has been applied in Title VII employment discrimination cases “often as a back-door means of satisfying the statute’s numerosity requirement.” It explained the doctrine as follows:

In determining whether to treat two entities as a single employer, courts examine the following four factors: (1) interrelation of operations; i.e., common offices, common record keeping, shared bank accounts and equipment; (2) common management, common directors and boards; (3) centralized control of labor relations and personnel; and (4) common ownership and financial control. None of these factors is conclusive, and all four need not be met in every case. Nevertheless, control over labor relations is a central concern. Quoting Swallows v. Barnes and Noble Book Stores, Inc., 128 F.3d 990 (6th Cir. 1997).

The burden is on a plaintiff to present facts that satisfy this four-part “single employer” test.

The court agreed with the church that “there is no evidence that the operation of the [home] and the church are interrelated.” It concluded:

The home maintains its own offices, records, bank accounts and equipment which is physically separate from the church. The day-to-day operations of the home are not run by the church, but by [an outside company] pursuant to a management plan …. [The outside company] did not contract with, or answer to, the church for the services it provides to the home. Nor does it provide any services to the church.

Moreover, there is no centralized control of labor relations between the home and the church. The church is governed by a majority vote of its entire membership on all church matters, including personnel issues, while the home is governed by a board of directors consisting of eleven unpaid volunteers. Although the bylaws of the home dictate that the pastor of the church also serve as chairman of the home’s board, his position represents only one out of eleven votes on the board. The remaining ten board members are volunteers. These board members have occupations separate and apart from their volunteer obligations to the home. Despite the fact that all the board members attend the church, there is no evidence that the home’s board members are required to consult with or seek approval of the church when making operational decisions affecting the home. Importantly, there is no evidence that the church has any authority to terminate or affect the employment of the home’s employees.

Finally, there is no evidence of common ownership or financial control between the church and the home. The assets of the home are owned by the individual “members” of the home’s board—the church has no “ownership” stake in the home. The home’s board, without input or approval of the church, approves an annual budget for the home, and [the outside company] provides management assistance in daily operations. The home’s revenues are not from the church, but result from rent receipts and government subsidies.

The court concluded, in light of these facts, that the church and home were not a “single employer” according to the four-factor test that it applied. It conceded that “there is indeed overlap” between the two due to the fact that the home’s board of directors consists solely of church members, but this fact alone did not “overcome the lack of evidence with respect to interrelation of operations, centralized control of labor relations, or common financial control.”

Application. Many churches operate affiliated entities. Common examples include schools and preschools. It is important for church leaders to understand that the courts in some cases may treat a church and an affiliated ministry as a “single employer” in deciding if the church has the requisite number of employees for a federal nondiscrimination law to apply, meaning that the employees of the church and the affiliate will be combined in making this determination. However, the employees of both entities will not be combined in all cases. The courts generally consider the following four factors in deciding whether or not to combine employees: (1) interrelation of operations; i.e., common offices, common record keeping, shared bank accounts and equipment; (2) common management, common directors and boards; (3) centralized control of labor relations and personnel; and (4) common ownership and financial control. Note that none of these factors is conclusive, and all four need not be met in every case.

The court concluded that the church and its retirement home were not a single employer, even though the members of the home’s board were church members. It based this conclusion on the following analysis:

Interrelation of operations

The home maintains its own offices, records, bank accounts and equipment, all of which are physically separate from the church.
The day-to-day operations of the home were not run by the church, but by a management company pursuant to a management agreement.
The management company did not contract with, or answer to, the church for the services it provided to the home. Nor does it provide any services to the church.

Common management, common directors and boards

Although the bylaws of the home dictated that the pastor of the church also served as chairman of the home’s board, his position represented only one out of eleven votes on the board. The remaining ten board members were volunteers.
Despite the fact that all the home’s board members attended the church, there was no evidence that the home’s board members were required to consult with or seek approval of the church when making operational decisions affecting the home. Importantly, there was no evidence that the church has any authority to terminate or affect the employment of the home’s employees.

Centralized control of labor relations and personnel

There was no centralized control of labor relations between the home and the church. The church was governed by a majority vote of its entire membership on all church matters, including personnel issues, while the home was governed by a board of directors consisting of eleven unpaid volunteers.

Common ownership and financial control

The assets of the home were owned by the individual members of the home’s board—the church had no ownership stake in the home. The home’s board, without input or approval of the church, approved an annual budget for the home, and the management company provided management assistance in daily operations.
The home’s revenues are not from the church, but result from rent receipts and government subsidies. Sanford v. Main Street Baptist Church Manor, Inc., 2009 WL 4167938 (E.D. Ky. 2009).

Resource. The degree of separateness between a church and an affiliate that is required to build an effective liability firewall is a complex question that is addressed fully in chapter 10 of Richard Hammar’s four-volume set, Pastor, Church & Law (4th ed. 2008), available by calling 1-800-222-1840 or visiting ChurchLawAndTaxStore.com, or through a membership on our website, ChurchLawAndTax.com.

This Recent Development first appeared in Church Law & Tax Report, May/June 2011.

Legal Developments

Job Applicant Sues Church-Operated School for Age Discrimination

Avoid discriminatory hiring practices.

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Employment Practices, Overtime Pay

Church Law & Tax Report

Job Applicant Sues Church-Operated School for Age Discrimination

Avoid discriminatory hiring practices.

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

Key Point 8-11. 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 8-13. 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.

Resource. For more information on this topic, purchase the download, “Understanding Wage and Hour Laws” on ChurchLawAndTaxStore.com.

A federal court ruled that a 56-year-old woman failed to establish that a church-operated school committed unlawful age discrimination when it rejected her application for employment as a teacher and instead hired a 21-year-old woman for the position. To fill a vacancy for a third-grade teacher position the school placed an advertisement in an online job bank. It received six applications for the position, one of which was from a 56-year-old woman (the “plaintiff”). All six applicants were interviewed, and school officials and church leaders chose a 21-year-old female applicant. This prompted the plaintiff to sue the school, and church, for age discrimination in violation of the federal Age Discrimination in Employment Act (ADEA). The ADEA prohibits employers with 20 or more employees, and engaged in interstate commerce, from discriminating in any employment decision on account of the age of an employee or applicant for employment who is at least 40 years of age.

The court noted that a “burden shifting analysis” must be used in evaluating age discrimination claims. This analysis involves the following four steps:

First, the plaintiff must prove a “pri-ma facie case,” which consists of the following elements: (1) the plaintiff is at least 40 years of age; (2) she applied for a position for which she was qualified; (3) she was subject to an adverse employment decision, such as termination or not being hired; and (4) the adverse employment decision was made under circumstances giving rise to an inference of unlawful discrimination.
Second, if the plaintiff establishes a pri-ma facie case, the burden shifts to the defendant to produce evidence of a legitimate, nondiscriminatory reason for its decision not to hire the plaintiff that rebuts the presumption of discrimination created by the plaintiff’s pri-ma facie case.
Third, should the defendant produce such evidence, the burden shifts back to the plaintiff to show both that the employer’s purported reason is mere pretext for discrimination and that the plaintiff’s age was the actual motivating factor behind the defendant’s hiring decision.

The court noted that “a plaintiff’s burden in proving a pri-ma facie case is minimal,” and that the plaintiff had done so. This meant that the burden shifted to the church defendants to produce evidence of a legitimate, non-discriminatory reason for not hiring the plaintiff. The court concluded that the church defendants met this burden by establishing that the plaintiff’s interviewers were dissatisfied with her interview performance, and in particular her responses to questions concerning lesson plans and classroom discipline.

The court stressed that “an employer may use subjective criteria, such as the employer’s impressions of job applicants during an interview, to make hiring decisions,” and that a court “must respect an employer’s unfettered discretion to choose among qualified candidates” and “not act as a super personnel department that second guesses employers’ business judgments.”

Since the church defendants met their burden of proving a legitimate, nondiscriminatory basis for the decision not to hire the plaintiff, the burden shifted back to her to prove that this purported basis was a “pretext” for discrimination and that her age was the real reason she was not hired. The court concluded that the plaintiff failed to meet this burden, and it dismissed the lawsuit. It noted that her only evidence of discrimination was the age difference between her and the 21-year-old applicant who was hired. But this evidence, without more, “does not contradict the evidence of plaintiff’s poor interview performance or show that this lawful excuse concealed a hiring decision motivated by unlawful discrimination.” A plaintiff in an age discrimination case “may not rely on conclusory allegations or unsubstantiated speculation.”

Application. This case illustrates an important point—churches subject to the ADEA (or a state counterpart) do not necessarily commit age discrimination by failing to hire the oldest applicant for a position. They will avoid liability if they can prove a legitimate, nondiscriminatory reason for their decision that is not a “pretext” to conceal an actual discriminatory intent. Donahue v. Norwich Roman Catholic Diocesan Corporation, 2008 WL 821890 (D. Conn. 2008).

This Recent Development first appeared in Church Law & Tax Report, September/October 2009.

Legal Developments

Interference with Contract

Student sues official who informed a potential employer of his arrest.

Richard R. Hammar, Attorney, CPA

Bio

State: Texas
Categories: Employment Practices, Overtime Pay

Church Law & Tax Report

Interference with Contract

Student sues official who informed a potential employer of his arrest.

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

Key Point 8-24. A reference letter is a letter that evaluates the qualifications and suitability of a person for a particular position. Churches, like other employers, often use reference letters to screen new employees and volunteers. Churches often are asked to provide reference letters on current or former workers. The law generally provides employers with important protections when responding to a reference letter request. However, liability may still arise in some cases, such as if the employer acts with malice in drafting a reference letter.

A Texas court dismissed a lawsuit brought by a university student against a school official who informed a prospective employer of the student’s arrest for public lewdness. A university student (the “plaintiff”) was working toward a degree in elementary education. While on his way to a student teaching assignment at an elementary school, he stopped at a men’s restroom in a public park. Another man followed him into the restroom, the two had sex, and they were subsequently arrested and charged with public lewdness. The restroom in the park was under surveillance because of numerous complaints about drug use and lewdness around children. The plaintiff pleaded no contest to the offense and was placed on deferred adjudication.

School officials decided that the plaintiff could obtain his teacher certification if two requirements were met: (1) he must make “full disclosure” about his arrest to his prospective employer, and (2) the employer must confirm in writing to university officials that he had “fully disclosed” his arrest.

The plaintiff applied for a fourth grade teaching position at a public school. He informed the principal that he had been arrested for public lewdness, but provided no other details. He prepared a letter for the principal to sign that was addressed to the university, affirming that he had been “totally forthcoming about his arrest record and has provided all documentation related to his arrest.” Because the letter “raised flags” of concern, the principal Brown placed a reference-check call to the university concerning the plaintiff. A university official (the “defendant”) referred to the existence of a newspaper article discussing the arrest. The official later testified that she told the principal about the newspaper article so that she would have the information and not be “blindsided” if a parent were to inquire about the incident.

The elementary school conducted a routine criminal background check on the plaintiff, which showed that he had received deferred adjudication for public lewdness. The plaintiff, however, had answered “No” to a question on his application that asked if he had “ever been convicted of a felony or offenses involving moral turpitude and/ or received probation or deferred adjudication.” Although the plaintiff had already been assigned a classroom and placed in paid training, the school ultimately declined to allow him to teach.

The plaintiff sued the defendant for interference with contract. The court noted that interference with contract requires proof of (1) the existence of a contract subject to interference; (2) a willful and intentional act of interference; (3) the act was the cause of plaintiff’s damages; and (4) actual damage or loss. The court concluded that the defendant’s reference to a newspaper article concerning the plaintiff during his conversation with the school principal was not a “willful and intentional act of interference.” It noted:

A willful act involves more than simple participation in some act with a breaching party. The defendant must knowingly induce one of the contracting parties to breach its obligations. There must be some act interfering with a contract or act persuading a party to a contract to breach; for example, offering better terms or other incentives. Liability for intentional interference may not be based on a simple finding that the defendant performed certain acts; there must be a finding that the defendant performed certain acts with the knowledge or belief that interference with a contract would result from that contract.

The act at issue in this case is the telephone conversation between [the defendant and the school principal] during which the defendant mentioned the newspaper article. Plaintiff alleges in his petition that the defendant “made it clear that she believed that hiring or retaining plaintiff as a teacher would embarrass both the school and the university ….” The principal stated that the defendant did not read her the article or provide her a copy …. This is the entirety of the evidence on which the plaintiff relies to support his assertion that the defendant advised the school that hiring the plaintiff would create problems; he refers to no other evidence that the defendant expressed any opinion to the principal, the only school administrator with whom she had contact, concerning his employment, and our review of the record finds no other evidence. In the defendant’s deposition, she said that she responded to the principal’s question about the plaintiff because she thought that she should have the information to “avoid being blindsided” by a parent who might have seen the article. The defendant had no previous relationship with the principal. The record does not show any further contact with the principal or any other school administrator to whom she could have communicated a negative recommendation about the plaintiff.

The court concluded that no jury could conclude that the defendant “performed an act intended to knowingly induce the school to breach its contract with the plaintiff, or that the conversation with the principal was done with the knowledge or belief that it would interfere with the plaintiff’s TISD contract. Accordingly, the defendant conclusively negated the element of tortious interference that requires a willful and intentional act …. The plaintiff produced no countervailing evidence that the defendant offered the school some inducement to breach its contract with the plaintiff or that her reference to a newspaper article served as a negative inducement for the school to breach the contract.”

The court further noted that the plaintiff had “admitted that the defendant was not acting maliciously but in the best interests of the university and the teacher education program,” which precluded a finding of willful and intentional interference with contract.

Application. Note the following considerations:

1. According to the principle of “interference with contract,” a former employer may be liable if it intentionally interferes with an existing employment relationship. To illustrate, assume that a church dismisses an employee (Jill) because of embezzlement, and Jill is later hired by another church. The pastor of the former employer discovers that Jill is now working for another employer, and he calls the employer and shares details about Jill’s embezzlement. Based on this unsolicited communication Jill is dismissed by her new employer. She later sues her former church and pastor for “interference with contract.” To prove interference with contract, Jill must demonstrate the existence of a contract (an employment relationship), and some intentional act by her former church or pastor that interfered with that contract.

2. Interference with contract requires malicious intent. The defendant must have willfully and intentionally engaged in conduct that interfered with another’s employment contract. In this case, the court concluded that the defendant’s reference to a newspaper article in her conversation with the principal could not reasonably be construed an act “intended to knowingly induce the school to breach its contract with the plaintiff.” In support of this conclusion, the court referred to the following facts: (1) the defendant did not read the article to the principal or provide her a copy; (2) the defendant expressed no opinion to the principal concerning the plaintiff’s employment; (3) the defendant communicated with no other school employee; (4) the defendant did not initiate the contact with the principal; (5) the defendant’s sole purpose in referring to the newspaper article was to prevent the principal from “being blindsided” by a parent who might have seen the article; (6) the defendant had no previous relationship with the principal; (7) the defendant had no further contact with the principal or any other school administrator to whom she could have communicated a negative recommendation about the plaintiff.

3. Some courts have extended the principle of interference with contract to the pre-employment stage, referring to this as “interference with prospective contractual relations.” This requires proof of the following elements: (1) a “reasonable probability” that the plaintiff would have entered into the prospective relationship or contract; (2) a wrongful act by the defendant that prevented the relationship from occurring; (3) the defendant did such act with a conscious desire to prevent the relationship from occurring, or knew that the interference was certain or substantially certain to occur as a result of the defendant’s conduct; and (4) the plaintiff suffered actual harm or damage as a result of the defendant’s interference.

4. Some courts have ruled that the so-called “ministerial exception” prevents them from resolving interference with contract claims involving clergy. 2008 WL 5264886 (Tex. App. 2008).

This Recent Development first appeared in Church Law & Tax Report, September/October 2009.

Legal Developments

Church Employee Sues for Overtime Wages

Have an attorney who is familiar with FLSA review your policy manual.

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Employment Practices, Overtime Pay

Church Law & Tax Report

Church Employee Sues for Overtime Wages

Have an attorney who is familiar with FLSA review your policy manual.

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

Key Point 8-08.6. The Fair Labor Standards Act exempts employees employed in an executive, administrative, or professional capacity from the minimum wage and overtime pay provisions. To be covered by one of these exemptions, an employee must perform specified duties, and be paid a salary in excess of a specified amount.

A federal appeals court rejected a church employee’s claim that her employing church violated the federal Fair Labor Standards Act by failing to pay her overtime compensation for hours worked in excess of 40 per week. The former principal (the “plaintiff”) of a church school sued the church, claiming that it failed to (1) pay overtime wages pursuant to the FLSA; (2) notify her of her right to continuing health coverage under the Consolidated Omnibus Reconciliation Act (“COBRA”); and (3) adhere to the requirements of the Employment Retirement Income Security Act (“ERISA”) in administering the church’s pension plan. A federal district court concluded that the plaintiff was an “administrative employee” exempt from entitlement to overtime pay under the FLSA and that COBRA and ERISA requirements did not apply to “church plans” like the one the church had established. A federal appeals court affirmed the district court’s ruling.

FLSA—in general

The FLSA requires that most employees in the United States be paid at least the federal minimum wage for all hours worked and overtime pay at time and one-half the regular rate of pay for all hours worked over 40 hours in a workweek. However, the FLSA provides an exemption from both minimum wage and overtime pay for employees employed as bonafide executive, administrative, or professional employees. To qualify for exemption, employees generally must meet certain tests regarding their job duties and be paid on a salary basis at not less than $455 per week. Job titles do not determine exempt status.

To qualify for the administrative employee exemption, all of the following tests must be met:

The employee must be compensated on a salary or fee basis at a rate not less than $455 per week;
The employee’s primary duty must be the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and
The employee’s primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.

The administrative exemption is also available to employees compensated on a salary or fee basis at a rate not less than $455 a week, or on a salary basis which is at least equal to the entrance salary for teachers in the same educational establishment, and whose primary duty is performing administrative functions directly related to academic instruction or training in an educational establishment. Academic administrative functions include operations directly in the field of education, and do not include jobs relating to areas outside the educational field.

Department of Labor regulations clarify that employees engaged in academic administrative functions include:

the superintendent or other head of an elementary or secondary school system, and any assistants responsible for administration of such matters as curriculum, quality and methods of instructing, measuring and testing the learning potential and achievement of students, establishing and maintaining academic and grading standards, and other aspects of the teaching program;
the principal and any vice-principals responsible for the operation of an elementary or secondary school;
department heads in institutions of higher education responsible for the various subject matter departments;
academic counselors and other employees with similar responsibilities.

Having a primary duty of performing administrative functions directly related to academic instruction or training in an educational establishment includes, by its very nature, exercising discretion and independent judgment with respect to matters of significance.

The duties requirement

The court agreed with the church that the plaintiff’s employment responsibilities met the “duties” requirement of an exempt academic administrative employee:

She exercised the discretion of a principal on a daily basis and made important decisions related to instruction. She spent a significant amount of time supervising the school’s teaching staff and providing teaching evaluations. She also called staff development meetings, chose to implement a different standardized testing system than had previously been used in the school, interviewed candidates for teaching positions and made hiring recommendations to the Senior Pastor, recruited new students, prepared proposed budgets, taught classes in the core subjects, and made decisions related to student discipline. That [the church’s senior pastor] possessed general supervisory authority over the school does not mean [that she] lacked discretion to make decisions in her own right and is instead consistent with the regulations’ recognition that decisions of exempt employees may be “reviewed at a higher level.”

The “salary” requirement

The plaintiff insisted that she was not exempt, and therefore entitled to overtime pay, because she did not satisfy the salary requirement. Her weekly pay exceeded $455, but she insisted that she nonetheless failed the salary test because her pay was “subject to reduction because of variations in the quality or quantity of the work performed.” She cited the following Department of Labor regulation:

An employee will be considered to be paid on a “salary basis” within the meaning of these regulations if the employee regularly receives each pay period on a weekly, or less frequent basis, a predetermined amount constituting all or part of the employee’s compensation, which amount is not subject to reduction because of variations in the quality or quantity of the work performed. (emphasis added)

The regulations clarify that a salary deduction of one or more full days in response to an employee’s absence for personal reasons will not affect his or her status as an exempt employee.

The plaintiff claimed that her pay was subject to reduction because of variations in the quality or quantity of the work she performed, and cited (1) an incident in which the church imposed a pay deduction after she missed a day of work for personal reasons; and (2) the pastor’s threat to dock school employees’ pay based on uniform infractions. The court ruled that neither of these incidents resulted in a violation of the salary test. With regard to the first incident, the court noted that this did not demonstrate an actual practice of compensating her on a non-salary-basis, especially since the FLSA regulations provide that a salary deduction of one or more full days in response to an employee’s absence for personal reasons will not affect his or her status as an exempt employee. Nor does a single deduction amount to a clear policy.

In rejecting the plaintiff’s second argument, the court noted that “there was no evidence that any salary deductions actually occurred on that ground, and [the pastor’s] isolated statements fall well short of establishing a clear and particularized policy” as required by the regulations.

COBRA and ERISA

The court rejected the plaintiff’s COBRA and ERISA claims: “It is not in dispute that [the church] established its health and pension plans and that it is a church that possesses 501(c)(3) tax exempt status. The plans are therefore church plans that are not subject to COBRA and ERISA requirements.”

Application. Many churches have adopted policies that permit employee salaries to be reduced based on variations in the quality or quantity of the work performed. Church leaders should recognize that such policies may result in the loss of exemption of church employees from the FLSA’s overtime pay requirements, and this leads to unexpected and unbudgeted liability for unpaid overtime compensation. This risk is especially acute if a church’s employee or policy manual was not reviewed by an attorney familiar with the FLSA.

Department of Labor regulations list several situations in which reductions in pay will not affect the exempt status of employees. One of these (deductions from pay when an exempt employee is absent from work for one or more full days for personal reasons, other than sickness or disability) was referred to by the court in this case. Other exemptions include

deductions from pay may be made for absences of one or more full days occasioned by sickness or disability (including work-related accidents) if the deduction is made in accordance with a bonafide plan, policy or practice of providing compensation for loss of salary occasioned by such sickness or disability;
while an employer cannot make deductions from pay for absences of an exempt employee occasioned by jury duty, attendance as a witness or temporary military leave, the employer can offset any amounts received by an employee as jury fees, witness fees or military pay for a particular week against the salary due for that particular week without loss of the exemption.
deductions from pay of exempt employees may be made for penalties imposed in good faith for infractions of safety rules of major significance.
deductions from pay of exempt employees may be made for unpaid disciplinary suspensions of one or more full days imposed in good faith for infractions of workplace conduct rules. Such suspensions must be imposed pursuant to a written policy applicable to all employees.
an employer is not required to pay the full salary in the initial or terminal week of employment;
an employer is not required to pay the full salary for weeks in which an exempt employee takes unpaid leave under the Family and Medical Leave Act.

This case illustrates the importance of having your employee or policy manual reviewed by an attorney who is familiar with the FLSA. 2009 WL 1298525 (2nd Cir. 2009).

This Recent Development first appeared in Church Law & Tax Report, September/October 2009.

Legal Developments

The Ministerial Exception and Racial Discrimination

Civil courts are prevented from applying employment laws to ministers.

Richard R. Hammar, Attorney, CPA

Bio

State: North Carolina
Categories: Clergy - Removal, Employment Practices

Church Law & Tax Report

The Ministerial Exception and Racial Discrimination

Civil courts are prevented from applying employment laws to ministers.

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

Key Point 8-10.1. The civil courts have consistently ruled that the First Amendment prevents the civil courts from applying employment laws to the relationship between a church and a minister.

A North Carolina federal court ruled that it was barred by the First Amendment guaranty of religious freedom from resolving a minister’s claim that his denomination engaged in unlawful racial discrimination in violation of Title VII of the Civil Rights Act of 1964. An African-American minister (the “plaintiff”) was employed by a state synod (“regional church”) as a missions director. He claimed that he was subjected to racial discrimination and a hostile work environment and that the conditions became so intolerable that he was ultimately forced to resign. He filed a claim of discrimination with the United States Equal Employment Opportunity Commission (EEOC), but the EEOC dismissed this claim on the basis of the so-called “ministerial exception” which prohibits civil courts and agencies from resolving employment disputes between churches and clergy. The plaintiff thereafter sued his denomination in federal court, alleging racial discrimination and hostile work environment under Title VII of the Civil Rights Act of 1964, as well as state law claims for constructive discharge, intentional infliction of emotional distress, and negligent infliction of emotional distress.

The court dismissed the plaintiff’s claims on the basis of the ministerial exception. It noted that his responsibilities as missions director were “directly involved in fulfilling the church’s purpose of receiving, establishing, and supporting congregations to bear witness to the Gospel and to carry out God’s mission. The specific responsibilities … include working to advance and spread the Gospel and assisting other individuals to carry on outreach work, which includes developing new congregations and supporting existing congregations and ministries.”

The court explained the ministerial exception “precludes application of Title VII to employment decisions relating to members of the clergy and others whose primary duties are religious in nature.” It quoted from an earlier federal appeals court ruling which it described as the “seminal case on the ministerial exception”:

The relationship between an organized church and its ministers is its lifeblood. The minister is the chief instrument by which the church seeks to fulfill its purpose. Matters touching this relationship must necessarily be recognized as of prime ecclesiastical concern. Just as the initial function of selecting a minister is a matter of church administration and government, so are the functions which accompany such a selection. It is unavoidably true that these include the determination of a minister’s salary, his place of assignment, and the duty he is to perform in the furtherance of the religious mission of the church. McClure v. Salvation Army, 460 F.2d 553 (5th Cir.1972).

The court noted that the ministerial exception has been applied not only to ordained ministers, but also by non-ordained individuals whose primary duties “consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship.” It concluded that the plaintiff was a minister for purposes of the ministerial exception, and as a result his lawsuit had to be dismissed:

As mission director, plaintiff’s duties clearly consisted of “teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship.” Moreover, many of his allegations relate to office space, meeting attendance, presentation of work plans, telephone messages, leadership selection, lack of communication, and the approval of religious groups. These allegations relate directly to internal church governance, which the First Amendment protects from outside interference. d in McClure,

The court again cited the McClure case:

An investigation and review of such matters of church administration and government as a minister’s salary, his place of assignment and his duty, which involve a person at the heart of any religious organization, could only produce by its coercive effect the very opposite of that separation of church and State contemplated by the First Amendment.

The court also ruled that the ministerial exception required a dismissal of not only the plaintiff’s Title VII claim, but also all of his state law claims.

In rejecting the plaintiff’s argument that the ministerial exception did not apply in this case because the court would not have to intrude upon the spiritual functions of the church in addressing his claims, the court observed: “It is not the court’s role to determine whether the church had a secular or religious reason for the alleged mistreatment of [plaintiff]. The only question is that of the appropriate characterization of [his] position.” Gomez, 2008 WL 3202925 (M.D.N.C. 2008).

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

Legal Developments

Dismissing a Minister for Wrongdoing

Take care when terminating staff over moral conduct.

Richard R. Hammar, Attorney, CPA

Bio

State: California
Categories: Clergy - Removal, Employment Practices

Church Law & Tax Report

Dismissing a Minister for Wrongdoing

Take care when terminating staff over moral conduct.

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

Key Point 2-04.1. Most courts have concluded that they are barred by the First Amendment guarantees of religious freedom and nonestablishment of religion from resolving challenges by dismissed clergy to the legal validity of their dismissals.

A California court ruled that a church’s music minister who was dismissed after it was learned that he was homosexual could not sue the church and church leaders for defamation and invasion of privacy as a result of statements made to the staff and congregation. An adult male (the “plaintiff”) was licensed as a minister by a conservative, evangelical church. He was employed by the church as its worship minister for six years, and then became its worship director. As worship director, he directed all aspects of congregational worship.

The plaintiff was homosexual, but never revealed his sexual orientation to any of the church elders because of his perception that the church considered homosexuality inappropriate and in violation of scripture and church doctrine. No one at the church ever asked the plaintiff about his sexual orientation for the many years that he was an employee.

If a church leader was guilty of misconduct, it was the church’s policy to confront that person and tell anyone in the church who was immediately affected by the leader’s ministry of the reason for his or her disqualification from church leadership. Sometime before his own termination, the plaintiff had participated as a church leader in terminating another staff member after discovering he was homosexual, after which he made an announcement to the entire church choir (about 100 people) that the staff member had been removed from his position because he “had admitted to some moral failure.”

The plaintiff eventually informed another church employee that he was a homosexual, and the employee shared this information with the church’s executive pastor. When confronted with this information, the plaintiff acknowledged that he was gay. A few days later, the plaintiff was informed by church leaders that he was going to be terminated from his leadership position and that an announcement would be made to church staff, the choir, and the congregation. Similar announcements had been made to the entire congregation when other church leaders were removed from leadership positions. The plaintiff prepared a written message which he agreed could be read by church elders to the choir. In that statement, he revealed he was gay and said there was now “a fundamental difference in theological perspective between myself and the church” making it “necessary to part ways.”

The following Sunday, the church’s senior pastor informed the congregation that the plaintiff had been terminated as worship director because he had “admitted to moral and sexual actions which according to the Bible, are sin and disqualify him from leadership and ministry in our church.” He told the congregants they did not need to know more details than that. The pastor told the congregation it was important for the matter to be brought out in the open because the church should “hold to the biblical standards of leadership, and when someone in leadership has disqualified themselves and there has been a breakdown in character, we need to be honest with each other and talk about that, and then pray for each other about it.” The pastor then referred to a specific passage in the Bible stating, “if someone is caught in a sin you who are spiritual should restore him … gently, but watch yourself so that you are not also tempted.” The pastor later testified that his statements to the congregation were necessary because the plaintiff’s ministry was “in front of the whole church,” and church members should not learn about problems with church leaders “through the rumor mill.”

The day after the plaintiff’s dismissal, certain church leaders allegedly made the following statements to the church staff, and repeated these statements the following weekend to the whole congregation during four separate services:

the plaintiff admitted to moral and sexual actions that are a sin;
he had disqualified himself from leadership through a breakdown in character;
he was caught in a sin;
he was a broken man who needed to be restored; and
he was asked 40 or 50 times if he was a homosexual and he lied and said that he was not.

According to the plaintiff, these statements were false and the pastor and elders who made them knew they were false. The plaintiff complained that these statements destroyed his career in church ministry, and caused him humiliation and severe emotional distress.

The plaintiff sued the church, and certain church leaders, for defamation and invasion of privacy. With regard to his invasion of privacy claim, the plaintiff alleged that he had “lived an ordinary private life” and had “never made any public statement about his sexual orientation,” and “did not consent to have his sexual orientation made public in a derogatory and negative way, or at all.”

The trial court granted the church’s motion to dismiss the case, based on the “ministerial exception.” The courts generally have ruled that they are barred by the First Amendment from resolving employment disputes between ministers and churches. This so-called ministerial exception is based on the principle that “a church’s selection of its own clergy is a core matter of ecclesiastical self-governance with which the state may not constitutionally interfere. A church must retain unfettered freedom in its choice of ministers because ministers represent the church to the people …. They act as the church’s lifeblood. Indeed, the ministerial relationship lies so close to the heart of the church that it would offend the First Amendment simply to require the church to articulate a religious justification for its personnel decisions.”

The plaintiff appealed, and a state appeals court reversed the trial court’s ruling in favor of the church. It conceded that the ministerial exception can apply to claims of defamation and invasion of privacy when based on statements “related to the hiring, firing, discipline or administration of clergy.” But, it noted that “no court has articulated a bright-line test for determining when defamatory and privacy invading statements are related to the termination of a minister.” The court concluded, on procedural or “technical” grounds, that in reviewing a lower court’s dismissal of a lawsuit its review is limited to the allegations contained in the original complaint. And, since it could not determine “from the face of the complaint whether making the statements falls within, or is outside of, the ministerial exception, the [trial court’s] judgment must be reversed.” The court concluded:

[The plaintiff’s] complaint sets forth the essential allegations of his defamation and invasion of privacy causes of action. He alleged that after being terminated from his ministerial position because of his homosexuality, church officials not only publicly announced the fact of his homosexuality to the entire congregation, but wrongly stated that he had lied to them on 40 to 50 occasions denying his homosexuality. The plaintiff alleged the defendants knew the latter statement to be false, he in fact had never been questioned about his sexual orientation, and the defendants made the statements with the specific intent to injure him. But the complaint contains no facts from which we can say there was an ecclesiastical purpose for any statements being made to the entire congregation after the plaintiff’s employment was terminated. We cannot say from the record before us the defendants’ statements were “part and parcel” of the defendants’ ecclesiastical functions, or “inseparable parts of a process of divestiture of priestly authority”. Indeed, the complaint suggests the statements were motivated by the individual defendants’ purely personal enmity towards homosexuals, not in furtherance of any “religious doctrine or theology of the church,” and arguably not in furtherance of an ecclesiastical purpose or part of an ecclesiastical function.

The appeals court sent the case back to the trial court, which again dismissed the plaintiff’s claims. The plaintiff once again appealed to a state appeals court.

The court’s ruling

This time, the appeals court ruled in favor of the church. It concluded:

The trial court properly granted summary judgment because there now is no material issue of fact concerning whether the statements made following the plaintiff’s termination were part of the process of his termination. He did not dispute the evidence put forth by the church that it was part of established church practice to explain to congregants, or members of the church directly affected by the particular pastoral leader’s ministry, the reasons for termination of any pastoral leader after the leader’s termination. The plaintiff himself had participated in such public disclosures about other church staff following termination of their employment. The church submitted evidence demonstrating it routinely gave such explanations to the congregation and that it had a religious purpose in doing so. And in his opening brief, the plaintiff concedes the church’s assertion that once it terminated his employment, “it was required, as an integral and inseparable part of its religious process and mission, to inform the congregation of its religious reasons for doing so, is also clearly a matter of church governance covered by the ministerial exception.”

Statements made after termination

On appeal, the plaintiff asserted that the statements made by church leaders about him were all made after his termination, and that the ministerial exception should not apply to statements made after a minister’s termination. The court disagreed:

As we have already concluded, the exception applies to “otherwise actionable claims of defamation and invasion of privacy, when based on statements ‘related to the hiring, firing, discipline or administration of clergy.'” And that would encompass post-termination acts if they were part of the process of termination. This is not a case, as the plaintiff characterizes it, in which the church’s acts occurred at some remote time unrelated to the termination of his pastoral employment. He was removed from his position on Tuesday, he prepared a statement that he agreed could be read to the church choir disclosing the details of his sexual orientation and explaining why he was leaving his church post, and at church services the following Sunday, [the senior pastor] made his comments to the congregation in accordance with the church’s established practice and doctrine. The undisputed evidence is that [the senior pastor’s] act of explaining to the congregation the reasons for [the plaintiff’s] departure were … “part and parcel” of his termination. Thus, the ministerial exception applies to preclude further judicial review regardless of the otherwise tortious nature of the statements.

“Secular” Inquiries

The plaintiff argued on appeal that the ministerial exception was not applicable in this case. He asserted that rather than tell the congregation the actual reason for his termination, i.e., that his sexual orientation conflicted with the church’s theology, the senior pastor told the congregation that the plaintiff was disqualified from leadership because he had been “caught in a sin,” had admitted to “moral and sexual actions that are sin,” had suffered “a breakdown in character,” and was a “broken man.” The plaintiff claimed that the ministerial exception did not apply to any of these statements because their “truth” could be determined based on purely secular principles and a jury would not be required to consider the religious beliefs of the church in deciding if the pastor’s statements were true or false or constituted an invasion of privacy. Once again, the court disagreed: “The truth or falsity of those statements necessarily requires inquiry into the doctrinal beliefs of the church—something we cannot undertake to do. Furthermore, once it has been established the statements were made in relation to the process of the plaintiff’s termination the ministerial exception applies regardless of the nature of the statements.”

Application. Consider the following points:

1. Perhaps most importantly, the court rejected the plaintiff’s argument that the ministerial exception does not apply to statements and acts occurring after a minister’s termination. The court concluded that the ministerial exception applies to post-termination acts if they are “part of the process of termination.”

2. The plaintiff prepared a written message which he agreed could be read by church elders to the choir. In that statement, he revealed he was gay and said there was now “a fundamental difference in theological perspective between myself and the church” making it “necessary to part ways.”

Obtaining such statements from employees at the time of termination is often a desirable practice, since it minimizes the church’s exposure to liability for unauthorized disclosures to the staff or congregation. The timing of such statements is critical. Employees are far more likely to sign them at the time they are confronted with evidence serving as the basis for their termination. However, the more removed the statement is from the day the employee is first informed of the church’s decision to terminate his or her employment, the less likely the statement will be signed.

Ideally, church leaders should have a dismissed employee sign a written confession that (1) admits to wrongdoing (in general or specific terms, depending on the circumstances), and (2) consents to a pastor or board member reading the confession to the staff and congregation. As noted above, having such a statement prepared in advance and available at the time the employee is informed of his or her termination is often desirable since it is more likely that it will be signed. Also, note that it generally is best for such a statement to authorize that it be read to the “congregation” rather than the “membership,” since the former is a broader category and would authorize the reading of the statement at a church service in which non-members are present. Alternatively, some churches draft statements authorizing it being read “in a church service.” This is a narrower authorization than referring to the “congregation,” since the latter term is not limited to disclosures made at church services.

3. It is interesting to note that the court failed to mention the legal principle of “qualified privilege.” Generally, comments made among church members and regarding matters of common interest enjoy a qualified privilege, meaning that they cannot be defamatory unless they are made with “malice.” In this context, malice means a knowledge that the statements were false, or a reckless disregard as to their truth or falsity. It is important to note that this privilege only applies to statements made to members, and assumes that the members have a legitimate need to receive the information. It does not apply to statements made in a worship service in which non-members are present. This means that it will be much easier for a church to be sued for defamation for information shared during church services in which non-members are present than in a special meeting that is restricted to members only. The court noted that the statements made by the church leaders in this case were made in a worship service. Presumably, non-members were present. If so, this would expose the church to a greater risk of liability for defamation. However, the court failed to address this issue, or its possible significance in this case.

4. Obviously, the dismissal of an employee may involve legal pitfalls and risks, and therefore it is important for a church to retain an attorney who can assist church leaders in making decisions in light of legal considerations. Gunn v. Mariners Church, Inc., 84 Cal.Rptr.3d 1 (Cal. App. 2008).

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

Legal Developments

Breach of Contract and the Ministerial Exception

Court agrees to hear church organist’s breach of contract lawsuit.

Richard R. Hammar, Attorney, CPA

Bio

State: Pennsylvania
Categories: Compensation and Benefits, Employment Practices

Church Law & Tax Report

Breach of Contract and the Ministerial Exception

Court agrees to hear church organist’s breach of contract lawsuit.

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

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

A Pennsylvania court ruled that a trial court erred in dismissing a church organist’s breach of contract lawsuit against her employing church on the basis of the “ministerial exception” without any analysis of the functions that she performed or their importance to the church’s mission. A woman (the “plaintiff”) was employed by a church as its organist. She and the church entered into a six-year contract, renewable annually, obligating her to play the organ for worship services in exchange for a weekly fee of $275. This arrangement continued for several years until the church unilaterally reduced her pay to $50 per week. The plaintiff sued the church for breach of contract. The trial court dismissed the plaintiff’s complaint with the following observation:

We accept the argument of [the church] that [the plaintiff’s] contract claim is barred by the Free Exercise Clause of the First Amendment to the United States Constitution which prohibits judicial encroachment upon decisions made by a religious institution concerning the employment of its ministers. Because the Roman Catholic Church views music as an integral part of Catholic worship, the Organist/Musical Director is considered a minister of the church. Therefore, this court has no jurisdiction.

A state appeals court reversed the trial court’s dismissal of the case. It acknowledged that the “ministerial exception” precludes civil courts “from considering claims involving the employment relationship between a religious institution and its ministerial employees, based on the institution’s constitutional right to be free from judicial interference in the selection of those employees.” The court noted that the ministerial exception “applies only to ministers, and whether a person is or is not a minister requires an evaluation of the person’s actual functions within the church.” The courts generally have applied a “ministerial-function” test under which the exception applies “if primary duties include teaching, spreading the faith, church governance, supervision of a religious order, or supervision of participation in religious ritual and worship.”

The court concluded that the trial court erred by ruling that because “the Roman Catholic Church views music as an integral part of its Catholic worship,” anyone who holds the position of “Organist/Musical Director” is a minister for purposes of the ministerial exception. The court found “no basis in either state or federal cases applying the ministerial exception for such a per se classification based merely upon the person’s title.”

The court was unable to say, based on the evidence presented, whether the plaintiff’s primary duties involved teaching, spreading the faith, church governance, supervision of a religious order, or supervision of participation in religious ritual and worship, as required by the “ministerial function” test. Indeed, the evidence presented by the church “did not even establish that the Roman Catholic Church views music as an integral part of its Catholic worship,” a point central to the trial court’s decision.

Alternatively, the church asked that the appeals court affirm the trial court’s decision based on Pennsylvania’s presumption that all employment is “at-will.” The church pointed out that the plaintiff signed a written contract with the church acknowledging her at-will status. The court rejected this argument, noting that the at-will doctrine only applies to employees hired for an indefinite term, and that the plaintiff had been hired for a six-year term, renewable annually.

Application. Many courts have ruled that the ministerial exception applies to church music directors. This court did not reject those rulings, but rather refused to adopt a rule that church organists and music directors are always deemed “ministers” for purposes of the ministerial exception. Instead, the court insisted that a “ministerial function” test must be applied to ensure that an employee in fact is functioning as a minister. It remanded the case back to the trial court with the instruction to decide, on the basis of the ministerial function test, whether the ministerial exception should bar judicial resolution of the plaintiff’s claims. Cooper v. Church of St. Benedict, 954 A.2d 1216 (Pa. Super. 2008).

This Recent Development first appeared in Church Law & Tax Report, March/April 2009.

Legal Developments

Hostile Environment Sexual Harassment

Court rules that church employee’s behavior does not qualify as harassment.

Richard R. Hammar, Attorney, CPA

Bio

State: North Carolina
Categories: Employment Practices

Church Law & Tax Report

“Hostile Environment” Sexual Harassment

Court rules that church employee’s behavior does not qualify as harassment.

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

Key point. 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 federal court in North Carolina dismissed a church employee’s allegations of sexual harassment on the ground that the offending behavior, even if true, was not sufficiently severe to amount to harassment. A church hired a woman (the “plaintiff”) as its director of music. As part of her job duties, the plaintiff worked with various musicians and was the staff member in charge of monitoring electronic equipment usage. A few years later the church hired a seminary student (Tim) as its youth director. The plaintiff worked with Tim occasionally, and saw him at weekly staff meetings. She later met with the church’s senior pastor, pursuant to the church’s personnel policy, and made the following allegations of sexual harassment:

• Prior to a worship service, Tim placed a photograph of a male bodybuilder wearing a Speedo bathing suit in the plaintiff’s music score. He later asked her if she had received his “surprise.”

• Soon after the picture incident, Tim showed the plaintiff a website project he had been working on for the church youth. When the plaintiff informed him that the technology committee would have to approve the project, he became angry and called her a “stupid [expletive].”

• While preparing for the trip to New York City, the plaintiff discovered a ticket to the “museum of sex,” which is located in New York City, in her office mailbox. Upon her return from New York, Tim asked her if she had received the coupon and if she had used it.

• The plaintiff went to Tim’s apartment to pick up her daughter from a church youth event. Tim suggested that her daughter and another member of the church youth group use his bedroom.

• At some point during his employment, Tim returned a computer to the plaintiff which had a copy of a movie (rated PG-13) in the DVD drive. The plaintiff’s husband viewed the film and found it offensive due to its sexual content.

The plaintiff alleged a host of other problems with Tim, and felt verbally and physically threatened by him. She sought psychiatric care and was treated for stress, anxiety and depression. The church never formally disciplined Tim for his behavior. However, his behavior led to a decision by church leaders not to renew his employment as youth director.

The plaintiff resigned her position at the church, and then sued the church for sexual harassment in violation of Title VII of the Civil Rights Act of 1964. Title VII makes it unlawful for an employer to discharge an employee or discriminate in “compensation, terms, conditions, or privileges of employment” because of the employee’s sex. The workplace environment is one of the terms and conditions of employment, and so Title VII prohibits verbal or physical conduct of a sexual nature that is “sufficiently severe or pervasive to alter the conditions of employment and create an abusive atmosphere.” The court concluded that the plaintiff had not presented “sufficient evidence on which a jury could find that the harassment was sufficiently severe or pervasive to alter the conditions of her employment.” It observed:

Title VII does not protect against all unwanted workplace distractions. Behavior such as “simple teasing, off-hand comments, and isolated incidents (unless extremely serious) will not amount to discriminatory changes in the terms and conditions of employment …. A plaintiff must show that the harassment was “severe or pervasive enough to create an environment that a reasonable person would find hostile or abusive, and the victim must subjectively regard that environment as abusive.” As there is no doubt that [the plaintiff] subjectively regarded the environment as abusive, it must be determined whether a reasonable person would also see the environment as hostile or abusive. In making the objective determination as to whether the work environment was abusive, courts consider: (1) the frequency of the discriminatory conduct; (2) its severity; (3) whether it is physically threatening or humiliating, or merely an offensive utterance; and (4) whether it unreasonably interferes with an employee’s work performance. Courts must also consider all of the surrounding circumstances, including the social context in which the particular behavior occurs.

The court reviewed the five instances of a hostile environment alleged by the plaintiff (and summarized above) and concluded:

These five instances, without more, are not enough for a reasonable person to find that the work environment was hostile or abusive. While [Tim’s] actions were inappropriate, they were certainly not frequent, occurring only five times over sixteen months. Moreover, these five instances were neither particularly severe in nature nor physically threatening or humiliating. Tim never used sexually explicit language nor propositioned or inappropriately touched [the plaintiff], and did not engage in behavior that demeaned the status of women in general. Some of these incidents could interfere with a person’s work, but the extent of the interference cannot reasonably be considered great. While his behavior may have been unsuitable for the workplace, Title VII does not attempt to purge the workplace of vulgarity. These isolated incidents engendering mildly offensive feelings are not enough to sustain an action under Title VII.

Even considering these five instances in light of the plaintiff’s other interactions with Tim, the work environment cannot be seen by a reasonable person as hostile or abusive. Title VII does not ensure a happy workplace, only one that is free from unlawful discrimination.

The court also rejected the plaintiff’s contention that a church is a working environment that must be sheltered from the “cruder aspects of secular life,” thereby creating a lower standard for sexual harassment: “Her personal reasons for choosing to work for a church are not relevant to whether an objectively reasonable person would find the work environment to be abusive.”

Application. This case is important for two reasons. First, it illustrates that “hostile environment” sexual harassment is not implicated by every offensive comment or act. Rather, the harassment must be “severe or pervasive enough to create an environment that a reasonable person would find hostile or abusive, and the victim must subjectively regard that environment as abusive.” The court cited the following factors to consider in evaluating whether harassment has occurred: (1) the frequency of the discriminatory conduct; (2) its severity; (3) whether it is physically threatening or humiliating, or merely an offensive utterance; and (4) whether it unreasonably interferes with an employee’s work performance.

Second, the court rejected the plaintiff’s contention that the definition of hostile environment sexual harassment should be relaxed in cases involving church employees because of the expectation that such behavior will not occur in churches. The court concluded that the definition of harassment is the same for churches as for any other employer. 2008 WL 5216192 (M.D.N.C. 2008).

This Recent Development first appeared in Church Law & Tax Report, March/April 2009.

Legal Developments

Whistleblower Protections for Church Employees

Dismissing or disciplining a whistleblower can have legal consequences.

Richard R. Hammar, Attorney, CPA

Bio

State: California
Categories: Employment Practices

Church Law & Tax Report

Whistleblower Protections for Church Employees

Dismissing or disciplining a whistleblower can have legal consequences.

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

Key point. Churches that dismiss or discipline employees for reporting suspected illegal activity by another church worker may have violated whistleblower protections under federal or state law.

A federal court in California ruled that a woman whose employment at a church was allegedly terminated because of her disclosure of potentially illegal activity by the church treasurer could sue her church for violation of a state policy barring employers from retaliating against “whistleblowers.” A church hired a woman (the “plaintiff”) as a clerical worker, and a few years later promoted her to the position of administrative assistant to the senior pastor. The plaintiff alleged that on several occasions another church employee subjected her and others to abusive and threatening behavior, including sexual harassment. She submitted formal complaints to the church leadership, but claimed that no action was taken. The plaintiff allegedly came across information suggesting that the church treasurer and another employee were misusing church funds. The church began an official investigation into financial improprieties as they related to church funds. But, while the investigation was proceeding and before the plaintiff was questioned about her suspicions, her employment was terminated.

Following her termination, the plaintiff alleged that:

church employees were falsely informed that she had broken into the church and destroyed her former work computer;
a church employee sent a member of the congregation an email stating that the plaintiff was fired because she “had done things that were evil and absolutely despicable”;
another church employee informed a church member that the plaintiff was fired because she did “grievous acts”;
another church employee informed a church member that the plaintiff had been fired because she had done “evil things.”

The plaintiff sued the church and various church employees, claiming that they had violated a “public policy” protecting “whistleblowers” from retaliation by their employers for reporting illegal conduct. Specifically, she alleged that the church’s decision to terminate her was based on her uncovering and disclosure of illegal behavior by the church treasurer, and that her termination violated a strong state policy against adverse employment actions against whistleblowers. The court rejected the church’s request to dismiss the case, and ordered the case to proceed to trial.

Application. Several states, like California, have statutes or policies that protect whistleblowers from retaliation by their employer. A similar provision is contained in the federal Sarbanes-Oxley Act, and represents one of the few provisions in that law that applies to churches. The Act amends federal criminal law to include the following crime: “Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, shall be fined under this title or imprisoned not more than 10 years, or both.” The following examples illustrate the application of the Sarbanes-Oxley Act to churches:

Example. A church employee learns that a child was molested at an overnight church activity. The employee informs the pastor, who decides to handle the incident internally as a matter of church discipline. The pastor is a mandatory child abuse reporter under state law. The employee decides to call the police and report the incident on her own initiative. The pastor learns of her action, and terminates her employment. The Sarbanes-Oxley Act’s whistleblower provision does not apply since the underlying offense is a violation of state, and not federal, law. However, state law may provide legal protections to the employee under these circumstances.

Example. A church employee learns that the church is not paying over-withheld income taxes and FICA taxes to the government. The employee notifies the local IRS office. When the pastor learns that the employee notified the IRS, he fires him. Has the pastor violated the Sarbanes-Oxley Act’s whistleblower provision? Possibly not. The Act amends federal criminal law to include the following crime: “Whoever knowingly, with the intent to retaliate, takes any action harmful to any person, including interference with the lawful employment or livelihood of any person, for providing to a law enforcement officer any truthful information relating to the commission or possible commission of any federal offense, shall be fined under this title or imprisoned not more than 10 years, or both.” The pastor’s decision not to pay over withheld taxes to the government may be a federal offense, since section 7202 of the tax code imposes criminal penalties upon “any person required to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax.” As a result, the pastor’s dismissal of the employee for reporting the possible violation of this section may trigger liability under Sarbanes-Oxley.

Note that this section requires that the employee provide to a “law enforcement officer” information relating to the commission of a federal offense. Is an IRS agent a law enforcement officer? Federal law defines this term as “an officer or employee of the federal government, or a person authorized to act for or on behalf of the federal government or serving the federal government as an adviser or consultant—(A) authorized under law to engage in or supervise the prevention, detection, investigation, or prosecution of an offense.” Construed broadly, this could include an IRS agent.

In summary, it is possible that the pastor’s dismissal of the church employee violated the whistleblower provision under Sarbanes-Oxley. If so, this would be a felony exposing the pastor to a fine of not more than $10,000, or imprisonment of not more than five years, or both, together with the costs of prosecution. Finally, note that apart from the pastor’s potential liability for violating Sarbanes-Oxley under these circumstances, the dismissed employee may be able to sue the pastor and church under state law for wrongful termination or some other theory of liability.

As noted above, several states have their own whistleblower protections that in many cases are broader than the Sarbanes-Oxley Act. 2008 WL 2357238 (S.D. Cal. 2008).

This Recent Development first appeared in Church Law & Tax Report, March/April 2009.

Legal Developments

Are Parochial School Teachers Ministers?

Court rules that ministerial exception does not apply to teacher in Catholic school.

Richard R. Hammar, Attorney, CPA

Bio

State: Wisconsin
Categories: Employment Practices

Church Law & Tax Report

Are Parochial School Teachers Ministers?

Court rules that ministerial exception does not apply to teacher in Catholic school.

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

Key point. Some courts have not recognized the ministerial exception, usually because the complainant was not a minister in either status or function, or was employed by a secular organization.

A Wisconsin court ruled that the so-called “ministerial exception,” which generally bars the civil courts from resolving employment disputes between churches and clergy, did not apply to a first grade teacher in a Catholic parochial school. A woman (the “plaintiff”) was employed as a first-grade teacher at a parochial school from 1974 until 2002. In 2002, when the plaintiff was 53 years old, the school informed her that her employment contract would not be extended for the next year. The plaintiff filed a complaint with a civil rights agency, claiming age discrimination under a state fair employment law. The school asked the agency to dismiss the complaint on the ground that it was barred by the ministerial exception since the plaintiff’s position was ministerial in nature and therefore any resolution of her complaint would violate the First Amendment guaranty of religious freedom. The agency concluded that the ministerial exception did not apply, and a trial court agreed. The school appealed.

A state appeals court ruled that the ministerial exception did not apply in this case, for the following reasons:

First, the court concluded that teaching positions in church schools are not necessarily ministerial in nature, and that “a general exemption for teachers in religious schools would be more expansive than warranted when considered in light of the magnitude of the state’s interest in the enforcement of antidiscrimination laws.”

Second, the court noted that the principal test for deciding whether a particular position is ministerial in nature is whether the person’s “primary duties consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship.” The court concluded that “a religious teacher’s duty to model and support particular religious values is not in itself one of the duties included in the primary duties test: it does not constitute teaching or spreading the faith ….” The court added: “We do not question the dedication of teachers in religious schools to fulfilling this role. However, the duties in the [test] are intended to distinguish, from other employees of churches or religious organizations, those persons whose relationship to the church or organization is such that employment decisions regarding them will likely involve ecclesiastical decisions or matters of church government, faith and doctrine. Modeling and supporting religious values does not provide a distinction that serves this purpose.”

Third, “even if in some cases the teaching of secular subjects might be so infused with religious doctrine that it would constitute the teaching of the faith, we are persuaded that is not the case here.” The court noted that the textbooks used by the school were non-religious, and that the plaintiff was not engaged in “teaching the faith within the meaning of the primary duties [test].”

Fourth, the duties included within the primary duties test were not the plaintiff’s primary duties. The religion class, prayers, and participation with her students in liturgies “do not constitute the primary part of her work day and they are not the primary focus either of the job description or the job evaluation.”

Fifth, “not applying the ministerial exception in this case is consistent with the fundamental purpose of the exception.” Because the plaintiff’s primary duties “do not implicate matters of church faith and doctrine, the prospect that employment decisions will implicate those matters is significantly diminished. This, in turn, affects the balance between the free exercise right and the important policies underlying [state law]. We are persuaded that a bar to adjudication of the plaintiff’s discrimination claim is not warranted based on the nature of her position.”

The court cautioned: “Our conclusion that the plaintiff’s position is not ministerial does not mean that [the school] would have no First Amendment protection if an employment decision concerning her did implicate a matter of church faith or doctrine.” Coulee Catholic Schools v. Labor and Industry Review Commission, 752 N.W.2d 341 (Wisc. 2008).

This Recent Development first appeared in Church Law & Tax Report, March/April 2009.

Legal Developments

FLSA and the Ministerial Exception

A minister’s claims to the minimum wage and overtime wage cannot be resolved by civil courts.

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Employment Practices

Church Law & Tax Report

FLSA and the Ministerial Exception

A minister’s claims to the minimum wage and overtime wage cannot be resolved by civil courts.

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

Key point 8-08.7. Ministers who are employed to perform ministerial services, and who are paid a salary that meets or exceeds the “salary test,” are professional employees exempt from the provisions of the Fair Labor Standards Act. Ministers not compensated on a salary basis, or who earn a salary below the salary test, may not be covered by the Act. Department of Labor regulations suggest that the Act does not apply to any ministers, and a few federal courts have ruled that the so-called ministerial exception prevents the application of the Act to ministers.

A federal appeals court ruled that the so-called “ministerial exception” prevents clergy from suing their employing church for violating the minimum wage or overtime pay requirements of the federal Fair Labor Standards Act. A married couple were ordained ministers of the Salvation Army, with the rank of captain, assigned to be the administrators of the Salvation Army’s Adult Rehabilitation Center in Indianapolis. Ministers of the Salvation Army receive no wages, though they receive “an allowance … sufficient for basic needs.” The allowance that each spouse received was $150 a week. They sued the Salvation Army for violations of the minimum wage and overtime pay provisions of the Fair Labor Standards Act. Their employment was immediately terminated for bringing the lawsuit. A federal district court dismissed the lawsuit on the basis of the ministerial exception. The ministerial exception is a court-made rule, based on the First Amendment’s religion clauses, that bars the courts from resolving discrimination and other employment related disputes between churches and clergy.

On appeal, the couple asserted that the ministerial exception should not apply in this case since requiring churches to obey the Fair Labor Standards Act would not “limit the right of a religious organization to decide who will perform religious functions [or] who will be the ministers.” They referred to a previous case in which the United States Supreme Court ruled that non-minister “associates” of a religious organization engaged in rehabilitating drug addicts were employees entitled to the protections of the Fair Labor Standards Act. Tony & Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985). Forcing it to pay minimum wages to the associates added to its costs, but “did not require a court to adjudicate religious issues or to order a church to retain a minister whom it considered unfit on religious grounds.”

A federal appeals court noted that it is a much different case when a law like the Fair Labor Standards Act is applied to a minister rather than to a lay employee having no religious functions. It pointed out that the couple themselves had testified that their duties included “preaching,” “leading worship singing,” “overseeing or leading daily devotions,” “overseeing or teaching Bible studies” to the residents, “overseeing or conducting Christian living classes” for them, and teaching classes for prospective Salvation Army ministers.

The court adopted a presumption that clergy are not covered by the Fair Labor Standards Act. The presumption “can be rebutted by proof that the church is a fake, the ‘minister’ a title arbitrarily applied to employees of the church even when they are solely engaged in commercial activities, or, less flagrantly, the minister’s function entirely rather than incidentally commercial …. It would be a case of a bonafide minister who had, however, stepped entirely out of his religious role to manage a commercial enterprise full time.” The court noted that none of these grounds for rebutting the presumption was available in this case.

Application. This case is important because of the court’s conclusion that the “ministerial exception” applies to the FLSA, which means that a minister’s claims to the minimum wage and overtime pay cannot be resolved by the civil courts. A number of other courts have reached this same conclusion. Each of these cases was addressed in prior issues of this newsletter.

Another interesting aspect of this case is the fact that the court’s opinion, on two occasions, expressed bewilderment at the Salvation Army’s failure to raise the defense that the terminated officers were “administrative employees” exempt from coverage under the FLSA. Of course, the reason this defense was not raised was that it was not available. To qualify for this exemption, an employee not only must perform the duties of an administrative employee, but also must be paid on a salary basis of at least $455 per week. Since each of the two officers was paid weekly compensation of only $150, neither was an exempt administrative employee under the FLSA. It is disconcerting for a federal appeals court to be so unfamiliar with the law. Schleicher v. Salvation Army, 518 F.3d 472 (7th Cir. 2008).

Resource. For more information on the legal requirements for performing a valid marriage, and a helpful checklist for ministers to follow, see chapter 3 in Richard Hammar’s book, Pastor, Church & Law Vol. 1 (4th ed. 2008), available by calling 1-800-222-1840. Note that this is the newly-released and fully updated fourth edition.

This Recent Development first appeared in Church Law & Tax Report, January/February 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

Bio

State: New York
Categories: Clergy - Removal, Denominations - Legal Liability, Employment Practices

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

Denominational Agency Employee Sues for National Origin Discrimination

Employers generally cannot be sued for discrimination based on isolated comments.

Richard R. Hammar, Attorney, CPA

Bio

State: Pennsylvania
Categories: Compensation and Benefits, Employment Practices

Key Point 8-11. 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.

A federal court in Pennsylvania ruled that a denominational agency did not engage in unlawful "national origin" discrimination against a Romanian-born employee as a result of (1) a single comment that the employee heard another employee make about immigrant workers, and (2) a requirement that the employee have a doctor's note authorizing all future sick days.

An American citizen of Romanian birth (the "plaintiff") was employed by a denominational agency for five years in the accounting department. From the beginning of her employment, the plaintiff's superiors complained about the quality and slowness of her work.

At a meeting to address these complaints, the plaintiff alleged that two fellow employees engaged in an inappropriate conversation about immigrants after the presidential election in 2004. Specifically, she claimed that they pointed at her and said that the reason Americans do not have enough jobs is because President Bush brings immigrants to the United States.

She filed a complaint with the human resources director, who investigated the matter and assured the plaintiff that any similar comments would not be tolerated.

After four years of employment, the plaintiff was informed that she must obtain a doctor's authorization for any future sick days. This requirement was due to concerns the plaintiff's superiors had concerning the number of sick days she was taking as well as discrepancies involving the number of sick days she took and the employer's payroll records.

The plaintiff's supervisor was asked by an assistant treasurer to submit to him a draft of her annual performance evaluation for her fourth year of employment. The treasurer instructed the supervisor to include in her evaluation a summary of work-related problems. The supervisor refused to do so, and submitted an evaluation that rated the plaintiff's overall performance as "exceeds expectations."

The supervisor was cited for insubordination and removed as the plaintiff's immediate supervisor. The treasurer proceeded to complete the plaintiff's annual performance evaluation himself. He referred to her work-related problems, and downgraded her overall rating from "exceeds expectations" to "meets expectations." The treasurer continued to receive complaints about the plaintiff's performance.

In her fifth and final year of employment, the plaintiff submitted a doctor's note to her employer stating that she would be out indefinitely because of depression. She never returned to work, but remained employed until the expiration of her 12 weeks of unpaid leave under the federal Family and Medical Leave Act.

She had been warned by letter that her failure to return to work during this 12-week period would result in the termination of her employment. This letter informed the plaintiff that the employer was not required to hold her job open, and provided her with the names and telephone numbers of contact persons with whom she could discuss her options. She did not contact anyone.

She later sued her former employer for discriminating against her on account of her national origin in violation of Title VII of the Civil Rights Act of 1964 which prohibits employers with 15 or more employees and engaged in interstate commerce from discriminating in any employment decision on the basis of a person's race, color, national origin, gender, or religion.

Hostile work environment

The court noted that "employers violate Title VII when they harass their employees so severely or pervasively that they alter the conditions of the employee's employment and create an abusive working environment." The plaintiff insisted that this occurred when she overheard the two other employees make the comment about immigrant workers taking jobs from American citizens. The court disagreed: "[The plaintiff] has failed to produce any evidence showing that the discrimination she was subjected to was severe or pervasive. The evidence only shows that one comment was ever made … which referenced Immigrants in any manner. She needs to show more than this one incident. While she has presented evidence showing that these women made other disparaging comments, such as calling her stupid, she has not shown that these comments, which are offensive and unprofessional, were motivated by her national origin. Verbal harassment, no matter how unpleasant and ill-willed, is simply not prohibited by Title VII if not motivated by the plaintiff's [national origin.] The evidence does not establish that the discrimination [the plaintiff] suffered on account of her national origin was severe or pervasive."

Doctor's authorization

The plaintiff claimed that the requirement that she obtain a doctor's authorization for any future sick leave was intended to discriminate against her because of her national origin. The court noted that to establish a case of national origin discrimination, the plaintiff had to show are that she (1) was a member of a protected class, (2) was qualified for the position in question, (3) suffered an adverse employment action, and (4) the circumstances support an inference of discrimination.

The court noted that the plaintiff proved the fi rst two elements, but failed to prove the third since there was no evidence of an adverse employment action against her based on her national origin. It noted that an adverse employment action "is an action by an employer that alters the employee's compensation, terms, conditions, or privileges of employment, deprives her of employment opportunities, or adversely affects her status as an employee."

The employer's "employee handbook" contained the following provision: "A doctor's release to return to work may be required after any illness of 3 days or more in duration. A doctor's release to return to work may be required after any illness resulting in any time missed from work. Your supervisor will notify you when a doctor's release is required for an illness less than three days in duration."

The court noted, based on this provision, that "one of the terms of [the plaintiff's] employment was that she could be required at anytime to present a doctor's note following an absence for illness. The fact that the provision was not enforced until [the employer] deemed it necessary did not effect a change in the terms of [the plaintiff's] employment. She has not shown that she suffered an adverse employment action. Other courts … have also held that the imposition of a doctor's note requirement is not an adverse employment action."

The court also concluded that the plaintiff failed to prove the fourth element (the circumstances surrounding the imposition of the requirement of a doctor's note did not give rise to an inference of discrimination). Quite the contrary, the plaintiff "was treated similarly to other employees with regard to the doctor's note requirement."

What this means for churches

This case illustrates the importance of objective employee evaluations. The plaintiff's immediate superior wanted to give the plaintiff an overall evaluation of "exceeds expectations," without any reference to her chronic absenteeism and performance problems.

This is a typical response by supervisors, since inflated evaluations are deemed preferable to the confrontation that often accompanies more candid and objective evaluations. In this case, the assistant treasurer acted properly by amending the evaluation to recount the absenteeism and performance problems, and by reducing the overall evaluation to "meets expectations."

Annual performance evaluations generally are not legally required for church employees. In fact, churches often are better off not using them at all as opposed to having evaluations that are inflated. inflated evaluations will significantly limit a church's ability to dismiss an employee who is protected by a state or federal employment discrimination law, since a strong inference arises that the "real" reason an employee with inflated evaluations is terminated is not job related, but rather due to discriminatory intent.

Second, this case demonstrates that employment discrimination claims based on a hostile working environment require proof of a level of discrimination that is both severe and pervasive, and this generally is not possible with isolated, off-hand comments. 2007 WL 2461822 (E.D. Pa. 2007).

Legal Developments

Church Employee Fired After Raising Objections to Financial Policies

Court rules that woman can sue church for violation of public policy and emotional distress.

Richard R. Hammar, Attorney, CPA

Bio

State: Connecticut
Categories: Compensation and Benefits, Employment Practices

Key Point 8-22. In most states, employees who are hired for an indefinite period are considered "at will" employees. This means that the employment relationship may be terminated at will by either the employer or employee, with or without cause, and with or without notice. The courts and state legislatures have created a number of exceptions to the at will employment rule. These exceptions limit the right of an employer to terminate an at will employee. Employees who are hired for a specific term are not at will employees, and they may be terminated only if the employer has "good cause."

Key Point 8-25. Employers often evaluate some or all of their employees on a periodic basis. Such evaluations can help employees be more productive, but they also can be used as evidence of discrimination if an employee who is a member of a protected class under a state or federal employment law is terminated despite average or above-average evaluations.

A Connecticut court ruled that a church employee who was dismissed from employment could sue the church for violation of public policy and emotional distress, but not negligence or blacklisting.

A church hired a woman (the "plaintiff") as the director of its school. She was employed in this position for six years. In her last annual performance evaluation the church rated her as satisfactory and did not provide any indication that it was unhappy with her job performance.

Shortly after this performance evaluation was prepared, the plaintiff expressed an objection to the church's use of a tuition increase to make improvements to the church. She informed church leaders that it was improper for the church to tell the children's parents that the tuition increase would be utilized by the school when actually it was being used for the general use of the church. The church dismissed the plaintiff as an employee a few days after she raised her objection. The plaintiff sued the church on the following four grounds:

Negligence per se

The plaintiff claimed that the church was liable on the basis of the legal principle of "negligence per se" for violating a state law providing that "no individually identifiable information contained in the personnel file … of any employee shall be disclosed by an employer to any person or entity not employed by or affiliated with the employer without the written authorization of such employee."

Under the doctrine of negligence per se, a person who violates a statute can be sued for monetary damages if (1) the purpose of the statute is to protect the interest of the plaintiff, individually, as opposed to the public; (2) the statute must clearly apply to the conduct of the defendant; (3) the defendant must violate the statute; and (4) the violation of the statute must cause the plaintiff's injury.

The plaintiff claimed that the church violated the statute by failing to implement proper policies to prevent its employees from disclosing confidential information contained in her personnel file, and that this violation amounted to negligence per se since she was within the class of persons protected by the statute. The court disagreed, noting that the statute did specifically authorize private lawsuits as a remedy for its violation.

Blacklisting

The plaintiff also sued the church for "blacklisting" her. Specifically, she claimed that the church "propagated to potential employers her name and false information concerning her with the intent and for the purpose of preventing her from securing employment with potential employers." Once again, the court concluded that no statute authorized private lawsuits by victims of blacklisting, and it declined to create such a remedy.

Violation of public policy

The plaintiff claimed that her termination violated public policy since it was based on her objection to what she believed to be an unethical practice of her employer. In particular, she alleged that it was a violation of public policy for a church (1) to mislead persons concerning the intended use of the funds it solicits, and (2) to solicit payment with a promise that the payment will result in one receiving a better product, knowing that it is not the case.

The church insisted that neither of these public policies was violated by the plaintiff's dismissal, or even related to her dismissal. The court refused the church's request to dismiss this claim.

Emotional distress

The plaintiff claimed that the church negligently inflicted emotional distress upon her in its termination process when it falsely accused her, in writing, of misconduct, including falsely accusing her of conduct constituting theft, embezzlement, and falsification of records and repeated dishonesty.

She claimed to have been further emotionally distressed "as there was a reasonable chance that she will be compelled to confront the false reasons given by the church for her termination to future employers, when they ask her concerning the reasons for her separation from employment."

She also claimed that she was emotionally distressed because the church negligently waited until after the start of the school year to terminate her employment knowing that it would be more difficult for her to obtain subsequent employment. The church asked the court to dismiss the plaintiff's emotional distress claim because its conduct in the termination process was not unreasonable. The court denied this request.

In summary, the court permitted the plaintiff to pursue her third and fourth claims against the church. 2007 WL 2570443 (Conn. Super. 2007).

See also "Compensation," Trinity Baptist Church v. Howard, 869 N.E.2d 1225 (Ind. App. 2007), in the Legal Developments section of this website.

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

Bio

State: Federal
Categories: Denominations - Legal Liability, Employment Practices

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

Bio

State: North Carolina
Categories: Denominations - Legal Liability, Employment Practices, Sexual Harassment

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.

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).
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.
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

Former Organist Sues Church

Court rules that church organist is not a ministerial employee.

Richard R. Hammar, Attorney, CPA

Bio

State: Maryland
Categories: Clergy - Removal, Employment Practices

Church Law & Tax Report

Former Organist Sues Church

Court rules that church organist is not a ministerial employee.

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

Key Point 2-04.1 Most courts have concluded that they are barred by the first amendment guarantees of religious freedom and non establishment of religion from resolving challenges by dismissed clergy to the legal validity of their dismissals.

Maryland’s highest state court ruled that it was not barred by the First Amendment guaranty of religious freedom from resolving a former church organist’s lawsuit against his former church, since he was not a “ministerial” employee. An 11-year-old boy (the “plaintiff”) began working for a church as its organist in 1958, and served until 1976. From 1976 to 1991 he pursued other employment, and then returned to the church as its organist from 1991 to 2001. During all of these years he served the church without a written employment contract. In 2001, the plaintiff entered into a two-year employment contract with the church to serve as its “organist/pianist/keyboard accompanist.” The contract described the plaintiff’s duties as follows:

To support the Gospel message through the music ministry of the church and to encourage the congregation to assume as active part in their musical participation at all liturgical parish functions.
To provide organ/piano/keyboard music and musical accompaniment to both the congregation and the choirs of the church at the 10:30 a.m., 12:00 noon and 1:15 p.m. Sunday services; to provide the same at the weekly Saturday 5:15 p.m. service; to provide same at special liturgical celebrations … to provide musical accompaniment for the congregation at the 7:00 p.m. Monday night weekly novena service.
To build and sustain congregational song at all liturgies.
To assist in selecting music associated with the worship at all liturgies in which he/she participates.
To assist in planning the music associated with the above mentioned liturgies.
To participate in special liturgical celebrations when requested, especially Christmas, Lenten and Easter liturgies, Confirmation, First Communion, and Reconciliation liturgies.
To work under the very general supervision of the choir directors of the Liturgical Choir and the Hispanic Choir.
To attend parish staff meetings when appropriate.

For the performance of these duties, the plaintiff was to receive an annual salary of $26,500, in addition to other benefits, including hospitalization insurance. The contract provided that the parties could terminate the employment contract “by mutual agreement” with 90 days advance notice.

In 2001, the plaintiff informed the pastor that he had been sexually abused by a parish choirmaster from 1958 to 1964. Immediately after reporting the sexual abuse, the plaintiff claimed that his employment situation began to deteriorate, as the pastor began to find fault with his performance. Prior to reporting the abuse, his performance record had been exemplary; he had never received a negative performance evaluation or warning during the some 29 years of employment with the church.

A few months later, the plaintiff was informed that he should retire from his position, and was offered up to $2,000 to seek psychiatric counseling. His employment was later terminated unilaterally by the church, without advance notice, based on his “apparent inability to work cooperatively.” The plaintiff later sued the church, alleging breach of contract, wrongful discharge, and emotional distress against the church, its pastor, and the archdiocese. The archdiocese asked the court to dismiss the lawsuit on the basis of the “ministerial exception.” This judge-made doctrine, which is based on the First Amendment guaranty of religious liberty, bars the civil courts from resolving employment disputes between churches and “ministers.” The archdiocese stressed that “music plays a vital role in a number of religious faiths,” including in the Catholic faith, and has deep religious significance. It cautioned that a judicial resolution of the plaintiff’s claims would endorse governmental interference with religion. A trial court agreed, and dismissed the lawsuit. The plaintiff appealed.

The Court of Appeals (the highest state court in Maryland) ruled that the ministerial exception did not apply to the plaintiff, and ordered the case to proceed to trial. It noted that for a church employee to be deemed a “minister” for purposes of the ministerial exception, his or her role must “consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision in religious ritual and worship.” The court concluded that “we simply are not convinced that plaintiff’s role was supervisory in any respect, involved any form of church governance, or directly required the teaching or the spreading of the religious faith.” It noted that the plaintiff “was not in absolute control of the music played, and he did not lead any choirs, teach any hymns, or control any part of the church services in which he participated. He was neither required to have specialized knowledge of the Catholic faith, nor expected to have any particular religious training. All he needed was knowledge of how to play an organ …. [T]he duties that [he] actually performed, while they occurred during church services, were not ministerial in any sense.”

The court stressed that the plaintiff did not lead the choir or congregation in song, but merely accompanied them. Nor did he “preach or inculcate values,” or “decide how the message was expressed. He was not … in a teaching role, in a position where his own beliefs affected his ability to perform his job …. He was not a music minister. He was not a pivotal figure at the church, did not plan any liturgies himself, and he was not in charge of the church’s musical life. He did not teach the choir any music, and he was not listed as parish staff.”

The court acknowledged that other courts had applied the ministerial exception to church music directors, but it concluded that each of these cases was distinguishable because of the nature of the tasks performed:

Assemany v. Archdiocese of Detroit, 434 N.W.2d 233 (1988). The ministerial exception applied to a church music director who was in charge of the Catholic liturgy in the church, and had a leadership role in the parish.
Egan v. Hamline United Methodist Church, 679 N.W.2d 350 (Minn. App. 2004). The ministerial exception applied to a church music director who was “responsible for managing and rehearsing the church choir, selecting and preparing music for regular Sunday services and other special services, playing the organ, and supervising other church music groups, such as the children’s choir and the handbell choir.”
Miller v. Bay View United Methodist Church, 141 F.Supp.2d 1174 (E.D. Wis. 2001). The ministerial exception applied to a church’s “music director and choir director” whose duties included “choosing appropriate musical selections for the Sunday worship services and preparing and directing the choirs in leading the congregation in song, researching the religious themes of the upcoming services in religious books and selecting music that coincided with the religious themes and meanings of that particular service as well as encouraging and promoting music ministry outreach.”
Starkman v. Evans, 198 F.3d 173 (5th Cir.1999). The ministerial exception applied to a church’s “choirmaster and director of music,” whose was required to have a masters in music and extensive study in church music, choral conducting, worship, choral vocal methods, hymnology, Bible, theology, Christian education, and church history and doctrine. The job description for this position stated that the person was responsible for planning worship liturgy, coordinating church and worship activities relating to the church’s music ministry, rehearsing with choirs and conducting those choirs, hiring musicians and lower level music ministry directors, and writing articles about the church’s music ministry for the weekly church bulletin, and introducing liturgical seasons for worship services. The music director acknowledged that for her and her congregation, music was a form of prayer and an integral part of worship services and Scripture readings.
Fassl v. Our Lady Perpetual Help Roman Catholic Church, 2005 WL 2455253 (E.D. Pa. 2005). The ministerial exception applied to a church’s director of music, whose job description included an ability to teach, to lead, and to encourage active participation of the congregation in liturgical celebrations and an ability to work with volunteers who participate in the church’s music ministry. The position required “a thorough understanding of and love for the liturgy of the church and the relationship of music to the liturgical life of the church.” The director of music directed three to five masses per weekend, planned music for liturgies, directed multiple church choirs, and prepared and played for penance services, all school liturgies, all other Holy Days, and contemporary and teen music groups.
Hope International University v. Superior Court, 14 Cal.Rptr.3d 643 (Cal. App. 2004). The court noted that “individuals whose function is essentially liturgical, that is, connected to the religious or worship service of the organization” are a “relatively easy case” of when the ministerial exception applies, and listed among the examples “music and choir directors.”

The court concluded that it was clear that the plaintiff failed to perform the kinds of duties mentioned in these cases, and therefore he was not a “minister” for purposes of the ministerial exception. As a result, the court rejected the request of the archdiocese to dismiss the lawsuit.

Application. This case will help church leaders know if the ministerial exception applies to their music minister or director. If the exception applies to a music minister or director, then the civil courts will not resolve that person’s employment-related claims.

Three judges dissented from the court’s opinion. They concluded that the plaintiff’s duties were sufficiently religious for the ministerial exception to apply. Archdiocese of Washington v. Moersen, 925 A.2d 659 (Md. 2007).

This Recent Development first appeared in Church Law & Tax Report, March/April 2008.

Legal Developments

Conducting Background Checks

An employer’s failure to conduct criminal records checks on its employees might be viewed by a jury as evidence of negligent hiring.

Richard R. Hammar, Attorney, CPA

Bio

State: Georgia
Categories: Employment Practices, Sexual Misconduct by Clergy, Lay Employees, and Volunteers

Church Law & Tax Report

Conducting Background Checks

An employer’s failure to conduct criminal records checks on its employees might be viewed by a jury as evidence of negligent hiring.

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

Key point 10-06. A church may be legally responsible on the basis of negligent selection for injuries resulting from the acts of a minister or other worker not involving sexual misconduct.

* A Georgia appeals court ruled that a trial court improperly dismissed a lawsuit brought against a home security company by a woman who had been kidnapped by one of the company’s employees and who had claimed that the company was responsible for its employee’s acts on the basis of negligent hiring since it failed to conduct a criminal records check on the employee when he was hired. A home security company (the “employer”) hired a salesman (the “employee”) to sell home security systems door-to-door. The employer did not perform a background check before hiring the employee, which would have revealed that he had been convicted of burglary and kidnapping in 1979, sentenced to life in prison, and paroled in 1995. In the past, the employer required background checks on all salespersons who entered prospective buyers’ homes. However, this practice was discontinued due to the “tremendous turnover” in those positions.

A woman (the “plaintiff”) went home from work in the early afternoon to pick up medicine for her daughter. As usual, she parked in her garage and entered the house through an unlocked door, leaving the garage door up. While she was straightening up her bedroom, she noticed the employee standing in the doorway. She asked if she could help him. He responded by pulling out a gun and pointing it at her. He then bound her with duct tape, placed her in her own car, and took her to another state. He eventually released the woman when she promised to pay him $6,000.

The plaintiff sued the employer, claiming that it was responsible for its employee’s wrongful acts on the basis of negligent hiring. A trial court granted the employer’s motion for summary judgment, meaning that it concluded that reasonable minds would all agree that the employer had not been negligent and therefore there was no need to waste the court’s time with a trial. The plaintiff appealed.

A state appeals court noted that “the appropriate standard of care in a negligent hiring/retention action is whether the employer knew or should have known the employee was not suited for the particular employment. Stated differently, an employer has a duty to exercise ordinary care not to hire or retain an employee the employer knew or should have known posed a risk of harm to others where it is reasonably foreseeable from the employee’s tendencies or propensities that the employee could cause the type of harm sustained by the plaintiff. Moreover, whether or not an employer’s investigative efforts were sufficient to fulfill its duty of ordinary care is dependent upon the unique facts of each case.”

The court concluded that “we cannot say that the evidence adduced was sufficient to demand a finding as a matter of law that the defendant had exercised due care in screening the employee in question.”

Application. No court, in a published decision, has found a church liable for the sexual misconduct of a volunteer worker or employee as a result of a failure to conduct a criminal records check. But, cases addressing the liability of secular employers for failing to conduct criminal records checks are relevant in assessing how churches will be treated by the courts. The court in this case concluded that there was a sufficient connection between the employer’s failure to conduct a criminal records check on its employee and his kidnapping of the plaintiff to reverse the trial court’s summary judgment in favor of the employer. Note, however, that the reversal of a summary judgment only requires only the slightest evidence. The court was persuaded that the plaintiff had presented “some evidence, however slight, that the employer’s failure to perform a background check on its employee was a proximate contributing cause of her kidnapping.”

Also, note that a failure to conduct a criminal records check will be relevant in assessing an employer’s liability only if such a check would have disclosed a criminal record demonstrating a propensity to commit the type of crime in question. To illustrate, the court referred to a prior case in which a court ruled that summary judgment was appropriate since a background investigation performed on a security guard who was involved in murder of the plaintiff’s son showed that the guard had no record of criminal activity. Kelley v. Baker Protective Services, 401 S.E.2d 585 (Ga. 1991).

In summary, this court concluded that an employer’s failure to conduct criminal records checks on its employees might be viewed by a jury as evidence of negligent hiring. Underberg v. Southern Alarm, Inc., 643 S.E.2d 374 (Ga. App. 2007).

Legal Developments

Exempt vs. Non-Exempt Employees

A federal court in Maryland addressed the question of whether a secretary is entitled to overtime compensation for hours worked in excess of 40 during the same work week.

Richard R. Hammar, Attorney, CPA

Bio

State: Maryland
Categories: Employment Practices

Church Law & Tax Report

Exempt vs. Non-Exempt Employees

A federal court in Maryland addressed the question of whether a secretary is entitled to overtime compensation for hours worked in excess of 40 during the same work week.

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

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 Maryland addressed the question of whether a secretary is entitled to overtime compensation for hours worked in excess of 40 during the same work week. A former secretary (the “plaintiff”) of a charitable organization sued the charity for failing to pay her overtime compensation in violation of the Fair Labor Standards Act (FLSA). In general, the FLSA requires employers to pay compensation at a rate of one and half times a non-exempt employee’s regular rate of pay for hours worked in excess of 40 in the same week. The plaintiff worked for the charity from 1982 until 2005, holding a variety of positions, all of which involved secretarial duties. When she began, she was a nonexempt “social services secretary.” In 1985, plaintiff’s title became ” administrative secretary.” Later, her title became ” executive secretary.” During her tenure as “executive secretary” she worked as an assistant to the executive director and exercised some supervisory responsibility over one or more others.

Until 1992, the charity designated plaintiff as a non-exempt employee under the FLSA, and paid her overtime compensation. In 1992, the charity designated her as exempt under the FLSA and discontinued paying her overtime compensation. At that time, the plaintiff signed an employment agreement in which she acknowledged her exempt status.

Plaintiff claims that, in 2002, she began working overtime hours. Upon inquiring about her exempt status, plaintiff was told she was exempt because she “supervised the receptionist.” Plaintiff asserts that she did not have this supervisory role, which she says was a minor part of her duties in any event, until more than eight years after the company first designated her as exempt. There was no receptionist position until then.

The charity did not require exempt employees to record daily hours worked but only whether they were present on a particular day, recording eight hours regardless of the actual hours worked. Plaintiff adhered to this policy, and so she had no detailed accounting of her actual hours after 1992.

Plaintiff’s employment formally terminated in 2005, and later that year she filed her lawsuit seeking unpaid overtime compensation for the period 2002 through 2005. The charity insisted that she was an exempt administrative employee under FLSA, and therefore it was under no obligation to pay her overtime compensation.

The court began its opinion by noting that defendants in FLSA cases “have the burden to prove by clear and convincing evidence that an employee qualifies for exemption …. Exemptions from the FLSA’s overtime pay requirements are narrowly construed … in order to further Congress’ goal of providing broad federal employee protection.”

Department of Labor regulations define what constitutes employment in an executive or administrative capacity. Under the regulations, to show that an employee is exempt as an administrative employee, an employer must show that its employee is one who is “(1) compensated on a salary or fee basis at a rate of not less than $455 per week; (2) whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer’s customers; and (3) whose primary duty includes the exercise of discretion and independent judgment with respect to matters of significance.” 29 C.F.R. § 541.200(a).

The plaintiff conceded that the charity satisfied the first of these elements. The dispute was over the final two elements. As to the second element, the court noted that “although it is clear that the plaintiff’s work was non-manual office work, the issue presented is whether it was directly related to the management or general business operations of her employer. To meet this standard, the charity must show that she engaged in activities such as running the business itself or determining its overall course, not just in the day to day carrying out of business affairs.”

The court concluded that “a reasonable jury could easily conclude that plaintiff’s work was essentially and predominantly clerical in nature, and not administrative or managerial. Indeed, her former boss described her duties, in part, as ‘providing secretarial support across various departments’ including scheduling and dealing with vendors. Likewise, plaintiff described at length in her deposition her secretarial duties, which included ordering supplies, taking minutes at company meetings, completing forms, and, under supervision, distributing petty cash.”

The charity pointed to the plaintiff’s job description, which gave her “authority to delegate assignments” and authority to oversee the receptionist, as evidence that she worked in an administrative capacity. Defendant also argues that plaintiff agreed to this job description. The court was unimpressed, noting that “the job description is not the most important consideration—her actual duties are.” It also noted that many if not most of the duties described in the job description “may be viewed as clerical duties that are quite common for secretaries and not essentially managerial. The description includes duties such as having authority from the executive director to delegate assignments to be completed, overseeing all work completed by the receptionist, and directing her in order of priorities, and maintaining special events. Simply speaking, the existence of a hierarchy among clerical staff does not mandate the conclusion that the plaintiff’s work was directly related to management or general business operations.”

In summary, the court concluded that the charity had failed to prove, by clear and convincing evidence, that the plaintiff’s duties qualified for the administrative employee exemption from the FLSA.

The court also concluded that the charity failed to prove the third element of its defense, namely, that her primary duties include the exercise of discretion and independent judgment with respect to matters of significance. It observed: “While it is clear that some of plaintiff’s duties entailed the exercise of discretion and independent judgment, e.g., meeting with office equipment dealers and evaluating their prices … those duties were not her primary duties …. Moreover … as to those of her duties classified as among her primary duties, the exercise of discretion and independent judgment in the performance of such duties was not in respect to matters of significance.” As a result, the court ruled that the charity had failed to establish that the plaintiff was an exempt administrative employee under the FLSA.

The charity argued that the plaintiff’s enjoyment, over many years, of the benefits of exempt employee status should preclude her overtime claim. These benefits included flexible hours, longer lunches, and working less than full days. The court found this defense “interesting,” but refused to recognize it.

Finally, the charity argued that the plaintiff’s evidence for overtime hours actually worked was too speculative, since no records were kept. The court agreed that this was a problem, but concluded that she “has projected sufficient evidence to get to the jury as to some amount.”

Application. This case is important for the following reasons:

First, it provides a helpful interpretation of the “administrative” employee exemption under the FLSA, and confirms that some “executive secretaries” will not qualify for exemption under FLSA. This means that they are entitled to overtime pay, and that a failure on the part of a church to recognize this obligation may lead to a significant unbudgeted and uninsured liability.

Second, it demonstrates that an employer cannot make an employee exempt under the FLSA by simply reclassifying the employee as exempt, or by changing the employee’s job description if this does not accurately reflect the actual duties performed.

Third, employers must establish that an employee is exempt under FLSA by clear and convincing evidence. It is imperative for church leaders to understand the significance of this. Clear and convincing evidence is a more difficult burden of proof than the typical “preponderance of the evidence” standard that applies in most civil cases. This makes it more difficult for an employer to establish that an employee is exempt under FLSA. As a result, churches should not presume that an employee is exempt under FLSA without clear and convincing evidence that this is the case. Doubts should be resolved against exemption. If there is any doubt, legal counsel should be consulted. Remember, treating a non-exempt employee as exempt can lead to a significant liability for unpaid overtime compensation. Bertrand v. Children’s Home, 489 F.Supp.2d 516 (D. Md. 2007).