Unemployment Benefits and Religious Employees

Religious employees are exempt from unemployment benefits in some states.

Richard R. Hammar, Attorney, CPA

Bio

State: New York
Categories: Schools

Church Law and Tax 1992-01-01 Recent Developments

Unemployment Taxes

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

• A New York state court ruled that a state law exempting “persons employed at a place of religious worship” from unemployment benefits did not violate the first amendment’s “nonestablishment of religion” clause. A teacher who had been employed by a religious school sought unemployment benefits. Benefits were denied on the ground that she had been employed by a religious school. The teacher claimed that the state law exempting religious employees from unemployment coverage was unconstitutional. A state appeals court disagreed. It applied a 3-part test announced in 1971 by the United States Supreme Court. Under this test, a law that appears to favor religion will be struck down unless it satisfies 3 conditions—it has a secular purpose, it has a primary effect that neither advances nor inhibits religion, and it does not create an “excessive entanglement” between church and state. The court concluded that the New York law exempting religious employees from unemployment benefits satisfied this test. It further noted that the Supreme Court has ruled that “government policies with secular objectives may incidentally benefit religion.” Such was the case here. This case contrasts starkly with a 1989 decision of the Oregon Supreme Court that found an exemption of religious employees to be unconstitutional (see the November-December 1989 issue of Church Law & Tax Report). The Oregon decision remains an unfortunate precedent that has not been followed by any other court. Claim of Klein, 563 N.Y.S.2d 132 (Sup. Ct. 1990).

Minimum Wage Law and Private Schools

A court concluded that the minimum wage law applied to a church-run school.

Richard R. Hammar, Attorney, CPA

Bio

State: Arkansas
Categories: Employment Practices, Fair Labor Standards Acts, Schools

Church Law and Tax 1991-11-01 Recent Developments

Employee Relations

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

• A federal appeals court concluded that the federal minimum wage law applied to the staff of a church-operated school. A church in Little Rock, Arkansas, operates an elementary and secondary school that utilizes a self-study program that teaches all subjects from a biblical point of view. The school is an integral part of the church. Each class has a supervisor who is assisted by a classroom “monitor.” Both work with the children but do not conduct formal classroom instruction. Supervisors grade papers, answer students’ questions, conduct prayer, and counsel the students. Monitors perform duties equivalent to teachers’ aides in the public schools. The school requires that all supervisors and monitors be “born again” Christians. Supervisors receive compensation of $125 per week ($3.29 per hour for a 38-hour week), while monitors receive $100 per week ($2.63 per hour for a 38-hour week). The Department of Labor charged the church with violating the federal minimum wage law (Fair Labor Standards Act), and sought back wages of some $23,000 for 18 current and former supervisors and monitors. A federal district court upheld the government’s position, and the church appealed. A federal appeals court agreed that the federal minimum wage law applied to the school’s employees, and it upheld the award of back pay. It emphasized that the minimum wage law specifically applies to church-operated school employees, and it rejected the suggestion that the supervisors and monitors were exempt from coverage on the ground that they are “ministers.” The court relied heavily on another federal appeals court ruling in Dole v. Shenandoah Baptist Church (discussed in detail in previous issues of this newsletter). DeArment v. Harvey, 932 F.2d 721 (8th Cir. 1991).

Fair Labor Standards Act

© Copyright 1991, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m42 m43 c0691

Legal Developments

Employees’ Violation of Employer’s Moral Teachings

Is termination on such a basis discrimination?

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Schools

Church Law and Tax 1991-11-01 Recent Developments

Employee Relations

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

• Can a teacher sue a church-operated school for discrimination when it refuses to renew her contract because of her violation of the church’s moral teachings? No, said a federal appeals court. A Catholic school hired a teacher in 1977. A few years later, she was divorced, though this did not affect her eligibility to teach. For the next several years, she served with distinction. However, in 1986, she remarried, and was later informed by the school that she would not be rehired for the following school term. The school based its decision on statements in the employment contract and employee handbook. The contract specified that the school had the authority to dismiss any teacher “for serious public immorality, public scandal, or public rejection of the official teachings, doctrine or laws of the Roman Catholic Church.” The employee handbook illustrated this provision by noting that an employee could be dismissed for “entering into a marriage that is not recognized by the Catholic Church.” The school informed the teacher that she would not be rehired because she had remarried without pursuing “proper canonical process available from the Roman Church to obtain validation of her second marriage,” and thereby had committed a serious offense against the “Church’s teachings and laws on the indissolubility of Christian marriage and the sacramental nature of the marriage bond.” The dismissed teacher sued the school, claiming that her dismissal violated Title VII of the Civil Rights of 1964 (which prohibits discrimination against employees on the basis of religion). A trial court rejected the teacher’s claim, and she appealed.

A federal appeals court also rejected the teacher’s claim. The court acknowledged that the Civil Rights Act prohibits employers from discriminating against an employee on the basis of religion. However, in deciding whether or not to apply this provision to a church-operated school, the court applied a 2-step analysis announced by the Supreme Court in a 1979 decision. In the previous case, the Supreme Court ruled that in evaluating whether or not to apply a government regulation to a religious organization, the following 2 questions must be asked—(1) whether application of the law to the religious organization would “raise substantial constitutional questions,” and (2) if so, whether the legislature clearly expressed an intent that the law apply to religious organizations. In this case, the court concluded that application of the Civil Rights Act’s prohibition of religious discrimination would raise substantial questions under the first amendment. It noted that “churches have a constitutionally protected interest in managing their own institutions free of government interference.” Accordingly, the Civil Rights Act’s prohibition of religious discrimination cannot apply to a church-operated school unless “Congress clearly intended that result.” The court concluded that there was no clear indication of such an intent. This conclusion was supported both the legislative history of the law, and even more importantly, by section 703(e), which specifically exempts religious educational institutions from the prohibition of religious discrimination. Section 703(e) specifies that “it shall not be an unlawful employment practice for a school … to hire and employ employees of a particular religion if such institution is … owned, supported, controlled, or managed by a particular religious [organization].” In conclusion, the court observed: “[I]t does not violate Title VII’s prohibition of religious discrimination for a parochial school to discharge a Catholic or a non-Catholic teacher who has publicly engaged in conduct regarded by the school as inconsistent with its religious principles. We therefore hold that the exemptions to Title VII cover the parish’s decision not to rehire [the teacher] because of her remarriage.” Little v. Wuerl, 929 F.2d 944 (3rd Cir. 1991).

The Civil Rights Act of 1964

Legal Developments

Church-Run Schools and the Equal Pay Act

An Ohio court ruled that a church-operated school is subject to the Act.

Richard R. Hammar, Attorney, CPA

Bio

State: Ohio
Categories: Schools

Church Law and Tax 1991-11-01 Recent Developments

Employee Relations

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

• A federal district court in Ohio ruled that a church-operated school was subject to the Equal Pay Act. The school, consisting of instruction from preschool through secondary levels, was operated by four Church of Christ congregations. The school adopted a policy of paying its teachers who qualified as a “head of household” an additional allowance of $1,500 per year. A “head of household” was defined as a teacher who was married with dependent children. The sponsoring churches adhered to the conviction that the Bible places the responsibility of the “head of a family” on the husband. Accordingly, the head of household allowance was not paid to a female unless her husband was either absent or unable to work. The Equal Employment Opportunity Commission (“EEOC”) charged the school with violating the Equal Pay Act, and demanded that all employees be paid the head of household allowance (regardless of gender). The EEOC also ordered the school to pay “back pay” of $132,000 to female employees who had been denied the allowance in the past. The school maintained that (1) the Equal Pay Act did not apply since the school’s alleged discrimination was not based on gender (but rather adherence to a religious principle), (2) the teachers were “ministers” and as such were not subject to the Act, and (3) application of the Act to the school employees violated the first amendment guaranty of religious freedom. The court rejected all of the school’s defenses, and ruled in favor of the EEOC. The court began its opinion by noting that the provisions of the Equal Pay Act (a part of the federal minimum wage and overtime compensation law) specifically apply to the employees of church-operated schools. The court then rejected each of the school’s 3 defenses. In rejecting the school’s first argument, the court insisted that the school’s “head of household” allowance policy was in fact based on gender “albeit as a means of giving witness to a religious belief that men and women occupy different family roles.” In rejecting the school’s second argument, the court acknowledged that the teachers and administrators viewed themselves as teachers of the Christian faith who considered their work religious ministry and a religious calling. The court responded to this perception by noting that the school’s “designation of these persons as ‘ministers’ for religious purposes does not determine their extra-religious legal status. There is no indication that any of the teachers are ordained ministers of the churches, nor do they perform sacerdotal functions. Although it appears undisputed that the principles of the Christian faith pervade the school’s educational activities, this alone would not make a teacher or administrator a ‘minister’ for purposes of exempting that person from the [Fair Labor Standards Act’s] definition of ’employee.'” In rejecting the school’s third argument, the court concluded that “the compelling interests underlying the Equal Pay Act substantially outweigh its minimal impact on [the school’s] religious beliefs …. [The school] remains free to practice its religious beliefs in ways that do not unlawfully discriminate in its wage scales on the basis of gender. Accordingly, the court finds the [school’s] free exercise argument is without merit.” In support of its decision, the court noted that while the school insisted that the Bible makes a distinction between the familial roles of men and women, “it concedes that the Bible does not mandate that men must be paid more than women for identical tasks.” E.E.O.C. v. Tree of Life Christian Schools, 751 F. Supp. 700 (S.D. Ohio 1990).

Fair Labor Standards Act

Legal Developments

Tax Exemption of Boarding School Dormitories

The Arkansas Supreme Court recently ruled on this issue.

Richard R. Hammar, Attorney, CPA

Bio

State: Arkansas
Categories: Schools

Church Law and Tax 1991-09-01 Recent Developments

Taxation – Church Property

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

• The Arkansas Supreme Court ruled that dwellings located on the grounds of a church-operated boarding school were not exempt from state property taxes. The Arkansas Conference of the Seventh Day Adventists operates a boarding school consisting of grades 9 through 12. Most of the students are members of the Seventh Day Adventist Church. The campus consists of a boys’ dormitory, a girls’ dormitory, a gymnasium, a maintenance building, a box factory, a duplex, and 12 single family dwellings that are rented to faculty and staff. A county tax commission determined that the 12 dwellings were not exempt from property taxation, and the Conference appealed. The Conference noted that state law exempts from taxation “school buildings and apparatus” and “grounds used exclusively for school purposes.” The Conference claimed that the 12 dwellings qualified for exemption under these provisions since they were located on school property, and were used for counseling and spiritual guidance of the students in addition to serving as the residences of faculty members. The Conference contended that one of the school’s goals is to provide “mental and spiritual guidance” to the students, and that this purpose was directly fulfilled by having the dwellings on campus and readily accessible to the students. Therefore, the Conference argued that the dwellings should be treated like the dormitories, which are exempt from taxation. The tax commission maintained that the dwellings rented to faculty and staff are in direct competition with other owners of rental properties and therefore the dwellings should be taxed. A trial court agreed with the tax commission that the dwellings were not exempt, and the case was appealed to the state supreme court. The supreme court agreed that the dwellings were taxable. The court observed that the exemption of school properties applies only to those properties that are used exclusively for school purposes, and that even this exemption is to be interpreted narrowly. The court conceded that the dwellings were used for counseling of students, and occasional student parties. However, the court observed that “no residences are used for conducting classes” and the counseling activities are not “regularly scheduled obligations.” Accordingly, the court could not agree that the dwellings were used exclusively for exempt purposes. The court added that “another factor to consider is that the residential dwellings compete with other property owners in the area,” whose properties are not exempt. Based on these considerations, the court concluded that “the primary use of the dwellings is for residential purposes and the incidental use is for school purposes.” Arkansas Conference Association of Seventh Day Adventists, Inc. v. Board of Equalization, 800 S.W.2d 426 (Ark. 1990).

Property Taxes

Legal Developments

Display of Religious Student Artwork

Does this violate the First Amendment?

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Freedom of Religion, Schools

A federal district court in New York ruled that a public school's display of a student's painting depicting a religious theme violated the first amendment's "nonestablishment of religion" clause.

The artwork consisted of a large mural painted in a corner of the school's auditorium by a student in 1965 as part of the school's plan to decorate the arena with original artwork of students. This program was discontinued shortly after this painting was completed. Only two other paintings are located in the auditorium—a picture of an audience, and one of George Washington.

The mural consisted of 21 human figures, including the crucified Christ, two other crucifixion victims, John the Baptist, Mary Magdalene, the Apostle Peter, Moses, and some gladiators and other unidentifiable figures. The mural also contained a depiction of the 10 Commandments. A family (the father was Baptist and the mother Jewish) sued the school, protesting what they felt was "an inappropriate display of a religious painting in a public high school."

The school defended the mural, claiming that the artist intended it to be a depiction of "man's inhumanity to man," rather than religious art. It also argued that "the presence of unidentifiable secular characters and the context in which the school displays the painting [i.e., a dark corner of the school auditorium] negate any message of government endorsement of Christianity and neutralize the effect of the Crucifixion."

The court rejected the school's claims, and concluded that the mural constituted an impermissible "establishment of religion." It noted that "despite the possible neutralizing effect of—or negation of endorsement by—the unidentifiable figures in the painting, this court remains wary of sectarian messages displayed in public schools as they transmit basic and fundamental values to our youth."

It quoted from an earlier decision of the United States Supreme Court: "To an impressionable student, even the mere appearance of secular involvement in religious activities might indicate that the state has placed its imprimatur on a particular religious creed. This symbolic inference is too dangerous to permit." The court also pointed out that in 1980 the Supreme Court outlawed the posting of the 10 Commandments in public school classrooms. The court concluded:

Taking into account the significant message behind the Crucifixion and the skeptical way in which the [Supreme] Court views sectarian messages in public schools, this court concludes as a matter of law that the painting has the primary effect of endorsing Christianity. First, the school displays the painting permanently and not part of any holiday setting. Further, the school's display contains no placards to explain the painting's meaning or the reason for being there. Moreover, this is not a case where the school displays the painting as part of a student art exhibit. Finally, the presence of the non-religious figures, rather than neutralizing the religious effect of the painting, blend into the scene of the Crucifixion and complete the picture as an average observer would perceive it to be …. The court concludes that the display of [the mural] in the auditorium violates the [nonestablishment of religion clause of the first amendment].

Joki v. Board of Education, 745 F. Supp. 823 (N.D.N.Y. 1990)

Legal Developments

Age Discrimination in Church-Run Schools

Court rules that a school’s rights were not violated in an investigation of discrimination.

Richard R. Hammar, Attorney, CPA

Bio

State: Wisconsin
Categories: Schools

Church Law and Tax 1991-07-01 Recent Developments

Freedom of Religion

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

• A Wisconsin state appeals court ruled that a church school’s constitutional rights were not violated when a state equal rights agency conducted a hearing on the age discrimination complaint of a former teacher. The teacher’s contract was not renewed following 16 years of service as the school’s third grade teacher. She was 56 years of age at the time of the school’s decision not to renew her contract. She filed a complaint with a state equal rights agency, alleging that the school’s decision was based on age and therefore violated state law. The school denied that age was the reason for its decision and cited problems with her classroom management, her professionalism, and her maintenance of a “prayerful environment.” A state investigator concluded that there was “probable cause” to believe age discrimination existed. This conclusion was based on an excellent evaluation that the teacher had received for the previous year, and the school’s record of systematically terminating the contracts of three out of four teachers who had many years of teaching experience at the school and were at the top of their pay scale. A hearing was scheduled to determine whether or not the school’s decision was based on age. The school filed a lawsuit alleging that a hearing would violate its constitutional right to religious freedom. A state appeals court rejected the school’s argument. It relied upon a 1986 decision of the United States Supreme Court holding that a state agency “violates no constitutional rights by merely investigating the circumstances of [an employee’s] discharge in this case, if only to ascertain whether the ascribed religious-based reason was in fact the reason for the discharge.” The court also relied upon other Supreme Court decisions permitting civil courts to resolve disputes involving religious organizations on the basis of “neutral principles of law.” The court concluded that the state fair employment law (which banned age discrimination) was a neutral principle of law. The court emphasized that the intrusion into the school’s religious beliefs “is minimal and is not an attempt for interfere with religious schools.” The court emphasized that “the school is still free to discharge employees for religious reasons. The school will prevail in the [state] investigation if [the former teacher] cannot prove that the religious-based reason given for her discharge was only a pretext for age discrimination. The burden of proof remains with [her].” In rejecting the school’s claim that the first amendment gives religious groups a constitutional right to “autonomy,” the court observed: “The [first amendment] guarantees religious rights to every citizen and not merely to religious institutions or their officers. We would be limiting the [first amendment] rights of individuals if we interpreted the [first amendment] as giving religious groups a right to autonomy that exempted them from judicial scrutiny …. If we accepted the school’s autonomy argument, the court would be awarding the religious employer a talisman to protect it from all discrimination lawsuits. This we cannot allow.” Sacred Heart School Board v. Labor & Industry Review Commission, 460 N.W.2d 430 (Wis. App. 1990).

See also Church property, St. Bartholomew’s Church v. City of New York, 914 F.2d 348 (2nd Cir. 1990).

Termination of Employees

Legal Developments

Denial of Tenure at Seminaries

Can a court resolve a professor’s claim that he was improperly denied tenure?

Richard R. Hammar, Attorney, CPA

Bio

State: New Jersey
Categories: Employment Practices, Schools

Church Law and Tax1991-07-01Recent Developments

Schools

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

• Can a civil court resolve a seminary professor’s claim that he was improperly denied tenure? No, said a New Jersey appeals court. The professor had been hired to teach at New Brunswick Theological Seminary, an educational institution affiliated with the Reformed Church in America (the “Church”). The seminary was founded in 1784. Its purpose remains the preparation of “men and women for educational and faithful leadership in the church.” It offers no secular degrees or courses of study. Every president has been an ordained minister of the Reformed Church, and all faculty and administrators are ordained clergy. The seminary is accountable to the Church, and subject to the supervision of the Church’s Board of Theological Education. The seminary’s policies regarding appointments, tenure, and dismissals, are set forth in a comprehensive faculty personnel manual. A dispute arose at the seminary over the status of a professor who claimed to have been promised a tenured position at the completion of his doctoral studies by the previous seminary president. When the current president refused to honor the previous president’s alleged promise (which was not contained in any written agreement), the professor resigned and later sued the seminary for wrongfully denying him tenure, and for “forcing” him to resign. The professor argued that the former president had the legal authority to grant him a tenured position. The seminary vigorously denied the professor’s allegation, claiming that only the Board of Theological Education had such authority. The faculty manual was somewhat ambiguous on this point. The professor further insisted that the dispute did not involve religious doctrine, and accordingly the civil courts had jurisdiction. He urged the court to apply “neutral principles” of contract law in resolving the claim. A trial court dismissed the former professor’s lawsuit, and the case was appealed. A state appeals court agreed with the trial court, and affirmed the dismissal of the lawsuit. The court concluded that while the civil courts may resolve contract disputes involving religious organizations if no religious doctrine or practice is implicated, this was not the case here. On the contrary, a resolution of the professor’s claim that the former president (without the approval of the Board of Theological Education) had the authority to grant him a tenured position “would require a searching examination of the polity and administration of the [Reformed] Church. If, as presently appears, the locus of appointive authority is ambiguous, a careful scrutiny of past practices and customs would be necessary. To permit civil courts to probe deeply into the allocation of power within a religious organization would result in a pervasive secular intrusion into Church government and administration …. In short, insinuation by civil courts into the customs, usages of the bylaws and the constitution, into the administration and polity of the Church in the hope of uncovering clues with respect to where the power to grant tenure resides, would threaten the freedom of the Church from secular entanglement.” In support of its conclusion, the court cited with approval a case in which the United States Supreme Court ruled that the first amendment guaranty of religious freedom grants religious organizations “independence from secular control,” and the “power to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine.” The court emphasized that it was not leaving the former professor “without a remedy.” It observed that the faculty manual provides an optional grievance procedure, and concluded that the Church and seminary “are obliged by their established procedures to provide [the professor] with a forum for resolution of his claim.” This case is yet another in a long line of court decisions refusing to resolve ministers’ claims of wrongful discharge. Alicea v. New Brunswick Theological Seminary, 581 A.2d 900 (N.J. Super. A.D. 1990).

Termination | Decisions of State and Lower Federal Courts

Legal Developments

City Limits Number of Students at Church-Run School

A court ruled that this restriction does not violate the First Amendment.

Richard R. Hammar, Attorney, CPA

Bio

State: Illinois
Categories: Schools, Zoning

Church Law and Tax 1991-05-01 Recent Developments

Zoning

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

• An Illinois state appeals court ruled that a city could limit the number of children attending a church-operated elementary school. A Lutheran church established an elementary school in 1983, receiving a special use permit from the city subject to an enrollment cap of 60 students. The permit was modified in 1987 to permit up to 75 students. The school soon exceeded this limit, and the church sought another modification allowing unlimited enrollment. The city rejected this request, and the church filed a lawsuit claiming that the city’s action violated parents’ first amendment right to freely exercise their religion. A trial court rejected the church’s argument, but did raise the enrollment limit to 105 students. The church appealed this ruling to a state appeals court, which affirmed the trial court’s decision. The court noted that the first amendment guaranty of religious freedom would be violated only if the church (or parents) could demonstrate that maintaining the school on the current premises was a “fundamental tenet” of its religion rather than a mere “preference.” The court emphasized that the church had “put forth no more than the abstract notion that this particular school is fundamental to its religious tenets let alone fundamental at this particular location.” The court acknowledged that the church would incur additional costs in relocating the school to a site where more students could be accommodated, but this fact alone did not demonstrate a violation of the first amendment guaranty of religious freedom. In conclusion, the court observed that “the first amendment does not require the city to make all land or even the cheapest or most beautiful land available to churches,” since “a church has no constitutional right to be free from reasonable zoning regulation nor does a church have a constitutional right to build its house of worship where it pleases.” Bethel Lutheran Church v. Morton, 559 N.E.2d 533 (Ill. App. 1990).

Miscellaneous Considerations

Legal Developments

Background Checks Required for Private Schools in Utah

The Utah legislature recently enacted a law requiring screening for school workers.

Richard R. Hammar, Attorney, CPA

Bio

State: Utah
Categories: Schools

Church Law and Tax 1991-05-01 Recent Developments

Schools

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

• The Utah legislature has enacted a law requiring private schools to conduct criminal records checks of prospective employees and volunteers. Criminal records checks of current workers is allowed if “reasonable cause” exists. Fingerprints are required if necessary to confirm a person’s identity. The state bureau of criminal investigation is required to release all records of criminal convictions, but school personnel can only consider “job-related” convictions in making employment decisions. Persons who are denied employment or dismissed because of such information must receive written notice of the reasons and be given an opportunity to respond. S.B. 17, Laws 1991 (effective April 29, 1991)

Legal Developments

Regulations for Church-Operated Schools

Court rules that church schools must comply with state regulations.

Richard R. Hammar, Attorney, CPA

Bio

State: Vermont
Categories: Schools

Church Law and Tax 1991-03-01 Recent Developments

Employee Relations

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

• A Wisconsin appeals court ruled that a state agency’s investigation into a dismissed teacher’s complaint of age discrimination did not violate the constitutional rights of a church-operated school. State law prohibits most employers, including church schools, from discriminating in employment decisions on the basis of age. A church school terminated a teacher whom it had employed for 16 years. The school cited “problems with the teacher’s classroom management, her professionalism, and her maintenance of a prayerful environment.” The teacher felt that she was fired on account of her age (56), and she filed a complaint with the state equal rights agency. The agency investigated the termination, and concluded that there was reason to believe that the teacher had been a victim of age discrimination. This conclusion was based primarily on the fact that the school had given the teacher an excellent evaluation less than a year prior to her dismissal. The agency ordered a hearing to resolve the matter, but the school filed a lawsuit seeking to prevent any hearing on the ground that a hearing into the basis for its dismissal of one of its teachers would violate its constitutional right to religious freedom. A trial court rejected the school’s position, and the school appealed. A state appeals court concluded that the school’s constitutional rights would not be violated by a hearing addressing the charge of age discrimination. The court relied solely on a 1986 decision of the United States Supreme Court in a similar case. The Supreme Court had ruled that an Ohio civil rights agency “violates no constitutional rights by merely investigating the circumstances of [the employee’s] discharge in this case, if only to ascertain whether the ascribed religious-based reason was in fact the reason for the discharge.” Based on this language, the Wisconsin court concluded that “the state agency charged with enforcing the state’s employment laws can investigate discrimination complaints against a religious institution without violating the first amendment.” The court emphasized that the school “is still free to discharge employees for religious reasons,” and that the school “will prevail in the [agency] investigation if [the dismissed teacher] cannot prove that the religious-based reason given for her discharge was only a pretext for age discrimination.” As a result, the agency hearing into the former teacher’s complaint of age discrimination will proceed. If the school can establish that it dismissed the teacher for “religious” reasons (e.g., failure to maintain a “prayerful environment” in the classroom), then it will prevail. This case also illustrates the problems associated with employee evaluations. While periodic employee evaluations are an excellent practice, they must be done objectively. Employers all too often “inflate” such evaluations in order to avoid conflict. This case illustrates the legal problems that can be associated with such a practice. Sacred Heart School Board v. Labor & Industry Review Commission, 460 N.W.2d 430 (Wis. App. 1990).

Legal Developments

Investigation of Claims of Age Discrimination

Court rules that investigation of teacher’s complaint does not violate school’s rights.

Richard R. Hammar, Attorney, CPA

Bio

State: Wisconsin
Categories: Schools

Church Law and Tax 1991-03-01 Recent Developments

Schools

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

• The Vermont Supreme Court ruled that a state law requiring church-operated elementary and secondary schools to comply with various state regulations did not violate the constitutional right of parents to freely exercise their religion. The Vermont compulsory education law requires all children between 7 and 16 years of age to attend either a public school or “a reporting private school.” All that is required of a “reporting private school” is that it file an annual report with the state department of education agreeing to offer certain courses, state its purposes, state the days and hours the school is in session, provide a list of students, and agree to notify the state when a student leaves. Monitoring whether or not a private school is offering the minimum course of study prescribed by state law is left up to the parents and not the state. A church that operated a private school refused to comply with these reporting requirements. As a matter of religious principle, it could not accept state control over the education of its children. The state criminally prosecuted two parents for violating state compulsory attendance law by sending their son to a non-reporting private school. The parents argued that their prosecution violated the constitutional guaranty of religious liberty. A trial court rejected this claim, and the parents appealed. The state supreme court began its opinion by observing that the constitutional guaranty of religious liberty is violated only if a state law burdens a sincerely-held religious belief, and the law does not serve a “compelling state interest” in the least restrictive way. The court readily agreed that the parents’ right to freely exercise their religion was “burdened” by the state compulsory attendance law. However, the court concluded that this burden was outweighed by the state’s “compelling interest” in the education of its citizens. It quoted an earlier decision of the United States Supreme Court: “Education is perhaps the most important function of state and local governments. It is the very foundation of good citizenship. In these days, it is doubtful that any child may reasonably be expected to succeed in life … denied the opportunity of an education.” The court noted that a state’s compelling interest in education “has been overwhelmingly sustained” by both state and federal courts. It observed: “[T]here have been extensive challenges to state regulation of home education or private schooling based on assertions of religious liberty. With only isolated exceptions, neutral and reasonable state regulations affecting home schooling and private education have been upheld against free exercise [of religion] challenges.” Further, the court concluded that the state’s minimal reporting requirements were the “least restrictive means” of accomplishing its compelling interest. The court observed in conclusion that when a state establishes minimum education standards, “compliance with them falls within the ambit of the fundamental contract between the citizen and society. It need scarcely be said that each of us, in order to enjoy membership in an organized social order, is pledged to adhere to a number of minimum norms. Of these, one of the most central is society’s duty to educate its children. The nature and extent of education remains largely a matter of personal choice. But there are basic minimums and, this being true, it is up to the people as a whole to set them. One way they have done this is to enact compulsory education statutes.” State v. DeLaBruere, 577 A.2d 254 (Vt. 1990).

See also Employee relations, Sacred Heart School Board v. Labor & Industry Review Commission, 460 N.W.2d 430 (Wis. App. 1990).

Legal Developments

Church Schools and the Minimum Wage

Court rules that church-run schools must pay the minimum wage.

Richard R. Hammar, Attorney, CPA

Bio

State: Federal
Categories: Employment Practices, Schools

Church Law and Tax 1991-01-01 Recent Developments

Employee Relations

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

• Does a church school have to pay its employees the “minimum wage”? Yes, concluded a federal appeals court in a significant ruling. A fundamentalist Baptist church in Virginia opened a private school in 1973 with a full-time curriculum that included instruction in the Bible and traditional academic subjects taught from a Christian perspective. For the first few years of the school’s operation, teacher salaries were very low. To attract and retain teachers, the church began paying “salary supplements” to each teacher who was a “head of household.” Between 1976 and 1986, all married male teachers received a salary supplement, but married women were not eligible to receive the supplement, since “the Bible clearly teaches that the husband is the head of the house, head of the wife, head of the family.” Also, between 1976 and 1982, 91 persons who worked at the school as support personnel were paid less than the hourly minimum wage. These workers included bus drivers, custodians, kitchen workers, bookkeepers, and secretaries. In 1978, the United States Department of Labor asserted that the school violated the “Fair Labor Standards Act” by paying women less than men and by not paying the minimum wage. The church agreed that it paid women less than men, and that it did not pay some workers the minimum wage. However, it asserted that (1) the school was not covered by the Fair Labor Standards Act, (2) school employees were “ministers” and therefore excluded from coverage under the Act, and (3) that applying the Act to the church’s school would violate the constitutional guaranty of religious freedom. A trial court rejected the church’s arguments, and ordered it to distribute $177,680 among those female teachers who had been paid less than men, and $16,818 among those workers who had not received the minimum wage. The church appealed, and a federal appeals court upheld the trial court’s decision in favor of the government. In rejecting the church’s claim that the Fair Labor Standards Act did not apply to a church-operated school, the court noted that the Act was amended in 1966 to specifically cover nonprofit, private schools. The church also claimed that school employees were really church employees and therefore exempt from the Act. It pointed out that the school was “inextricably intertwined” with the church, that the church and school shared a common building and a common payroll account, and that school employees must subscribe to the church’s statement of faith. The court rejected this reasoning without explanation. The court also rejected the church’s claim that its school employees were exempt from the Act because they were “ministers” who considered teaching at the school “their personal ministry.” It noted that they “perform no sacerdotal functions, neither do they serve as church governors. They belong to no clearly delineated religious order.” Further, “the exemption of these teachers would create an exception capable of swallowing up the rule”—since it would mean that all teachers at church-operated schools would be exempt (contrary to the intent of the 1966 amendment to the Act that was designed include them). Finally, the court rejected the church’s claim that its constitutional right of religious freedom would be violated by subjecting its school employees to the minimum wage and “equal pay” provisions of the Act. The church claimed that its “head of household” salary supplements (paid to males) “was based on a sincerely-held belief derived from the Bible,” and that employee wages should be fixed by the church acting under divine guidance rather than by the government. The court acknowledged that the church might suffer a burden on the practice of its religion, but it insisted that any burden would be limited. It observed that although the church’s head of household salary supplement (for males) “was grounded on a biblical passage, church members testified that the Bible does not mandate a pay differential based on sex. They also testified that no [church] doctrine prevents [the school] from paying women as much as men or from paying the minimum wage. Indeed, the school now complies with the Fair Labor Standards Act ….” This limited burden on the church’s religious beliefs was outweighed by the government’s compelling interest in ensuring that workers receive the minimum wage. The court observed that school employees whose religious convictions were violated by the school’s coverage under the Act could simply return a portion of their compensation back to the church. Or, they could volunteer their services to the school. This ruling indicates that church-operated primary and elementary schools in the fourth federal circuit (which includes the states of Maryland, North Carolina, South Carolina, Virginia, and West Virginia) must comply with the Fair Labor Standards Act’s “equal pay” and minimum wage provisions. Note that this ruling only applies to church-operated primary and secondary schools. It does not apply to churches themselves. The Act has never been construed to apply to churches that are not engaged in commercial activities. However, the court’s rather cavalier rejection of the church’s religious beliefs suggests that any attempt by Congress to include church employees under the coverage of the Act would be deemed permissible. Coverage of church employees (not engaged in commercial activities) has not yet been contemplated by Congress. Note further that clergy are specifically exempt from the provisions of the Act. Dole v. Shenandoah Baptist Church, 899 F.2d 1389 (4th Cir. 1990).

Legal Developments

Failure to Renew Contracts

Can a school be sued for failing to renew an administrator’s contract?

Richard R. Hammar, Attorney, CPA

Bio

State: California
Categories: Contracts, Employment Practices, Schools

Church Law and Tax 1991-01-01 Recent Developments

Employee Relations

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

• Can a church school be sued for failing to renew an assistant principal’s one-year employment contract? No, concluded a California state appeals court. The assistant principal’s contract specified that “the term of the employment agreement shall be for a one-year period.” The contract further specified that “it is understood that [the assistant principal] is being employed for a one-year period and that there is no obligation on the part of the school [or the assistant principal] to renew this contract at the end of that term.” Prior to the expiration of the assistant principal’s one-year contract, the principal notified her in writing that her contract would not be renewed. She was offered and accepted a teaching position in the school, and she appealed her termination as assistant principal to the church. When her appeal was denied, she sued the church for actual and punitive damages. She alleged that due to her many years of faithful employment at the school (as both a teacher and assistant principal), her employment contract contained an “implied condition” to act in good faith that required the church to renew her contract unless it had “just reason” for not doing so. She also claimed that the church was guilty of “negligent discharge” because it failed to renew her contract without giving her any advance notice of any performance problems that she could correct. Finally, she claimed that the church had intentionally caused her emotional distress. A trial court granted the church’s request for a “summary judgment,” and the former employee appealed. A state appeals court upheld the trial court’s ruling in favor of the church. With regard to the former employee’s first claim, the court agreed that “the law imposes a duty of good faith and fair dealing in every contract.” However, it emphasized that this implied duty cannot be used to alter the terms of a clear, written agreement. The court observed: “Here, we are not confronted by a written employment contract which is uncertain in duration, or as to the parties’ obligation to renew. This written contract expressly limits the term of employment to one year and provides that neither party need renew the agreement. Consequently, by express language, the contract precludes the existence of any contrary implied agreement to employ [the former assistant principal] for more than a year or require renewal in the absence of good cause for not doing so.” Further, the court noted that the assistant principal had not been “fired.” Rather, her one-year contract had not been renewed. The court observed that “although termination contrary to the express terms of an employment contract may [be the basis of a lawsuit], a decision not to enter into a new contract or renew an expired one is not …. It is the general rule that when a contract specifies the period of its duration, it terminates on the expiration of such period.” The court also rejected the former employee’s claim that her long and faithful service prevented the church from not renewing her contract without good cause. It observed that “lengthy service combined by promotions and salary increases are natural occurrences for an employee who remains with an employer for a substantial length of time and does not create an implied agreement for permanent employment terminable within the context of nonrenewal only upon just cause.” The court also refused to recognize the former employee’s claim of “negligent discharge,” since no California court had ever recognized such a theory of liability. Finally, the court rejected the former employee’s claim that the church had intentionally caused her emotional distress. This would have required outrageous conduct on the part of the church, and this was something that the court refused to recognize. Tollefson v. Roman Catholic Bishop of San Diego, 268 Cal. Rptr. 550 (Cal. App. 1990).

Legal Developments

Freedom of Religion

Church Law and Tax 1990-09-01 Recent Developments Freedom of Religion Richard R. Hammar, J.D., LL.M.,

Richard R. Hammar, Attorney, CPA

Bio

State: Alabama
Categories: Freedom of Religion, Schools

Church Law and Tax 1990-09-01 Recent Developments

Freedom of Religion

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

• To what extent can a university professor share his religious beliefs during class? That was the issue before a federal district court in Alabama. A state university professor occasionally referred to his religious beliefs during class lectures, and organized voluntary, after-class meetings to discuss the religious implications of the course material. When a few students complained of the classroom comments and after-class meetings, the university investigated the matter and issued a memorandum prohibiting the professor from injecting his religious beliefs and preferences during instructional time, and banning his after-class meetings. When the professor’s attempts to have the university rescind the memorandum proved unsuccessful, he filed a lawsuit in federal court alleging that the school was interfering with his constitutional right to freely exercise his religion. The court agreed with the professor. The court began its opinion by emphasizing that “university professors are entitled to freedom of speech in their jobs,” and that the “classroom is peculiarly the marketplace of ideas.” It observed that the university did not prohibit faculty members from engaging in non-religious classroom speech involving personal views, and did not prohibit faculty members from organizing after-class meetings for discussing ideas from a non-religious perspective. Accordingly, the university has “created a forum for students and their professors to engage in a free interchange of ideas” and “it may not exclude unfavored religious speech unless the exclusion is necessary to further a compelling governmental interest ….” The university countered that its policy was necessary in order to avoid “establishing a religion.” The court summarily rejected this defense, concluding that “the university has no interest sufficient to justify restricting a professor’s freedom to make occasional classroom comments about personal religious beliefs or to restrict him from holding after-class meetings with students on state university property to discuss a Christian perspective on academic topics.” Bishop v. Aronov, 732 F. Supp. 1562 (N.D. Ala. 1990).

© Copyright 1990, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m47 c0690

Legal Developments

Freedom of Religion – Part 1

Church Law and Tax 1990-05-01 Recent Developments Freedom of Religion Richard R. Hammar, J.D., LL.M.,

Richard R. Hammar, Attorney, CPA

Bio

State: Arkansas
Categories: Freedom of Religion, Schools

Church Law and Tax 1990-05-01 Recent Developments

Freedom of Religion

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

• A federal court in Arkansas outlawed Bible classes that had been taught in a city’s public schools for 51 years. The schools gave elementary grade children the opportunity to learn about the Bible. Bible classes were taught during regular school hours in the school building, by volunteers not acting on behalf of any church. No course credit was given for the classes, and attendance was voluntary. Nearly 96% of all students attended the Bible classes. The parents of one child filed a lawsuit in federal court, alleging that the program violated the first amendment’s “nonestablishment of religion” clause. The court began its opinion by observing that, according to Supreme Court pronouncements, “any government involvement with religion, to be constitutional, must have a secular purpose, its principal or primary effect must be one that neither advances nor inhibits religion, and it must not foster an excessive governmental entanglement with religion.” A state practice that violates any of these requirements is invalid. The court concluded that the Bible study program violated all three requirements. It referred to lessons and songs that endorsed Christian dogma, and quoted one of the Bible teachers who stated in class that “Jesus is our gateway to Heaven. He laid down his life for us so that we could go to Heaven. He is our shepherd and he wants us all to be one big flock of sheep.” Such evidence, the court concluded, clearly demonstrated that the program had a religious purpose, and that it advanced religion. The court acknowledged that purely “secular” Bible study programs in public schools have been upheld as lawful by other federal courts, and it indicated a willingness to review a modified Bible study program in this case. It noted that the United States Supreme Court has ruled that “Bible study, when presented objectively as part of a secular program of education, may … be effected consistently with the first amendment.” Doe v. Human, 725 F. Supp. 1503 (W.D. Ark. 1989).

Legal Developments

Schools – Part 1

Church Law and Tax 1990-05-01 Recent Developments Schools Richard R. Hammar, J.D., LL.M., CPA •

Richard R. Hammar, Attorney, CPA

Bio

Church Law and Tax 1990-05-01 Recent Developments

Schools

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

• Can parents deduct contributions made to a church that pays the tuition of their children at a church-operated school? No, concluded the IRS in a recent private letter ruling. The church had a membership of about 70 families, about one-fourth of whom had children enrolled in a private elementary school operated by another church (affiliated with the same denomination) in a nearby community. In 1987, the church announced that it would pay the tuition of all members’ children enrolled in the school, and it requested that families with children in the school increase their tuition by the amount that they would otherwise have paid as tuition. With only a few exceptions, members with children in the school allowed the church to pay their tuition obligation. While only one-fourth of church members had children in the school, these same persons contributed about half of the church’s total offerings. The IRS further observed that the contributions of several families “increased or decreased markedly as the number of their children enrolled in the school changed,” and “the contributions of parents of students drop off significantly in the summer months when the school is not in session.” Under these circumstances, the IRS ruled that “to the extent that a parent’s tuition liabilities are paid by the church, the contributions of the parent are not deductible charitable contributions.” In explaining its decision, the IRS emphasized that a deductible charitable contribution “is a voluntary transfer of money or property that is made with no expectation of procuring a financial benefit commensurate with the amount of the transfer.” In concluding that this test was not satisfied, the IRS noted the following factors: “The parents are entirely relieved of paying tuition out of their own pockets. Parents are aware that [their] church would be unable to continue paying tuition expenses without continued large contributions from parents. Also, one purpose of the plan was to enable parents to have additional contributions deductions approximately equivalent to their previously nondeductible tuition payments.” Further, “parent-members contribute approximately three times as much as other members, on a family-by-family basis. Moreover, this enlarged giving falls off in summer months, when no tuition bills are due. This, coupled with the awareness of the members that the free tuition program could not continue unless the parents, as a group, sustain their pattern of increased giving, leads to the conclusion that the contributions of school parents are made with the expectation of receiving back benefits in the form of church-paid tuition for their children.” In summary, “contributions” to the church were not deductible to the extent that a parent’s tuition liability was paid by the church, since the parent had an expectation of receiving a return benefit in the form of tuition payments. Such an expectation prevents the parents’ payments from being characterized as deductible contributions. IRS Private Letter Ruling 9004030.

Legal Developments

Freedom of Religion – Part 2

Church Law and Tax 1990-05-01 Recent Developments Freedom of Religion Richard R. Hammar, J.D., LL.M.,

Richard R. Hammar, Attorney, CPA

Bio

State: Colorado
Categories: Freedom of Religion, Schools

Church Law and Tax 1990-05-01 Recent Developments

Freedom of Religion

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

• A federal court in Colorado ruled that a public school policy prohibiting the distribution of “material that proselytizes a particular religious or political belief” was unconstitutional. The court observed: “The mission of public education is preparation for citizenship. High school students … must develop the ability to understand and comment on the society in which they live and to develop their own sets of values and beliefs. A school policy completely preventing students from engaging other students in open discourse on issues they deem important cripples them as contributing citizens. Such restrictions do not advance any legitimate governmental interest.” The court rejected the school’s claim that the policy was required in order to avoid violating the first amendment’s nonestablishment of religion clause. It noted that a policy “permitting students to speak to the full extent of their consitutional rights” would have a secular purpose, and would not advance religion. Rivera v. East Otero School District, 721 F. Supp. 1189 (D. Colo. 1989).

Legal Developments

Schools – Part 2

Church Law and Tax 1990-05-01 Recent Developments Schools Richard R. Hammar, J.D., LL.M., CPA •

Richard R. Hammar, Attorney, CPA

Bio

State: Michigan
Categories: Freedom of Religion, Schools

Church Law and Tax 1990-05-01 Recent Developments

Schools

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

• A Michigan state appeals court ruled that the state could require parents wanting to “homeschool” their children to use state-certified teachers. A couple who homeschooled their children for two years was convicted for violating the state compulsory attendance law requiring parents to send their children to public schools or state-approved private schools. In order to be state-certified, a private “homeschool” must use a state certified teacher and teach prescribed courses. The parents admitted that they were not certified teachers, but they argued that the teacher certification requirement was unconstitutional since it infringed on their right to freely exercise their religion. The court acknowledged that the parents’ religious beliefs were affected by the state law, but it concluded that the impact on their religious beliefs was minimal and was clearly outweighed by the state’s “compelling interest” in quality education. The court noted that “religious school teachers may have to receive more training in order to become certified, but the regulations do not require anyone to attend courses taught from a perspective contrary to their beliefs. The teachers can fulfill all the state certification requirements while attending either a religious or a nonreligious institution. For these reasons, we find the infringement on free exercise rights is minimal and is outweighed by the state’s interest.” The court admitted that “state licensure does not guarantee quality teachers. But one cannot ignore the high likelihood that a person who meets the qualifications for certification has absorbed the knowledge a competent teacher should have.” The court also rejected the parents’ claim that the teacher certification requirement violated “the fundamental right of parents to direct the education of their children.” People v. De Jonge, 449 N.W.2d 899 (Mich. App. 1989).

Legal Developments

Freedom of Religion

Church Law and Tax 1990-03-01 Recent Developments Freedom of Religion Richard R. Hammar, J.D., LL.M.,

Richard R. Hammar, Attorney, CPA

Bio

State: New York
Categories: Freedom of Religion, Schools

Church Law and Tax 1990-03-01 Recent Developments

Freedom of Religion

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

• Does a state law requiring all primary and secondary school students to receive instruction regarding “AIDS” and drug abuse violate the constitutional rights of parents who are opposed to such instruction on the basis of their religious belief? No, concluded a New York state appeals court. The parents who challenged the law were members of the Plymouth Brethren, a devoutly religious group dedicated to strict adherence to Biblical teachings and separation from evil influences. Recognizing the sensitive nature of the curriculum, the law permits parents to exempt their children from in-class AIDS instruction by applying for an exemption and agreeing to provide suitable home instruction. Further, the law allows a child to be excused generally from the study of health and hygiene upon a verified petition by an authorized religious representative asserting that such study conflicts with the religion of the pupil’s parents. The parents found these protections inadequate and demanded a total and unconditional exemption. In rejecting the parents’ claim, the court observed that the constitutional right to freely exercise one’s religion may be restricted if the government “is advancing a compelling interest which is essential to the accomplishment of an overriding governmental purpose.” The court concluded that “there can be little doubt that education regarding the dangers of drug and alcohol abuse constitutes a compelling state interest, and the prevention of AIDS transmission has itself been defined as a substantial and compelling state interest.” Accordingly, the state can require AIDS and drug abuse instruction in the public schools even though such instruction may impinge upon the religious rights and sensibilities of some students. The court rejected the parents’ claim that their pious religious existence will better protect their children from the plagues of AIDS and drug abuse. It noted that “the Brethren is not an isolated community … immune from the known hazards of AIDS.” On the contrary, some of its members stray from its rigorous precepts, and such persons are then integrated into society at large ignorant of AIDS and its methods of transmission and prevention. Such persons, the court concluded, “will surely be at risk and will, undeniably, if infected, constitute a potentially grave risk to all with whom they come into intimate contact.” Ware v. Valley Stream High School District, 545 N.Y.S.2d 316 (1989).