Age Discrimination Law and Religious Organizations

Does federal age discrimination law apply to churches and religious schools?

Church Law and Tax 1994-09-01 Recent Developments

Employment Practices

Key point: Federal age discrimination law prohibits discrimination in employment decisions on the basis of the age of an applicant or employee who is 40 years of age or older. This law applies to some religious organizations.

A federal court in Pennsylvania issued an important ruling on the application of federal age discrimination law to religious organizations. A chef formed a food service company and later entered into a contract to provide meals for a Catholic monastery. The chef served for ten years, and was then dismissed. A monastery spokesman explained the dismissal by stating that the quality and variety of food had deteriorated. The chef sued the monastery claiming that it violated the federal Age Discrimination in Employment Act, which prevents employers with at least 20 employees and engaged in interstate commerce from discriminating in any employment decision on the basis of the age of an employee who is at least 40 years of age. The monastery asked the court to dismiss the case on the ground that the chef was not protected by the Act since he was not an employee of the monastery. It also claimed that the lawsuit was barred by the constitutional guaranty of religious freedom. The court refused to dismiss the case and ordered that it proceed to trial. It acknowledged that there was some evidence to support the conclusion that the chef was not an employee, including: (1) he insisted on being treated as an independent contractor for tax purposes, and received a 1099 rather than a W-2; (2) the monastery contracted with the chef’s corporation for his services; (3) the monastery did not withhold taxes from the chef’s pay; and (4) the monastery did not pay social security taxes for the chef, or extend to him any employee fringe benefit. However, the court concluded that there was evidence that the chef was an employee, and accordingly it could not dismiss the case. The court noted that in deciding whether or not a worker is an employee for purposes of federal civil rights laws, the courts must apply the “common law employee test”. It quoted from a recent Supreme Court ruling that described this test (note the similarity to the test the IRS uses in defining employees for federal tax purposes):

In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party’s right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party’s discretion over when and how long to work; the method of payment; the hired party’s role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.

The court cited the following factors the indicated employee status: (1) the monastery provided the chef’s equipment; (2) the monastery hired and paid the chef’s assistants; (3) the chef had worked for ten years at the monastery, and was required to work five or six days each week; (4) the chef had to comply with various reporting requirements imposed by the monastery; and (5) the chef’s work was done at the monastery. The court concluded that from this evidence “there is a genuine issue whether [the chef] was an employee of the [monastery].”

After concluding that there was sufficient evidence of employee status to send the case to trial, the court addressed the question of whether or not the basis for the chef’s dismissal was unlawful age discrimination. The monastery claimed that it dismissed the chef because of dissatisfaction with the quality and variety of food he prepared. However, the chef claimed that this was a mere “pretext” to disguise the fact that he had been dismissed on account of age. In support of his case, the chef produced a letter from a representative of the monastery, dated just a few months before the chef’s dismissal, that stated in part:

I am writing to commend the talents and services of [the chef]. I have known [the chef] for about eleven years, since he first came to [the monastery]. His performance quickly earned him appointment as head chef, a position he has held for about ten years …. [H]is indomitable spirit and friendly manner made each and all feel that their needs were important and were addressed and served. Special celebrations for feasts, holidays and a weekly cocktail party all served to bring [the chef’s] culinary creativity to special performance level. Each special occasion was concluded with a round of applause for [the chef] and his staff. To have served the food needs for such a demanding and varied public with style and sensitivity is a true achievement. To have done so with distinction for a decade is achievement of the very highest order. [The chef] will not disappoint the client that entrusts with him their fondest culinary expectations.

The court concluded that this letter, praising the chef’s performance, and written just a few months before his dismissal, “creates a genuine issue of fact as to whether the proffered reason for his termination was the true reason.” It left to the jury the task of deciding whether the monastery’s dismissal was in fact based on unacceptable quality, or upon the chef’s age.

This case is important for two reasons: (1) It illustrates the liberal definition of “employee” under the federal age discrimination law. A worker may be deemed to be an employee for purposes of federal age discrimination law despite the fact that the employer treats the worker as an independent contractor for tax purposes. (2) Churches must recognize the potential effect of issuing complimentary letters or evaluations to employees that are later dismissed. The court in this case viewed such an apparent contradiction as proof that the employer may have dismissed the employee on account of unlawful age discrimination and not on the basis of unacceptable performance (as the employer insisted). One final point—few local churches are covered by the federal age discrimination law since they have fewer than 20 employees. Even churches with 20 or more employees will not be covered by the law unless they are engaged in interstate commerce. Very few local churches have been found by the courts to be engaged in commerce for purposes of federal civil rights laws. Stouch v. Brothers of the Order of Hermits of St. Augustine, 836 F. Supp. 1134 (E.D. Pa. 1993).

See Also: Age Discrimination in Employment Act

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