Employee Relations

Church Law and Tax 1989-11-01 Recent Developments Employee Relations Richard R. Hammar, J.D., LL.M., CPA

Church Law and Tax 1989-11-01 Recent Developments

Employee Relations

The Iowa Supreme Court ruled that a church-sponsored retirement center had not acted improperly in dismissing a female custodian. The custodian and her husband had been hired as a “team” and were required to live in an apartment on the premises. The husband was employed as building superintendent. A year after the couple was hired, the husband was dismissed because he allegedly had circulated notes threatening the administrator. The wife was also dismissed because “the termination of [her husband’s] employment necessarily destroyed the team concept,” and also out of a concern that her “effectiveness would be hampered by resentment” over her husband’s dismissal. She sued the center, claiming that her discharge constituted sex discrimination, breach of contract, and a violation of “public policy.” A trial court and a state appeals court ruled in favor of the center, and the wife appealed to the state supreme court. The supreme court also rejected the wife’s claim. In rejecting the allegation of sexual discrimination, the court observed that the center had established a legitimate nondiscriminatory reason for firing the wife: “[Her] husband could no longer remain at the center because of the threats he had made. Budgetary and economic concerns as testified to by the center’s witnesses would not have allowed the center to provide separate apartments for [the wife] and a new superintendent. Further, allowing [her] to live off of the premises would not have been a reasonable alternative because the team concept would have been destroyed. In these circumstances, the [trial court] could rationally conclude that the center’s decision to terminate [the wife’s] employment was reasonable and had not been motivated by a discriminatory [intent].” The court concluded that the wife had failed to prove that the center’s alleged reasons for terminating her were a “pretext for discrimination.” The court also rejected the wife’s “breach of contract” claim. Specifically, the wife acknowledged that either an employer or an employee has the authority to terminate an employment relationship “at will,” but she insisted that the center’s authority to terminate her had been limited by its stated “personnel policies.” The court agreed that an employer’s “personnel policies” (whether contained in an employee handbook or otherwise) can become part of an employee’s oral or written contract of employment if the parties so intend, and such policies may limit an employer’s authority to terminate an employee. The court concluded that even if the parties intended that the center’s personnel policies be a part of the wife’s employment contract, this would not have affected the center’s right to fire the wife since the personnel policies only limited the center’s authority to dismiss employees on the basis of misconduct (and the wife had not been dismissed as a result of any misconduct on her part). Finally, the court rejected the wife’s claim that her dismissal violated “public policy.” It observed that under Iowa law an employee termination violates public policy only if it is based upon an employee’s filing of a workers’ compensation claim. This case illustrates the importance of reviewing proposed employee dismissals to ensure that they are based on provable nondiscriminatory grounds. It also illustrates that personnel policies and employee handbooks may inadvertently limit a church’s authority to dismiss employees—if they are deemed to be a part of the employee’s oral or written employment contract. Finally, note that the dismissal of an employee for filing a workers’ compensation claim constitutes a violation of public policy in several states, and will subject the employer to potential legal liability. Hamilton v. First Baptist Elderly Housing Foundation, 436 N.W.2d 336 (Iowa 1989).

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