Employment Practices

A federal court in New York ruled that it was barred from resolving a dismissed minister’s wrongful termination lawsuit against her church.

Church Law and Tax2005-03-01

Employment practices

Key point 8-06. The civil courts have consistently ruled that the first amendment prevents the civil courts from applying civil rights laws to the relationship between a church and a minister.
The Civil Rights Act of 1964

A federal court in New York ruled that it was barred by the first amendment guaranties of religious freedom and the nonestablishment of religion from resolving a dismissed minister’s wrongful termination lawsuit against her church and church officials. An ordained minister (Janet) accepted a position as a church’s associate minister. She entered into a written employment agreement with the church. The agreement provided that Janet would serve “at the pleasure of” the senior pastor, and, that if she were terminated for any reason (other than for cause) she would be given not less than one year’s prior written notice.” The agreement also provided for specified compensation and benefits, and authorized Janet to make disbursements from a “clergy discretionary fund” that had been created to allow her to “deposit and, at her sole discretion, disburse all donations received to support her ministry.”

After several months of employment, Janet was informed by the senior pastor that she was going to be terminated. The senior pastor asked Janet to sign a “termination letter” in which she agreed that her employment was terminated “for cause” based on inappropriate distributions she had made from the discretionary fund. The pastor presented Janet with a list of improper transactions, including several payments to the high school that her son attended; payments to babysitters; and the payment of expenses her son and two friends incurred on a ski trip with a religious youth group. Janet admitted that she had paid for these expenses, but defended them as having been properly made, at her discretion, to support her ministry. She refused to sign the termination letter.

Janet claimed that a denominational officer attempted to intimidate her into signing the termination agreement by informing her that if she failed to do so she could be charged in a formal complaint with “conduct unbecoming of a member of clergy.” The church terminated Janet’s employment and all of her benefits.

Janet alleged that the senior pastor, and a denominational officer, made false statements about her alleged misuse of her discretionary funds and other, unspecified “wrongdoing,” to members of the congregation and prospective employers. In an effort to discredit the allegations of misconduct, she documented each challenged financial transaction and requested an opportunity to present her evidence to the church board. When her request was rejected, she distributed written explanatory materials to all members of the church board. The senior pastor directed the vestry to return the materials unread.

Following her termination, Janet sued her church for breach of her employment agreement, wrongful discharge, and wrongfully denying her employment benefits. She also sued her pastor and a denominational officer, claiming that they had defamed her and damaged her professional reputation.

Freedom of religion

The “church defendants” claimed that the first amendment guaranty of religious freedom prevented a civil court from resolving employment disputes between a church and its minister. The court agreed that “if a lawsuit involves an employment decision by a church with respect to one of its ministers, courts lack jurisdiction because the [first amendment guaranty of religious freedom] bars court involvement in the employment relationship between a minister and a church.” This “absolute bar” developed under “a line of Supreme Court cases interpreting the free exercise clause as prohibiting courts from encroaching on a church’s ability to manage its internal affairs, particularly with respect to decisions regarding the selection and retention of clergy.” The court referred to the following Supreme Court rulings: (1) Gonzalez v. Roman Catholic Archbishop, 280 U.S. 1 (1920) (“it is the function of the church authorities to determine what the essential qualifications of a chaplain are and whether the candidate possesses them”); (2) Serbian Eastern Orthodox Diocese v. Milivojevich, 426 U.S. 696 (1976) (“questions of church discipline and the composition of the church hierarchy are at the core of ecclesiastical concern”); (3) Kedroff v. St. Nicholas Cathedral, 344 U.S. 94 (1952) (“free exercise clause protects the power of religious organizations “to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine”).

The court then cited several federal appeals court decisions that have considered “whether the free exercise clause precludes ministers from suing church employers for purported violations of federal anti-discrimination statutes. Those courts have held, unanimously, that the free exercise clause bars the application of these statutes to churches’ employment decisions concerning ministers. Courts have referred to this bar as being a ‘ministerial exception’ to, or a ‘ministerial exemption’ from, federal anti-discrimination statutes.” Each of the cited cases has been addressed fully in prior editions of this newsletter.

The court also pointed out that the “ministerial exception” prevents not only claims by ministers, but also claims by lay employees of religious organizations “when the lay employees serve a function sufficiently similar to that served by ministers.” Further, the ministerial exception applies to state “common law” claims (such as breach of contract, defamation, and interference with contract) as well as federal employment laws.

The court then examined Janet’s duties while employed by the church, and concluded that as assistant pastor she clearly was a “minister” for purposes of the ministerial exception. Her duties included liturgical participation, preaching, pastoral care, supervision of children’s ministries, and Women’s Bible Study. Therefore, the court was without authority to resolve Janet’s claims.

The court stressed that the first amendment did not bar the civil courts from resolving every dispute that might arise in the context of an employment contract between a minister and his or her church. For example, “in Janet’s employment agreement the church agreed to provide her with an apartment, and to pay her utilities. If the church failed to pay her utilities bills, and she chose to sue the church for breach, the first amendment would not bar such a lawsuit. The crucial distinction between that permissible suit, and this impermissible suit, is that this suit involves a challenge to the church’s decision to terminate Janet’s employment. The court cannot adjudicate such disputes.

Janet argued that this case would not require court involvement in a church’s decision regarding who is fit to be a minister, because the court was not being asked to order the church to do anything other than pay damages for breaching the employment agreement, and for its wrongful conduct surrounding that breach. The court disagreed: “Regardless of the relief requested, a court may not exercise jurisdiction over a case disputing the reasons why a church decided to terminate a minister …. The prohibition on a court resolving employment disputes between a church and its minister is founded on the principle that courts may not second-guess a church’s determination of who is fit to perform religious duties. It is irrelevant whether the end result of such a court determination would be damages or reinstatement.”

Nonestablishment of religion clause

The court also noted that a resolution of Janet’s lawsuit would violate the first amendment’s nonestablishment of religion clause, which “bars courts from exercising jurisdiction in cases where resolution of the dispute would result in the entanglement of government with religion,” since doing so would require the court to determine “whether the discretionary fund was used in furtherance of Janet’s ministry.

Application. This case is important for the following reasons: (1) The ministerial exception has been almost universally recognized by both federal and state courts, and it provides churches with virtual immunity from employment discrimination claims by current or former ministers. (2) The term “minister” is not limited to ordained clergy, but can include lay employees when they “serve a function sufficiently similar to that served by ministers.” (3) The ministerial exception applies to state “common law” claims (such as breach of contract, defamation, and interference with contract) as well as federal employment laws. (4) The court acknowledged that some disputes between a minister and church may be resolved by the civil courts if (i) no interpretation of church doctrine is required, and (ii) the dispute does not involve a minister’s termination. (5) Judicial resolution of employment disputes between a church and a minister is barred not only by the first amendment’s guaranty of religious freedom, but also by the first amendment’s nonestablishment of religion clause. Kraft v. The Rector, Churchwardens and Vestry of Grace Church, 2004 WL 540327 (S.D.N.Y. 2004).

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