Employment Practices – Part 1

A New York court ruled that it was prevented from resolving a lawsuit brought by former church employees challenging their dismissal by the church.

Church Law and Tax2000-09-01

Employment Practices

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. Termination

Key point 8-04. 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.” Termination of Employees

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 New York court ruled that the first amendment guaranty of religious freedom prevented it from resolving a lawsuit brought by former church employees challenging their dismissal by the church. Four church employees entered into one-year written employment contracts with their employing church. The four employees occupied the positions of outreach director, family minister, hospitality minister, and adult education minister. The employment contracts were by their terms automatically renewable after one year unless the church’s administrative team decided to terminate the contract due to financial concerns or poor job performance.

After the church had employed each of the four employees for several years, the church employed a new senior pastor. The senior pastor appointed a new church administrator, and this appointment was not well received by the four employees and others. The four employees, and other staff members, signed a statement opposing the appointment of the new administrator. This statement was read to the congregation following a worship service.

As a result of these and other actions, the four employees were sent letters from the church informing them that they were being dismissed. The letters based this action on “continued refusal to cooperate with and follow the directives of the new pastor.” At the time the letters were sent, each of the four employees had several months remaining on his or her one-year contract of employment.

The four dismissed employees sued their church, claiming that their dismissals amounted to a breach of their written one-year contracts. The church asked the court to dismiss the lawsuit on the ground that it was barred by the first amendment, which prohibits the civil courts from resolving religious disputes.

The court conceded that the first amendment requires that “religious bodies be left free to decide church matters for themselves, uninhibited by state interference.” On the other hand, the court noted that a state “has freedom to adopt any approach to resolving religious disputes which does not entail consideration of doctrinal matters.” It noted that many courts have resolved church property disputed on the basis of “neutral principles of law” involving no consideration of religious doctrine (such as nondoctrinal language in deeds, charters, or bylaws).

The four employees claimed that their lawsuit did not present a “religious dispute” to be resolved, and that the court could resolve their claims of breach of contract by applying “neutral principles of law.” The church countered by insisting that a resolution of the employees’ lawsuit would require the court to focus not only on the language of the employment contracts, but also on the Code of Canon Law, the staff reference manual, and the nature of the underlying dispute between the parties. Such inquiries, the church asserted, would inevitably plunge the court into a religious controversy.

The court observed:

This court has authority to resolve contract issues where the case is capable of being determined solely upon the application of neutral principles of contract law, without resolving any controversy over religious doctrine. Such disputes relating purely to the secular terms of an employment agreement, lend themselves to being decided under the neutral principles theory. In order to assess whether the “neutral principles of law” approach is appropriate for this case, the court must determine whether any religious doctrinal issues need to be passed upon, whether implementation of a religious duty is contemplated, and whether there will be any interference with religious authority as a result of the outcome.

The court noted that the employees’ lawsuit in this case “sets forth claims for breach of employment agreements, without raising any issues of religious doctrine,” and that the “crux” of the lawsuit is that the church breached the employment contracts by dismissing the four employees. However, the court stressed that all four employees

were dismissed on the basis that they refused to cooperate with and follow the directives of the new pastor …. Therefore, in order for this court to decide this dispute it is necessary for the court to resolve the underlying controversy as to whether the pastor … has the right to terminate employees holding ministry positions that are to promote the religious positions and beliefs of the church.

The court noted that each of the four employees had been employed in a ministry position “directly related to the religious doctrine to be promoted by the church.” The court pointed out that at the time the church hired its new pastor, there was turmoil in the church regarding the appropriate religious doctrine, ceremonies, and beliefs that were to be promoted by the church. The employment agreements dealt with this dispute by including a provision addressing the “beliefs and tenets” that the employees had to embrace: “At no time shall any employee be forced to subscribe to the beliefs and tenets of any entity or organization, except those specifically contained in the mission statement of [this church].” In addition, contracts were renewable at the end of their one-year term unless the church’s administrative team decided to terminate the contract due to financial concerns or poor job performance by the employee. These terms in the employment contracts agreements “attempt to protect the employees from having any beliefs or tenets imposed by a new pastor.”

The court concluded that it could not resolve the employees’ lawsuit without delving into religious considerations, and as a result it dismissed the case. It concluded,

The controversies at issue in this action are not related to purely secular terms of the contract, but instead relate to the right of the newly appointed pastor … to terminate people performing ministry for the parish. The papers submitted by both parties establish that the dispute is directly related to differences in religious beliefs between the new pastor and the prior administrator. This court will not interject itself into resolving religious disputes as to the rights and authority of … a pastor to terminate employees performing ministry duties of a church, and the enforcement of contract terms directly addressing religious beliefs. To decide otherwise would require this court to resolve underlying controversies over religious doctrine. The court is barred by the Constitution from interfering in religious disputes. The Constitution directs that religious bodies are to be left free to decide church matters for themselves, uninhibited by state interference.

The court did concede that it could resolve employment disputes involving (1) an alleged failure by a church to pay the full amount of compensation called for in an employment contract, or (2) employment of a custodian or other secular position. In either of these cases, the court noted that it might be able to apply neutral principles of contract law to determine the specific secular issues related to the contract.

The court also rejected the employees’ argument that the church failed to follow its “progressive discipline” policy contained in the employee handbook. Under a progressive discipline policy, employees are disciplined more and more severely depending on the nature and recurrence of the offending behavior. The employees insisted that the church violated this policy by terminating them without first applying more lenient sanctions. The court disagreed, noting that the policy does not require in all cases a step by step procedure for imposing discipline, but rather permit the church to dismiss an employee without first attempting less severe sanctions.

Application. There are a number of important points to note about this case.

1. The civil courts ordinarily will not interfere with a church’s employment decisions regarding employees in “ministry” positions. The courts are more likely to resolve disputes involving “secular” positions, but only if they can do so on the basis of neutral principles of contract law without any inquiry into religious doctrine or practice.

2. Churches can reduce the likelihood that a civil court will resolve employment disputes involving their employees by inserting “religious conditions” in employee handbooks or employment contracts. Such conditions could include allegiance to church doctrine and practice, and the avoidance of unscriptural behavior. The handbook or contract should clarify that the pastor or church board shall make the final decisions concerning noncompliance with these conditions.

3. Many churches include “progressive discipline” policies in their employee handbooks. As this case illustrates, such policies should clarify that employees remain subject to discipline for their behavior; that discipline may include dismissal; and that dismissal need not be preceded by one or more less severe sanctions.

4. The employees in this case were employed for renewable one-year terms. One consequence of hiring employees for specified terms is that they are not “at will” employees and may be dismissed only for “good cause.” An “at will” employee is hired for no specified term. Such employees may be terminated at any time, with or without notice or cause, subject to several exceptions. On the other hand, the employee can terminate the relationship at any time, without facing liability. In general, it is more difficult to terminate employees hired for definite terms. Smith v. Clark, 709 N.Y.S.2d 354 (Sup. 2000).

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