Former Teacher Sues School for Breach of Contract

Court rules that teacher may sue former employer.

Church Law and Tax 1997-03-01

Employment Practices

Key Point. In some states, a religious organization’s decision to dismiss an employee may be subject to civil court review if the employee performed no “ministerial functions.”

Key Point. Employee handbooks can limit an employer’s legal right to dismiss “at will” an employee hired for an indefinite term.

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 appeals court ruled that a church school could be sued on the basis of breach of contract by a teacher who was dismissed. The facts of the case are simple. A second grade teacher was informed, after 23 years of teaching at a parochial school, that her school was being closed and that she was not going to be offered a teaching position in another parochial school. The teacher sued the school and diocese, claiming that her dismissal amounted to age discrimination in violation of federal law. She also asserted that the school and diocese had breached her contract of employment. A jury rejected the teacher’s age discrimination claim, but agreed with the teacher that the school and diocese had breached her employment contract and awarded her $83,000 in damages. Specifically, the jury found that the school’s “teachers’ handbook” was part of the teacher’s employment contract and that the school breached this contract by failing to follow a provision requiring it to objectively evaluate each teacher according to specified criteria. The school and diocese appealed. Their main argument was that the court’s resolution of the breach of contract claim was prohibited by the first amendment’s nonestablishment of religion clause, which prohibits entanglement between church and state. The court disagreed, noting that “[r]eligious groups … are generally not immune from all governmental regulation of their employment relationships, or from court enforcement of those laws.” The court concluded:

[T]he judicial enforcement of state employment contract law generally requires little intrusion into the functioning of religious institutions. Furthermore, the only reference to religion made by the diocese is its conclusory allegation that [the teacher] was not hired at [another school] because she “did not adequately prepare children for the sacraments.” We believe that this allegation … did not put into issue the validity or truthfulness of Catholic religious teaching. The diocese’s entanglement argument must be rejected.

The court conceded that there may be cases of age discrimination where “the relationship between employee and employee is so pervasively religious that it is impossible to engage in an age—discrimination inquiry without serious risk of offending the [nonestablishment of religion] clause.”

This case illustrates two important points. First, churches and church schools will be less vulnerable to discrimination and breach of contract claims if they create job descriptions emphasizing the spiritual aspects of each position. Many courts have ruled that teachers parochial schools are performing a vital religious function. Unfortunately, this was not adequately documented or argued in this case. Second, the case illustrates the importance of following those procedures (such as periodic employee evaluations) mandated by an employee manual or handbook. If these policies are clearly set forth, but then ignored, a church or school risks being sued for breach of contract. Gargano v. Diocese of Rockville Centre, 80 F.3d 87 (2nd Cir. 1996). [Discharge and Discipline of Teachers, Application of Federal Labor and Discrimination Laws to Private Schools]

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