• Key point. Denominational agencies may be liable for the acts of persons employed by affiliated organizations.

The Louisiana Supreme Court ruled that a Catholic archdiocese might be legally responsible for the molestation of a parochial school student by a school principal. A couple claimed that their minor child was molested when he was a kindergarten student. A trial court dismissed the lawsuit, noting that the archdiocese and school were separate legal entities; that the principal was an employee of the school; and, absent an employment relationship, the parents’ claims against the archdiocese under the theories of negligent hiring, negligent supervision, and negligent retention could not be maintained. A state appeals court agreed with these conclusions, and the parents appealed to the state supreme court. The supreme court ruled that there was sufficient evidence of an “employment” relationship between the archdiocese and principal that the case should have gone to the jury. It noted that an employee may be employed by more than one employer. The fact that the principal was a school employee did not prevent him from being an employee of the archdiocese. Further, there was evidence demonstrating that the archdiocese and school were not separate legal entities, but rather were part of a “hierarchical” relationship with the archdiocese exercising control over the school. The court then addressed the question of whether the principal was an employee of the archdiocese:

The single, most important factor to consider in deciding whether the employer-employee relationship exists … is the right of the employer to control the work of the employee. The right of control necessarily encompasses supervision, selection and engagement, payment of wages or salary, and the power to dismiss.

The court concluded that there was evidence that the archdiocese met three of these four factors-it exercised substantial supervision over its schools and principals, it was directly involved in the selection of principals, and, it had the authority to dismiss principals. The court conceded that the archdiocese did not pay principals’ salaries, but it concluded that the control the archdiocese did exercise over school principals was sufficient to establish an employment relationship: “The archdiocese exercised a discernable degree of supervision and control, an important factor in analyzing employment relationships. The archdiocese was also involved in the hiring and the dismissal of [the principal].”

Application. The court’s unduly expansive interpretation of the term “employee” will encourage plaintiffs to sue denominational agencies as well as local churches for the acts of clergy and church employees. It is unfortunate that the court did not address several critical questions that are directly relevant in deciding if a worker is an employee of a particular organization: Did the archdiocese withhold federal income taxes from the principal’s wages? Did it withhold state taxes? Did it withhold FICA taxes? Did it obtain workers compensation for the principal? Did it issue the principal a W-2 form each year? Did it include the principal’s wages and withholdings on Form 941 (employer’s quarterly tax returns)? Did it require the principal to complete an I-9 immigration form? These are questions that should have been addressed. Perhaps they will be by the trial court. Doe v. Parauka, 714 So.2d 701 (La. 1998). [Clergy Status-Employee or Self-employed, Negligence as a Basis for Liability, Denominational Liability]

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