Sexual Harassment Suit Proceeds Against Local Church, but Not Denomination

Denominations are not held liable for acts of individual churches.

Church Law & Tax Report

Sexual Harassment Suit Proceeds Against Local Church, but Not Denomination

Denominations are not held liable for acts of individual churches.

KEY POINT 8-09.1 Many federal employment and civil rights laws apply only to those employers having a minimum number of employees. In determining whether or not an employer has the minimum number of employees, both full-time and part-time employees are counted. In addition, employees of unincorporated subsidiary ministries of a church are counted. The employees of incorporated subsidiary ministries may be counted if the church exercises sufficient control over the subsidiary.

KEY POINT 8-12.5 Sexual harassment is a form of sex discrimination prohibited by Title VII of the Civil Rights Act of 1964. It consists of both “quid pro quo” harassment and “hostile environment” harassment. Religious organizations that are subject to Title VII are covered by this prohibition. An employer is automatically liable for supervisory employees’ acts of harassment, but a defense is available to claims of hostile environment harassment if they have adopted a written harassment policy and an alleged victim fails to pursue remedies available under the policy. In some cases, an employer may be liable for acts of sexual harassment committed by nonsupervisory employees, and even nonemployees.

* A North Carolina federal court ruled that a female church employee could proceed with a sexual harassment lawsuit against her church, but it dismissed her claims against a denominational agency. A female employee (the “plaintiff”) of a Methodist church sued her church and the Annual Conference (“Conference”) alleging sexual harassment and discrimination in violation of Title VII of the Civil Rights Act of 1964. Title VII prohibits any employer, including a church, that is engaged in commerce and that has 15 or more employees from discriminating in any employment decision as a result of a person’s race, color, national origin, sex (including sexual harassment), or religion. The plaintiff alleged that a church employee “engaged in a pattern of sexual harassment, verbal abuse, and physical threats directed towards her, and false statements to church members and staff about her, that created a hostile and unsafe work environment.”

Liability of the Conference

The Conference asked the court to dismiss it from the lawsuit on the ground that it was not the plaintiff’s employer and therefore could not be liable for violating Title VII. The plaintiff insisted that the Conference was her employer because it exercised sufficient control over her employment through its supervision of her employing church and through its authority to direct the pastor of the church. The plaintiff asserted that her church, and the Conference, should be viewed as a single employer under the “integrated employer” theory. Under the “integrated employer” theory several entities may be considered so interrelated that they constitute a single employer. The court applied the following factors to determine whether various entities were an “integrated employer”: (1) common management; (2) interrelation between operations; (3) centralized control of employment relations; and (4) degree of common ownership or financial control. The integrated employer test “instructs a court to determine what entity made the final decisions regarding employment matters related to the person claiming discrimination.” As a result, in order for the Conference to be considered the plaintiff’s employer, “there must be evidence that the Conference made the final decisions regarding employment matters related to her.”

In support of her argument that the Conference was her employer, the plaintiff focused on the hierarchical nature of the United Methodist Church, particularly the annual charge conference. She asserted that the Conference assigns pastors to churches, monitors the performance of pastors by ensuring that the local church adheres to the Book of Discipline, and reviews the annual budget of the local church. The court noted that “although the evidence demonstrates that the district superintendent, and thus the Conference, has general awareness and oversight regarding the activities of the local church, the undisputed evidence is that neither the Conference nor the district superintendent manage or are even involved in the day-to-day operations of the church.” For example, there was no evidence that the Conference “made the final decisions regarding employment matters related to” the plaintiff.

The court concluded: “In sum, there is nothing in the record suggesting that the Conference exerted any control over the plaintiff’s employment. On these facts, it can be determined as a matter of law that the Conference was not the plaintiff’s employer.” As a result, the court granted the Conference’s motion to dismiss it from the case.

Liability of the church—the 15-employee requirement

The church asked the court to dismiss the plaintiff’s Title VII claims against it on the ground that it was not subject to Title VII since it had fewer than 15 employees. Title VII applies to any employer who “has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year.” The conduct that the plaintiff alleged constituted a violation of Title VII occurred between December 2003 and April 2005. As a result, the court noted that the “current” and “preceding” years for purposes of the Title VII claim are 2002 to 2005. The church asserted that it did not have 15 or more employees for twenty weeks in each of those years. In particular, it noted that (1) in 2002, it had no more than 12 employees employed for more than 20 weeks; (2) in 2003, it had no more than 12 employees employed for more than 20 weeks; (3) in 2004, it had no more than 14 employees employed for more than 20 weeks; and (4) in 2005, although it had 15 or more employees for at least 20 weeks, there were not twenty calendar weeks in 2005 in which at least 15 of those employees were employed at the same time. The church based its calculations on the “payroll method” utilized by the Supreme Court in Walters v. Metro. Educ. Enters., Inc., 519 U.S. 202 (1997). Under this test, only those persons who appear on an employer’s payroll, and who meet the test of an employee, are included in applying the 15-employee test. Persons who appear on an employer’s payroll, but who are not employees, “do not count toward the 15-employee minimum.”

The plaintiff claimed that in addition to the employees listed on the church’s payroll, the church had an employment relationship with two seminary interns. The plaintiff conceded that the interns were not listed on the church’s payroll, but she asserted that they should be considered employees because they worked at the church and the church paid some of their seminary tuition as compensation for their services. The court noted that one of the interns worked at the church for most of 2004, and that the church paid $13,200 toward his seminary tuition in that year. If the payment of this intern’s compensation constituted “indirect but significant remuneration” paid by church in exchange for his services, then he could be considered an employee of the church for 2004, which would have increased the church’s “payroll” to 15 employees for that year, thereby subjecting it to Title VII coverage. On this basis, the court refused to dismiss the plaintiff’s claims against the church, and ordered the case to proceed to trial.

The plaintiff also contended that the individuals who work at the church’s preschool should be considered church employees for purposes of Title VII. The church objected, noting that while the preschool was located on church premises it was “organizationally separate from the church and its employees.” In support of its argument, the church noted that the preschool “has a separate federal income tax identification number, maintains its own budgets, funds and personnel functions, and pays rent to [the church] for use of the church’s facilities pursuant to a written Use of Shared Space Agreement.”

The plaintiff countered by noting that (1) according to its bylaws, the preschool was “under the jurisdiction of” of the church council; (2) the preschool was designated by the church as one of its “nurturing ministries”; (3) the church newsletter reports news of the preschool; (4) the preschool director attends church staff meetings and prepares an annual report for the Conference; and (5) preschool employees are listed as church employees on an annual workers compensation form.

The court concluded that the plaintiff’s arguments regarding the preschool employees were sufficient to raise a legitimate question regarding the number of church employees and its coverage under Title VII, and on this basis it declined the church’s motion to dismiss the plaintiff’s Title VII claims against the church.

Application. This case is significant for three reasons.

  1. It demonstrates the potential liability of churches for acts of sexual harassment. This important topic is addressed fully in section 8-12.5 in Richard Hammar’s book, Pastor, Church & Law, Volume 3 (The Church Guide to Employment Law) (4th edition 2007).
  2. The case is yet another repudiation of the “single employer” or “single enterprise” theory in the context of denominational agencies and their affiliated churches. If these doctrines are ever successfully applied to denominational agencies and their affiliated churches, this would have the following consequences: (1) In applying Title VII’s 15-employee requirement, the employees of denominational agencies would be combined with employees of affiliated churches. This would have the effect of making Title VII applicable to virtually every church, no matter how small. Churches with only one or two employees would be subject to Title VII and EEOC scrutiny. (2) Denominational agencies, both national and regional, would be deemed responsible for many if not most of the obligations and liabilities of affiliated churches, including employment claims and sexual misconduct claims. The effect would be nothing short of catastrophic. Many denominational agencies would face liability for the acts and omissions of affiliated churches over whom they exercise little if any oversight. Fortunately, no court has reached this radical conclusion, and many have repudiated it.
  3. The court’s analysis of the 15-employee requirement was instructive. Wooten v. Epworth United Methodist Church, 2007 WL 2049011 (M.D.N.C. 2007).

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