Unemployment Benefits and Religious Employees

Religious employees are exempt from unemployment benefits in some states.

Church Law and Tax 1992-01-01 Recent Developments

Unemployment Taxes

A New York state court ruled that a state law exempting “persons employed at a place of religious worship” from unemployment benefits did not violate the first amendment’s “nonestablishment of religion” clause. A teacher who had been employed by a religious school sought unemployment benefits. Benefits were denied on the ground that she had been employed by a religious school. The teacher claimed that the state law exempting religious employees from unemployment coverage was unconstitutional. A state appeals court disagreed. It applied a 3-part test announced in 1971 by the United States Supreme Court. Under this test, a law that appears to favor religion will be struck down unless it satisfies 3 conditions—it has a secular purpose, it has a primary effect that neither advances nor inhibits religion, and it does not create an “excessive entanglement” between church and state. The court concluded that the New York law exempting religious employees from unemployment benefits satisfied this test. It further noted that the Supreme Court has ruled that “government policies with secular objectives may incidentally benefit religion.” Such was the case here. This case contrasts starkly with a 1989 decision of the Oregon Supreme Court that found an exemption of religious employees to be unconstitutional (see the November-December 1989 issue of Church Law & Tax Report). The Oregon decision remains an unfortunate precedent that has not been followed by any other court. Claim of Klein, 563 N.Y.S.2d 132 (Sup. Ct. 1990).

See Also: Unemployment Taxes

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