Unemployment Benefits – Part 1

State unemployment compensation laws generally do not apply to persons employed by church-operated child-care centers.

Church Law and Tax 2006-09-01

Unemployment benefits – Part 1

Key point. State unemployment compensation laws generally do not apply to persons employed by church-operated child-care centers.

* A Florida court ruled that a woman who was employed as a caregiver in a church-operated child-care center was not eligible for unemployment benefits following the termination of her employment. A woman (Beth) worked as a childcare giver for a separately incorporated child-care center operated by a church. Following the termination of her employment, she sought unemployment benefits. A state agency ruled that Beth was entitled to unemployment benefits, and she appealed. A state court concluded that she was not eligible for benefits. It noted that employees generally are entitled to unemployment compensation benefits when their employment is terminated by their employer. However, Florida law specifies that ‘the term employment does not apply to service performed in the employ of: (a) a church or convention or association of churches, or (b) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled, or principally supported by a church or convention or association of churches.’ The court concluded that the second exception applied in this case since the child-care center was operated primarily for religious purposes and was operated, supervised, controlled, or principally supported by the church. It noted that the child-care center was ‘primarily subsidized by the church,’ and so the only remaining question was whether it was operated primarily for religious purposes. In answering this question in the affirmative, the court noted:

The church’s bookkeeper testified that the function of the child care center was to take care of children and provide an outreach for the church. Likewise, Beth’s testimony that she worked only with small children, performing day-to-day responsibilities, with no direct contact with the church, is irrelevant in determining the primary purpose of the child care center [since the exemption] is phrased entirely in terms of the nature of the employer, and not in terms of the work performed or the place at which the employee works. Further, the employee policy, which Beth signed, indicates that religious purposes pervade all aspects of the day care center. Peace Lutheran Church v. State of Florida, 906 So.2d 1197 (Fla. App. 2005).

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