Defending Against Claims of Discrimination

Why financial misconduct defense trumped sexual harassment claim in NC case.

Church Finance Today

Defending Against Claims of Discrimination

Why financial misconduct defense trumped sexual harassment claim in NC case.

A federal court in North Carolina dismissed a church employee’s allegations of sexual harassment on the ground that the church had offered a legitimate non-discriminatory reason for dismissing her. The employee (the “plaintiff”), who was the senior pastor’s administrative assistant, obtained a church member’s three contribution checks from the financial secretary’s mailbox, and then entered a designation for each check on its memo line which referred to a church account that did not exist. When the senior pastor learned of the plaintiff’s actions, he confronted her. She admitted her conduct was wrong, and offered to resign. The pastor informed her the following day that she had the option of resigning or submitting to an investigation by the church’s staff-parish relations committee in accordance with the church’s bylaws. He cited “dishonesty and breach of confidentiality” as reasons for his ultimatum.

The court noted that a plaintiff in a sexual harassment lawsuit has the initial burden of proving that the employer engaged in the discriminatory practice. A plaintiff can meet the initial burden of proof by establishing a “prima facie case” of discrimination by a preponderance of the evidence. This is done by showing that (1) the plaintiff is a member of a class protected by a federal, state, or local civil rights law; (2) the plaintiff suffered an adverse employment decision (such as not being hired if a job applicant, or being dismissed or disciplined if an employee); (3) a direct relationship exists between membership in the protected class and the adverse employment decision.

If the plaintiff is successful in making out a prima facie case of discrimination, then a presumption of discrimination exists, and the burden shifts to the employer to show a legitimate, nondiscriminatory reason for the adverse employment decision. If the employer demonstrates a nondiscriminatory reason for the adverse employment action, then the presumption is rebutted and the plaintiff must prove that the nondiscriminatory reason was a “pretext” for discrimination.

The court concluded that even if the plaintiff had met her initial burden of proof by establishing a prima facie case of harassment, her claim still would have to be rejected because the church had proven a legitimate, nondiscriminatory reason for dismissing her:

The evidence shows that the plaintiff, who did not have any authority over church finances, removed a check from the financial secretary’s mailbox and placed a notation on and next to [the donor’s] check indicating that the money was to be directed to a special fund that did not exist. [The senior pastor] felt that any inkling of financial misconduct could negatively affect the financial well being of the church, which relied on donations.

In his memo to the chairwoman of the staff-parish relations committee [the senior pastor] cites dishonesty and breach of confidentiality as reasons for disciplinary action. The memo, in essence, proposed alternatives: giving the plaintiff the option of resigning or having a full and open hearing as outlined by the [church bylaws] with a possible adverse result ranging from probation to termination. The plaintiff, in fact, admitted she had done something wrong and offered to resign even before the senior pastor presented her with this memo. At her meeting with the senior pastor the plaintiff admitted that disciplinary action would be appropriate and chose resignation.

Mishandling of church finances is a legitimate reason for taking adverse action against an employee. Therefore, the church has met its burden of articulating a legitimate non-retaliatory reason for its treatment of the check incident.

The court acknowledged that the plaintiff could still prevail in her harassment claim if she could prove that the church’s allegedly nondiscriminatory basis for its decision to terminate her employment was a pretext for discrimination. The plaintiff insisted that the senior pastor chose to get rid of her in retaliation for her reporting previous acts of sexual harassment involving church staff. While such allegations, if supported by evidence, could overcome the church’s alleged nondiscriminatory basis for its actions, the court concluded that she had failed to produce any supporting evidence to support such a theory:

Her assertions that the senior pastor acted out of a discriminatory motive are not substantiated by any evidence other than her own opinion. While she may feel that she did not deserve either of the alternatives presented to her by the church, it is not the province of the court to determine whether an employment decision is wise, fair or correct, only whether it is discriminatory. Because she cannot point to any evidence that indicates that the church used the check incidents as a pretext for a retaliatory action against her, she has not presented sufficient evidence to raise a genuine issue of material fact that may be submitted to a jury. 2008 WL 5216192 (M.D.N.C. 2008).

This article first appeared in Church Finance Today, June 2009.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

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