Dynamic Cash-Flow Forecasting is Key to Managing Rapid Change

Budgeting during a time of rapid change is a matter of ditching the annual budget and doing some dynamic cash-flow forecasting and planning.

Q: Our church has always tried so hard to stick to our budget. What do we do about budgeting in times of rapid change and uncertainty? What are some strategies for preserving cash, if that’s one of the things we should be doing?


Here’s some fairly radical advice as it relates to budgeting—radical in the sense that this is not conventional church financial management wisdom: Stop focusing on your regular annual budget. For churches experiencing rapid changes in their giving levels, the annual budget developed months ago is largely irrelevant.


Looking for help with other critical church finance topics? Pick up the second edition of Batts’

Church Finance: The Church Leader’s Guide to Financial Operations


I realize that as a matter of church governance and policy, you might have to have a budget. But what you planned when you developed that budget is no longer reality. Your spending levels and spending categories most likely have changed. Your revenue levels may be very different. So, what do you do?

Stop focusing on what you’re calling the budget and start doing what I call dynamic cash-flow forecasting and planning. That may sound like a fancy term. Dynamic just means it’s changing. It’s moving. And cash-flow forecasting and planning means estimating what’s going to happen, as best you can, and continuously updating your estimate based on new developments as they unfold.

Forecast this way each week over the next few months. Estimate as best you can, and adjust the forecast frequently based on new developments.

What dynamic cash-flow forecasts look like

Weekly cash-flow forecasts could start with a spreadsheet in which you start with your beginning cash and then project your expected cash inflow and your expected cash outflow. Put simply: cash inflow, which might include borrowing, is cash that’s coming into your church. And then cash outflow, including debt service—is whatever cash is going out for whatever purpose. And then, of course, the difference between your expected inflow and your expected outflow is your expected net cash flow. Add your beginning cash to your expected net cash flow; this would be your expected ending cash.

Forecasting also includes modeling different scenarios with different assumptions. If giving for your church so far is relatively flat, you should model one scenario that shows your giving level staying flat. You might also want to model a scenario of your giving level going down by 10 percent or 15 percent, or whatever makes sense to you depending on your current circumstances and trending. You might want to run various scenarios and update them each time as you have better information about what seems to be happening.

Weekly cash-flow forecasts should be developed for a reasonable and appropriate period of time in the future. I would suggest at least eight to ten weeks out. A forecast much shorter than that has little value for cash-flow planning and strategic decision-making. And in a highly dynamic environment, a forecast much longer than that is likely to have less reliability.

Rolling budgets

Rolling budgets are an alternative to annual budgets suitable for some churches to use as their regular approach to budgeting. Maintaining weekly cash-flow forecasts is an accelerated version of maintaining rolling budgets. Maintaining rolling budgets is not a “do it once a year” approach to budgeting. (I discuss this process on pages 18 and 19 of Church Finance: The Church Leader’s Guide to Financial Operations.)

Churches that are experiencing rapid growth are good candidates for rolling budgets, since their revenue and expense levels change more rapidly than a full-year budget is typically designed to address. Normally, for churches that utilize rolling budgets, I would recommend updating the rolling budget approximately quarterly. But these are not normal times. For this reason, I recommend updating it weekly—or every time you learn or observe something new and different. Doing this allows you to better manage cash and financial activities during a dynamic or very challenging, rapidly changing season.

Editor’s note. For additional details on dynamic cash-flow forecasting and planning—along with a helpful PowerPoints on the topic—see the free video of Mike Batts’s webinar with Church Law & Tax.

Protecting and preserving cash

Now, regarding protecting and preserving cash. While this is not conventional financial management, I suggest churches consider drawing on a line of credit—if you have a line of credit available. Borrowing money to pay operating expenses is a very high-risk proposition, and I am not saying you want to spend the borrowed funds on operations. Only do so if it’s deemed absolutely essential—and only if you have a viable plan to pay off the borrowed funds.

The main reason I suggest this is the risk that the bank may curtail your line of credit if it is not used. Banks curtailed lines of credit significantly during the Great Recession and it can easily happen again. Borrowing the funds can prevent a scenario where you go to borrow the funds later. . . only to be told by the bank that it has frozen your line of credit due to financial concerns. (Don’t forget to consider FDIC insurance levels with respect to your bank deposits. If you have significant bank account balances, you may wish to diversify the funds among multiple banks—banks also have economic risks in the current environment.)

For churches that do not have a line of credit—and if you, again, want to preserve cash—you may want to consider carrying a balance on a credit card account. Again, I stress that this is not traditional advice. It will be important to review your modeling—looking at the future. Maybe you have a loan that has been approved but not yet funded. This means, though, that those funds should be coming in. In the meantime, you could cautiously use the credit card in order to stay afloat until you have the needed funds from, say, the PPP money. When you are more financially stable, you would pay off the credit card. Keep in mind, though, that this is very short-term strategy.

Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

When Does the Clergy-Penitent Privilege Exempt Reporting Child Abuse?

Montana Supreme Court interprets the state’s mandatory child abuse reporting law did not apply and rules in favor of church.

Every state has a child abuse reporting law that requires designated “mandatory reporters” to report known or reasonably suspected child abuse.

Ministers are mandatory reporters in many states. However, some states exempt ministers if they learned of the abuse through conversations protected by the clergy-penitent privilege—communications made in confidence during spiritual counsel.

This article explores a Montana Supreme Court decision interpreting the state’s mandatory child abuse reporting law and the clergy-penitent privilege.


Background: $35 Million Judgment Reversed

Case: Nunez v. Watchtower Bible & Tract Society, 2020 MT 3 (2019)

In 1998, one of three siblings reported to a church elder that her step-father had inappropriately touched and fondled her as a child.

  • The elder directed her to two other elders.
  • They dismissed her allegations, citing the lack of a confession or a second witness, which they required before taking action.
  • With no church support, the victim returned home. The abuse escalated to repeated incidents of rape until she was old enough to leave.

In 2004, another sibling reported similar abuse to a different elder.

Church’s actions:

  • The elder obtained a signed corroborating letter from another sibling.
  • He contacted the national denomination’s legal department. An attorney advised that Montana law did not require reporting the abuse to authorities.
  • Acting on this advice, no police report was made.

Instead:

  • Three elders formed a judicial committee to confront the step-father.
  • The committee disfellowshipped him and informed the congregation.
  • A year later, the elders reinstated him into the congregation.

Lawsuit and Trial Court’s Decision

In 2016, two victims (the “plaintiffs”) sued the church for failing to report the abuse.

Legal claims:

  • Alleged negligence per se under Montana’s mandatory reporting law.
  • Claimed the church’s failure to report led to further abuse and damages.

Trial court outcome:

  • Ruled in favor of the plaintiffs.
  • Awarded $4 million in compensatory damages and $31 million in punitive damages.
  • Found the church liable under the negligence per se doctrine.

The church appealed, arguing it had no duty to report under Montana law.


Montana’s Child Abuse Reporting Law

Montana’s law requires certain professionals, including clergy, to report child abuse to the Department of Public Health and Human Services.

Key exemption:

“A member of the clergy or a priest is not required to make a report if the communication is required to be confidential by canon law, church doctrine, or established church practice.”

Arguments:

  • Church’s position: The exemption applied because their doctrine required confidentiality.
  • Plaintiffs’ position: The exemption did not apply because the church had disclosed information and lacked a confidentiality doctrine.

Montana Supreme Court’s Decision

The Montana Supreme Court reversed the trial court’s judgment.

Key findings:

  • The church’s doctrine, canon, or practice required confidentiality.
  • As a result, the clergy-penitent privilege exemption applied.
  • The church was not considered a mandatory reporter under Montana law in this case.

Court’s statement:

“We do not opine whether [the Legislature] could have made a different policy choice that would afford greater protection to child victims. The Legislature is the appropriate body to entertain such policy arguments.”


Relevance to Church Leaders

This case carries important lessons for church leaders:

1. Understand the Clergy-Penitent Privilege

  • Know when the privilege applies.
  • Understand how and when it can be waived.

2. Recognize Potential Civil Liability

  • In some states, clergy who fail to report may be held personally liable—if no exemption applies.
  • Liability can arise through statutes or judicial rulings.

Important:
Some courts have allowed child abuse victims to sue ministers for failure to report. Others, like Montana’s court, have not.

  • Always consult an attorney with questions about mandatory reporting laws.
  • Do not rely solely on internal church procedures or assumptions.

4. Be Aware of Criminal Penalties

  • In many jurisdictions, mandatory reporters who fail to report face potential criminal liability.

Final Note

Church leaders must remain informed about how clergy-penitent privilege interacts with state child abuse reporting laws to protect both their congregations and themselves.

The issues raised in this article are covered in greater detail in Richard Hammar’s article, “Child Abuse Reporting and the Clergy Privilege.”

Free Download: How Thorough Is Our Background Screening Program?

Proper screening costs very little but increases safety a great deal.

Last Reviewed: January 28, 2025

Use the following checklist to gauge how your church is doing at screening employees and volunteers.

Download a PDF version of this checklist.

We’d like to think that all people seeking to work or volunteer for a ministry are honest, ethical, and inherently trustworthy. Unfortunately, they’re not. They’re human, just like us. That’s why it’s so important for every church to conduct thorough background screens before filling any position—paid or volunteer. Use these tips to help your ministry implement an effective screening program.

Before Saying “You’re Hired!”

  • Fill in the blanks. Have prospective workers complete a written application form. This step may seem obvious, but many churches have informal hiring practices. A written application provides information that can be used to conduct reference checks and an interview.
  • Obtain asking rights. Your application form should include a liability release, signed by the applicant, giving you permission to contact references and obtain any criminal records. It also should release from liability the person being asked to provide information.
  • Check references. Contact all individuals, former employers, and organizations listed in the application. Learning what others say about an individual’s past performance and conduct is a vital part of the screening process.
  • Have a talk. Once you’ve narrowed the field to a few top candidates, it’s time for an interview. You’ll get a better sense of whether the applicant will be a good fit for your ministry when you meet in person.

After a Great Interview

  • Look for criminal records. Some states mandate criminal records checks for certain employees, such as teachers, childcare workers, and others in high-risk settings. It’s a good practice to conduct a criminal records check on all paid and volunteer staff, even ministers, before putting them to work.
  • Choose a reputable screening provider. The results you’ll get from a “free” or bargain criminal records search may be worth what you paid. Hire a screening company that uses county court records to verify database information, searches past locations where a person has lived, uncovers alternate or false names, and helps you to comply with state and federal laws.
  • Evaluate the results. Finding a criminal conviction may not be enough to disqualify someone from a church position. You’ll need to evaluate the severity of the offense, how long ago it happened, and whether it pertains to the position being filled. An attorney could help you with this analysis.

Downloadable checklist: Are We Protecting Our Youth Ministry?

This 12 question checklist can help your church assess the safeguards it has in place.

Last Reviewed: February 12, 2025

Use the following checklist to gauge how your church is doing at protecting youth in its ministry.

Download a PDF version of this checklist.

As a young, newly married couple, my husband and I worked with a small group of teens through our church. Barely older than the kids we worked with, I remember our struggle to maintain boundaries. I particularly remember one girl who came from an unchurched family. She made no secret of the crush she developed on my husband.

Looking back, I recognize the risk we naively assumed. The only instruction we had from church leadership was to befriend the teens, and provide spiritual instruction and some form of entertainment. No one thought about written policies and procedures to safeguard the ministry and those involved. We were on our own. That was more than thirty years ago.

Times have changed and today’s youth worker needs to be more aware than ever of the risks involved in ministry.

Can We Respond to Gun Violence at Church? A Checklist for Churches.

Discover if you’re protecting your congregation.

Use the following checklist to see if your church is well-equipped to respond if the unthinkable should happen.

Download a PDF version of this checklist.

Not so long ago, believers were able to seek a quiet, solitary moment of worship in their church sanctuaries. No locked door, or armed guard, there was no prohibited entry. In many places, those opportunities to meet God in his house (without first being cleared for admittance) are gone.

The shooting of 14 people attending a youth rally at Wegdwood Baptist Church, in Fort Worth, Texas—the bomb that exploded at First Assembly of God in Danville, Illinois, injuring 35 people—the killing of a wife, son, and fellow-member by a congregant of New St. John Fellowship Baptist Church in Gonzales, Louisiana: these are only a few examples of the violence that has shattered the peace of sanctuaries across our nation.

Does this mean we should barricade the doors, shrinking back in fear of what could happen at our church? No! This is a time not only to exercise our trust in the Lord, but to fully equip ourselves with the right tools to protect our congregation.

Downloadable Checklist: Are We Prepared for a Sexual Misconduct Allegation?

Use this checklist to help prepare for a sexual harassment allegation in your church.

Last Reviewed: February 3, 2025

Sexual harassment occurs in all kinds of work settings. While we may think it’s more prevalent in secular businesses and organizations, the church is not immune to incidents of sexual misconduct among ministry workers. Use the following checklist to gauge how proactive your church is at preventing sexual misconduct and how prepared it is to respond to an allegation of sexual harassment.

Download a PDF version of this checklist.

The legal definition of sexual harassment is when the terms, conditions, or privileges of employment are determined on the basis of sex. The two recognized forms of sexual harassment are (1) when an employee is subjected to unwelcome advances and submission is explicitly or implicitly made a condition of employment, and (2) when the employer (directly or through agents) creates an intimidating, hostile, or offensive work environment.

The following are some simple steps you can take to help educate and equip your church body to prevent sexual harassment in your congregation.

Create a Safe Environment

Be vocal. Let your staff and congregation know that you take harassment seriously. Those who work at and attend the church should feel safe if they need to come forward with an accusation of sexual harassment.

Define policies. If there aren’t currently policies in place concerning sexual harassment in your church, create them. The church must be prepared if an allegation surfaces. Putting your staff and volunteers through a sexual ethics course may also prevent harassment at your church.

Keep a Safe Environment

Practice accountability. One way to keep your staff accountable is to monitor overtime hours, an individual’s declining performance, increased absences, inability to concentrate, or changes in his/her work habits.

Check your insurance. Make sure your church insurance covers employment-related claims, such as a sexual harassment claim.

Address allegation. When an allegation surfaces at your church, remove the accused from contact with the claimant during the investigation. The claimant should also be offered pastoral assistance, including counseling. Contact your insurer, attorney, and governing church bodies so they can further advise you on your next steps.

Is Your Data Security Up to Speed? A Checklist for Churches

Keep your church records and data safe with the right precautions and software.

Use the following checklist to gauge how your church is doing at protecting data.

Computers are absolutely vital to help keep a church running, but they are also vulnerable. Keep your church records and data safe with the right precautions and software. We’ve compiled the following simple tips to help you secure your valuable information.

Download a PDF version of this checklist.

Strategic Plans

  • One database is enough. If you’re using multiple databases to store information, the more you’ll need to protect. Try to consolidate your data so you can better secure it.
  • Guessable passwords. Are your passwords guessable? Avoid using words, names, or numbers that could be easily guessed by an outsider. Also, never share passwords with your coworkers.
  • Perform regular backups. Backing up your computers daily, even hourly will save you time in the future if there’s a power surge. Taking your vital records and data to an off-site location also gives you a safety if a natural disaster occurs.

Software Prevention

  • Suspicious activity. Has your Internet service been acting strangely? If new homepages, toolbars, or unwanted ads are continually appearing on your browser, update your security software immediately.
  • Don’t be fooled. Adware and spyware are softwares want to trick you into installing their software onto your computer. Never agree to install software before you know what it is.
  • Update security patches. Continually update security patches on your Windows, Internet server, and email. Sometimes these programs provide safety features to keep malicious software off of your computer.
  • The antivirus. If your church does not already own antivirus software, purchase it. If you own an older version of this software, you may need to update it since older versions do not protect against adware and spyware.

Event Planner Checklist: Is Your Church Prepared to Host a Large Event?

Use this event planner checklist to host a well-organized church event with confidence.

Last Reviewed: February 11, 2025

Use this event planner checklist to ensure your church is fully prepared to host a successful event.

Download a PDF version of this checklist.

Perhaps God has blessed your ministry with the vision and space to practice hospitality and put on a big event. Whether it’s a national conference or a smaller-scale event like a carnival night for your local community, opening your church’s doors to non-members presents many logistical challenges.

Why an Event Planner Checklist is Essential

Planning a large event requires foresight and meticulous attention to detail. Even the most well-organized events can face unforeseen challenges. Unfortunately, the more people you bring together in one place, the higher the probability of unexpected situations occurring. You might encounter uninvited guests, weather-related disruptions, or even emergency situations that require immediate action.

But take heart—through proactive risk management and thorough preparation, your church can ensure a smooth event experience. By using an event planner checklist, you’ll be equipped to handle any scenario with confidence.

Church Event Planner Checklist

Here’s a comprehensive checklist to guide your event planning process:

1. Define the Event’s Purpose and Goals

  • Clarify the purpose of the event and expected outcomes.
  • Identify the target audience and estimated attendance.

2. Secure Necessary Permits and Approvals

  • Verify zoning and occupancy restrictions.
  • Obtain permits for food service, amplified sound, or special activities.
  • Confirm fire safety compliance with your local fire department.

3. Plan the Venue and Logistics

  • Reserve and inspect the event space.
  • Confirm seating arrangements, parking availability, and accessibility features.
  • Set up a clear signage system to direct attendees.

4. Budget and Fundraising

  • Create a budget covering rentals, permits, catering, and other costs.
  • Consider sponsorships or fundraising to offset expenses.

5. Safety and Emergency Preparedness

  • Develop an emergency action plan with clear evacuation routes.
  • Ensure first aid kits and medical personnel are available.
  • Coordinate with local law enforcement for crowd control, if necessary.

6. Staffing and Volunteer Coordination

  • Recruit and train volunteers for registration, security, and hospitality.
  • Assign roles and responsibilities in advance.

7. Marketing and Promotion

  • Utilize social media, email newsletters, and flyers to spread the word.
  • Encourage RSVPs to gauge attendance numbers.

8. Technical and Audio-Visual Setup

  • Test microphones, projectors, and other AV equipment.
  • Have backup power sources in case of outages.

9. Catering and Hospitality

  • Plan food and beverage offerings based on dietary restrictions.
  • Ensure proper food storage and safety measures.

10. Post-Event Follow-Up

  • Send thank-you emails to attendees and volunteers.
  • Gather feedback through surveys for future improvements.

Frequently Asked Questions (FAQs)

What should be included in an event planner checklist?

An event planner checklist should cover logistics, budgeting, safety measures, volunteer coordination, marketing, and post-event follow-up.

How can churches improve event security?

Churches can improve security by coordinating with local law enforcement, training volunteers for emergency response, and having clear crowd management protocols.

What are the most common challenges in church event planning?

Common challenges include unexpected attendance surges, technical issues, security concerns, and last-minute venue restrictions.

How far in advance should a church plan a large event?

Churches should begin planning large events at least 6–12 months in advance to secure venues, permits, and key logistics.

Downloadable Checklist: Crime Prevention at Church

A checklist to help you evaluate your building’s security.

Use the following checklist to gauge how your church is doing at preventing crime.

Download a PDF version of this checklist.

What Makes a Church Vulnerable?

The days of unlocking a church in the morning and leaving it open all day have gone the way of the one-room, wooden chapel. Churches today house thousands of dollars’ worth of sound equipment, musical instruments, and computers, not to mention sizable contributions. If criminals sense easy access to potential cash, it’s only a matter of time before your church becomes a target. By understanding your vulnerabilities, you can strengthen your resistance to property crimes.

Step 1: Do a Risk Assessment

The first step in knowing how to prevent burglaries, theft, and vandalism is to assess your risks. If you’re unsure how to do this, ask a security consultant or a local law enforcement agency to help you. The assessment section of this download can help you get started, but you’re also encouraged to examine the type and frequency of crimes in your area and determine if any of your policies and procedures are leaving you susceptible, such as leaving a door open all of the time or having one person be responsible for all financial records within the church office.

Step 2: Create a Security Plan

Once you know your vulnerabilities, you can create a plan for solving them. Your security plan should include:

  • An objective: What are you trying to achieve? In what time frame?
  • An analysis: How can the problems be solved? What problems take first priority?
  • A training component: Is staff trained in security awareness? What role should staff members and volunteers play in an emergency situation?
  • Implementation: What steps will we take to improve security in the next one to five years?

Step 3: Take Action

Knowing what makes your church vulnerable and what you can do about it gives you a road map to follow. Even if your church has improved security in the past, it makes sense to review your systems and procedures regularly, to make sure you haven’t missed anything or that new susceptibilities haven’t crept in.

Choosing Church Insurance: Tips From a Professional (+ Free Download)

16 questions to help select and retain your church’s insurance.

Use the following check list to gauge how your church is selecting insurance.

Download a PDF version of this checklist.

Why Learn about Insurance

True story: A pastor arrived at his church property only to witness the entire building burning in flames. It was a total loss. The following morning, as he wondered where the church would meet, and whether they had enough coverage to rebuild, he found out the church was underinsured. It would cost well over $1 million to rebuild what they had lost. But with only $700,000 in coverage, what were their options?

True story: After carefully performing reference and background checks, a church hired a part-time youth pastor. One year later, when he admitted to engaging in inappropriate behavior with students, he was arrested and charged. It was determined that there was prior knowledge of an incident, but no action had been taken. When the church was sued by parents, the church—without separate sexual misconduct coverage—quickly reached its general liability limit and was forced to find money from reserves, donations, and loans to pay the judgments.

Regardless of good intentions, inadequate church insurance can lead to significant and permanent losses. Some churches never recover. Though nearly every church has insurance coverage, many church leaders lack confidence in their understanding of their policies and the terminology associated with them.

So let me encourage you: You are not alone. Guidance is available, and you’re already taking important steps in receiving it. As you gain a better understanding of church insurance, as well as your church’s specific needs, you are making progress toward better safeguarding your ministry.

When it comes to church insurance, you must be informed. Get to know your insurance agent. And purchase only from a company that offers not only good prices, but good service, claims coverage, and specific knowledge of church insurance issues.

Advantage Member Exclusive

Video: Politics in the Church—What to Know for Election Season

Politics in the church is a complex topic. In this video, Richard R. Hammar offers helpful insights and tips in navigating the issues.

Politics in the church is a complex and passionate topic. But there are realities to face.

In order to maintain their exemption from federal income taxes, churches must comply with several requirements specified in section 501(c)(3) of the tax code. Two of these requirements involve political activities: Churches may not participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office. And, churches may not engage in substantial efforts to influence legislation.

So, what do these requirements exactly mean? How should church leaders navigate them as election season heats up? And what happens if they violate them?

In this webinar offered exclusively for Church Law & Tax Advantage Members, renowned church attorney and CPA Richard R. Hammar—author of Pastor, Church & Law, Fifth Edition and the annual Church & Clergy Tax Guide—explores the requirements and discusses how leaders should approach this sensitive, and often volatile, issue.

Want more information on this topic? Check out the “Churches and Political Activities” Recommended Reading page.

Editor’s Note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

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Supreme Court Rules that Title VII’s Ban on “Sex” Discrimination Includes Sexual Orientation

Why the Supreme Court’s Title VII decision changes the definition of “sex” discrimination–and how it affects churches.

The United States Supreme Court in 2020 ruled that an employer who fires an individual for being homosexual or transgender engages in “sex” discrimination. Such actions are in violation of Title VII of the Civil Rights Act of 1964.

This article will review the facts and summarize the Court’s decision. It will also assess its significance to churches and other religious organizations.

The facts

The case involved three plaintiffs.

One plaintiff worked for a Georgia county as a child welfare advocate. Under his leadership, the county won national awards for its work. After a decade with the county, he began participating in a gay recreational softball league.

Soon after, he was allegedly disparaged by leading community members for participating in the league. He was later fired for conduct “unbecoming” a county employee.

The second plaintiff worked as a skydiving instructor in New York. After several seasons with the company, he mentioned that he was gay and, days later, was fired.

The third plaintiff worked for a funeral home. When she got the job, she presented as a male. But two years into her service with the company, she began treatment for despair and loneliness. Ultimately, clinicians diagnosed her with gender dysphoria and recommended that she begin living as a woman. In her sixth year with the company, she wrote a letter to her employer. In it, she explained that she planned to “live and work fulltime as a woman.” The funeral home fired her before she left, telling her “this is not going to work out.”

Each plaintiff brought suit under Title VII. (Title VII prohibits employers from discriminating in any employment decision on the basis of race, color, national origin, sex, or religion.) A federal appeals court dismissed the first plaintiff’s case. This dismissal was on the ground that Title VII’s ban on “sex” discrimination did not extend to sexual orientation. But another federal appeals court ruled that the second plaintiff could pursue his discrimination claim since Title VII’s ban on sex discrimination in employment did encompass sexual orientation. And a third federal appeals court allowed the third plaintiff’s discrimination claim to proceed for the same reason. All three cases were appealed to the United States Supreme Court.

The Court’s ruling

The Supreme Court sided with the two appeals courts. Both courts interpreted Title VII’s ban on sex discrimination to include sexual orientation and gender identity. Title VII states that it is “unlawful . . . for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.”

The Court concluded that an employer that fires an employee merely for being gay or transgender violates Title VII.

Application to churches and religious schools

What is the relevance of the Court’s ruling to churches and other religious organizations, including schools? Consider the following points.

1. Title VII exemption for religious organizations

Title VII section 702 contains the following exemption for religious organizations:

This title shall not apply to . . . a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.

This provision permits religious corporations and educational institutions to discriminate on the basis of religion in the employment of any person for any position.

As originally enacted, section 702 permitted religious employers to discriminate on the basis of religion only in employment decisions pertaining to their “religious activities.” Congress amended section 702 in 1972 to enable religious organizations to discriminate on the basis of religion in all employment decisions. In the years following the 1972 amendment, a number of federal courts suggested that the amendment violated the First Amendment’s nonestablishment of religion clause. But in 1987, the United States Supreme Court resolved the controversy by ruling unanimously that section 702 did not violate the First Amendment’s nonestablishment of religion clause. Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints v. Amos, 483 U.S. 327 (1987).

Note that religious organizations are exempt only from the ban on religious discrimination in employment. They remain subject to Title VII’s ban on employment discrimination based on race, color, national origin, or sex—except with respect to employment decisions involving clergy.

Churches that take an adverse action against an employee or applicant for employment based on religious considerations should describe their action appropriately. Refer to the religious or doctrinal principle at issue, and avoid generic labels like “sex” or other gender- or sexuality-based labels.

2. Covered employers

Title VII only applies to employers engaged in interstate commerce and having 15 or more employees. The courts have defined “commerce” very broadly, and so most churches will be deemed to be engaged in commerce. Note that most states have also enacted their own employment discrimination laws. These laws eliminate the commerce requirement and generally apply to employers with fewer than 15 employees.

3. Ministers

In 2012, a unanimous United States Supreme Court affirmed the so-called “ministerial exception.” The ministerial exception bars the civil courts from resolving employment discrimination disputes between churches and ministers. The Court concluded:

We agree that there is such a ministerial exception. The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments. According the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions. Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., 132 S.Ct. 694 (2012).

This means that all discrimination disputes involving clergy are off limits to the civil courts. This includes not just those cases involving religious discrimination, but also those alleging discrimination based on sexual orientation or transgender status.

4. Religious schools

Title VII contains three religious exemptions for religious schools. The first, quoted above, is section 702. In addition, Title VII, Section 703(e)(2), of the Civil Rights Act of 1964 specifies:

[I]t shall not be an unlawful employment practice for a school, college, university, or other educational institution or institution of learning to hire and employ employees of a particular religion if:

  • such school, college, university, or other educational institution or institution of learning is, in whole or in substantial part, owned, supported, controlled, or managed by a particular religion or by a particular religious corporation, association, or society, or
  • if the curriculum of such school, college, university, or other educational institution or institution of learning is directed toward the propagation of a particular religion.

A federal appeals court interpreted this language as follows in a case involving a discrimination lawsuit brought against Samford University by a theology professor:

Samford says that, even if its refusal to allow Plaintiff to teach at the divinity school were not covered by the religious educational institution exemption, it is entitled to an exemption as an educational institution substantially “owned, supported, controlled or managed by a particular religion or religious corporation, association, or society.” Samford argues for a flexible interpretation of Section 703 and points to Samford’s historical ties with the [Southern Baptist] Convention, the fact that the Convention is the single largest contributor to the university, and that its Board of Trustees requires it to report to the Convention on all budgetary and operational matters. Plaintiff, on the other hand, says Samford is not “owned, supported, controlled, or managed” by a religious association because (1) the Convention no longer appoints trustees and (2) only seven percent of its budget comes from the Convention. Neither side cites precedents interpreting Section 703, and we are aware of no precedent that speaks to the issue of what it means to be “owned, supported, controlled, or managed” by a religious association.

The court quoted from another federal court ruling construing section 703(e)(2), Pime v. Loyola University of Chicago, 803 F.2d 351, 357 (7th Cir.1986):

Is the combination of a Jesuit president and nine Jesuit directors out of 22 enough to constitute substantial control or management by the Jesuit order? There is no case law pertinent to this question; the statute itself does not answer it; corporate-control and state-action analogies are too remote to be illuminating; and the legislative history, though tantalizing, is inconclusive.

The court concluded that Samford is “in substantial part” “supported” by the Convention:

“Substantial” is not defined by the statute. But the word substantial ordinarily has this meaning: “Of real worth and importance; of considerable value; valuable. Belonging to substance; actually existing; real; not seeming or imaginary; not illusive; solid; true; veritable. Something worthwhile as distinguished from something without value or merely nominal. Synonymous with material.” Black’s Law Dictionary, 1428 (6th ed. 1990). Continuing support annually totaling over four million dollars (even in the abstract, no small sum), accounting for seven percent of a university’s budget, and constituting a university’s largest single source of funding is of real worth and importance. This kind of support is neither illusory nor nominal. So, the Convention’s support is substantial. We hold—as an alternative to our Section 702 holding—that Samford qualifies as an educational institution which is in “substantial part” supported by a religious association and that the exemption protects Samford in this case.

A federal appeals court concluded that Title VII’s exemption of “religious institutions” from the ban on religious discrimination in employment applied to the school. It based this conclusion on the following considerations: (1) the university was established as a “theological” institution. (2) The university’s trustees are all Baptists. (3) Nearly 7 percent ($4 million) of the university’s budget comes from the Alabama Baptist Convention (the “Convention”)—representing the university’s largest single course of funding. (4) The university submits financial reports to the Convention, and its audited financial statements are made available to all Baptist churches in Alabama. (5) All university professors who teach religious courses must subscribe to the Baptist “statement of faith,” and this requirement is clearly set forth in the faculty handbook and in faculty contracts. (6) The university’s charter states that its chief purpose is “the promotion of the Christian religion.” (7) The university is exempt from federal income taxes as a “religious educational institution.”

5. Concerns about sweeping effects of the Court’s decision

Responding to concerns the Court’s June 15, 2020, decision “will sweep beyond Title VII to other federal or state laws that prohibit sex discrimination. And, under Title VII itself, they say sex-segregated bathrooms, locker rooms, and dress codes will prove unsustainable after our decision today.” The Court responded:

But none of these other laws are before us; we have not had the benefit of adversarial testing about the meaning of their terms, and we do not prejudge any such question today. Under Title VII, too, we do not purport to address bathrooms, locker rooms, or anything else of the kind. The only question before us is whether an employer who fires someone simply for being homosexual or transgender has discharged or otherwise discriminated against that individual “because of such individual’s sex.” . . . Whether other policies and practices might or might not qualify as unlawful discrimination or find justifications under other provisions of Title VII are questions for future cases, not these.

The employers also expressed concern that the Court’s decision may require some employers to violate their religious convictions. The Court responded:

We are also deeply concerned with preserving the promise of the free exercise of religion enshrined in our Constitution; that guarantee lies at the heart of our pluralistic society. But worries about how Title VII may intersect with religious liberties are nothing new; they even predate the statute’s passage. As a result of its deliberations in adopting the law, Congress included an express statutory exception for religious organizations. This Court has also recognized that the First Amendment can bar the application of employment discrimination laws “to claims concerning the employment relationship between a religious institution and its ministers.” Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U. S. 171 (2012). And Congress has gone a step further yet in the Religious Freedom Restoration Act of 1993 (RFRA). That statute prohibits the federal government from substantially burdening a person’s exercise of religion unless it demonstrates that doing so both furthers a compelling governmental interest and represents the least restrictive means of furthering that interest. Because RFRA operates as a kind of super statute, displacing the normal operation of other federal laws, it might supersede Title VII’s commands in appropriate cases.

But how these doctrines protecting religious liberty interact with Title VII are questions for future cases too. [The defendant funeral home] did unsuccessfully pursue a RFRA-based defense in the proceedings below. In its certiorari petition, however, the company declined to seek review of that adverse decision, and no other religious liberty claim is now before us. So while other employers in other cases may raise free exercise arguments that merit careful consideration, none of the employers before us today represent in this Court that compliance with Title VII will infringe their own religious liberties in any way.

6. Justice Alito’s dissent

Justice Alito issued a dissenting opinion in which he noted, in part:

Briefs filed by a wide range of religious groups—Christian, Jewish, and Muslim—express deep concern that the position now adopted by the Court “will trigger open conflict with faith-based employment practices of numerous churches, synagogues, mosques, and other religious institutions.” They argue that “[r]eligious organizations need employees who actually live the faith,” and that compelling a religious organization to employ individuals whose conduct flouts the tenets of the organization’s faith forces the group to communicate an objectionable message.

This problem is perhaps most acute when it comes to the employment of teachers. A school’s standards for its faculty “communicate a particular way of life to its students,” and a “violation by the faculty of those precepts” may undermine the school’s “moral teaching.” Thus, if a religious school teaches that sex outside marriage and sex reassignment procedures are immoral, the message may be lost if the school employs a teacher who is in a same-sex relationship or has undergone or is undergoing sex reassignment. Yet today’s decision may lead to Title VII claims by such teachers and applicants for employment.

At least some teachers and applicants for teaching positions may be blocked from recovering on such claims by the “ministerial exception” recognized in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U. S. 171 (2012). Two cases now pending before the Court present the question whether teachers who provide religious instruction can be considered to be “ministers.” But even if teachers with those responsibilities qualify, what about other very visible school employees who may not qualify for the ministerial exception? Provisions of Title VII provide exemptions for certain religious organizations and schools “with respect to the employment of individuals of a particular religion to perform work connected with the carrying on” of the “activities” of the organization or school, 42 U. S. C. §2000e–1(a); see also §2000e–2(e)(2), but the scope of these provisions is disputed, and as interpreted by some lower courts, they provide only narrow protection.

The November 2019 Church Law & Tax Advantage Member article previewed the cases before the United States Supreme Court. The article and included five steps that churches and religious organizations holding traditionally orthodox views of human sexuality could take if the Court decided to expand the definition of “sex” under Title VII.

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

What Churches Should Know About State-Mandated Sexual Harassment Training Laws

Some states now require employers to train annually on harassment, and don’t exempt churches. More states may follow suit.

Since 2018, the majority of states have enacted legislation either mandating or recommending that employers train employees on sexual harassment avoidance. This happened at great speed. It can often take decades for legal changes at the state level to become a national trend.

The speed of this development can be traced to the great cultural shift arising from the #MeToo movement, which became a high-profile cultural marker following heavily publicized Hollywood sexual harassment scandals in 2017. With sexual harassment in the workplace as a major focal point, a program to reduce the incidence of harassment at work through education became a significant objective of the #MeToo movement. Legislation to mandate such workplace training ensued.

Varying requirements by state

Most states have enacted laws that address workplace sexual harassment in some fashion. Nearly all of these have been enacted within the last two years, and many took effect just in 2020.

One impact of this rapidly evolving development has been in the widely varied approaches from state to state. No two states have statutes that follow any type of uniform approach.

Mandatory education for adults as a condition for employment was one dramatic shift in the law, but most states that have legislated in this area have done so cautiously. A number of states require only that public employees obtain some training in avoiding sexual harassment, and other states recommend training. At least seven states, however, mandate some form of training requiring private employers to provide training for their employees on creating a work environment that is informed about how to identify and avoid sexual harassment (see “How Seven States Mandate Employers to Train on Sexual Harassment” for more details).

Because the enactment of these state laws has not led to a significant public backlash, it can be expected that more states will pass these types of laws, and those that merely encourage training may follow the lead of those who have mandated such training.

How churches are affected

While #ChurchToo, a church-focused variation of #MeToo, began in 2018, mandatory harassment training in church offices has not been a visible part of that movement. Churches nonetheless may fall under these emerging state laws, since the laws are aimed directly at the employer-employee relationship, and none of the state laws carve out exceptions for churches.

While the claim of a religious liberty exception to any government-mandated training program may someday prove to have merit, these laws have not yet been challenged in court. Churches should be prepared for federal courts to take the position that workplace protection statutes are laws of general application that are not subject to a free exercise of religion exemption.

Inevitably, a church’s response to these government-mandated training programs will impact the defense of a sexual harassment claim within the church. Any church without a training program in place may be at a disadvantage in defending such a case because the church may appear to have been insensitive to the risks faced by the alleged victim. Considering this rapidly emerging trend, churches may reduce the risk of sexual harassment if they stay ahead of this issue by providing helpful training to employees to foster a healthy workplace environment.

Training requirements states have set

State laws that mandate training possess some common traits. Among them:

  • There are generally minimum thresholds in the size of the workplace before the training obligation is triggered (ranging from any employer of any size to employers with 50 or more employees);
  • Specific time periods are mandated within which the training must take place for new hires;
  • Training for supervisors is more comprehensive than for other employees;
  • In most instances, the training must be regularly repeated (such as annually); and
  • Most of the statutes are vague about what specific content the training should contain, although California and New York give substantial detail. Some states provide model training materials, although none are specifically required.

The states that do provide guidance on the content follow a general pattern that includes the following points:

  • Sexual harassment should be defined with reference to state and federal law, and include examples of harassment;
  • Employees should receive an explanation regarding their rights on how to make a harassment claim against their employer and remedies they may seek from their employer;
  • Employees should receive a description of state and federal remedies also available to victims; and
  • Employees should receive an explanation regarding how employers are legally prohibited from retaliating against employees who raise a harassment claim.

Shaping useful training for church offices

Several human resources education vendors offer products meeting the requirements of all states, including those few that give specific details regarding the content of the instruction. However, these generalized programs are provided for a wide range of businesses, not specifically religious organizations.

As a result, some of these materials might strike a tone that church leaders and other religious employers find unsuitable, even if the principles taught in these programs are generally agreeable. For example, a church that wants scripturally based instruction may find the secular foundation of the commercial materials to be out of touch with the church’s moral positions.

The best approach for many churches may be to take the general content outline suggested by their state’s law (or another state’s, if their respective state offers none) and then develop a program that can be rooted in the church’s general approach to ministry. To satisfy the emerging pattern of legal requirements for workplace training, the training should be comprehensive and run at least two hours. It should cover:

  • The broad definition of sexual harassment, including how the church’s home state defines it, as well as how it is defined as a form of sex discrimination under federal law (both “quid pro quo” harassment and “hostile environment” harassment);
  • Examples of what constitutes sexual harassment (not just reliance upon simple definitions); and
  • A description of remedies and how to obtain them.

One good model for a church’s training is the “State of Illinois Sexual Harassment Prevention Training” program prepared by the state’s Department of Human Rights. These materials need to be adapted to the law of the church’s home state. But the general outline laid out in this 35-slide PowerPoint presentation is comprehensive and offers a good template for the scope and depth of adequate training. Notably, it provides a lengthy list of behaviors that constitute sexual harassment, including gestures, the use of nicknames, and the making of certain sounds.

Caution. Every church preparing its training program will need to consider how it will approach gender identity and sexual orientation issues. While states may differ in their treatments of these issues, several states consider these issues to be subject to the same approaches used in addressing any other harassment. Since these statutes are very new, the full implications of these laws to churches have not been developed by courts. Christian churches with orthodox views of human sexuality and marriage should consult further with qualified local legal counsel regarding how they handle these specific topics.

Make preparations now

While some churches may bristle at the idea of government-mandated messages of instruction within churches, the liability exposure to churches that are unprepared for sexual harassment training is significant. Even in those states that do not expressly mandate training, the absence of a training program may be used as evidence of negligence by a church. Ascertaining the church’s best approach to risk assessment will increasingly include a full discussion of the best way to reduce the incidence of sexual harassment, which unfortunately remains an issue in churches.

Myron Steeves is founder and senior attorney at the Church Law Center of California, and dean emeritus of Trinity Law School. He is an active member of the nonprofit committees of both the California Bar Association and the American Bar Association (ABA), and chairs the ABA's Religious Organizations Subcommittee.

How Seven States Mandate Employers to Train on Sexual Harassment

The similarities—and distinctives—of these training laws that churches in each state should understand.


Editor’s note: The original version of this article, published in June of 2020, reached an initial conclusion for California and its statute’s applicability to religious organizations. However, based upon new developments and additional time to interpret the statute, this article was revised in July of 2020 to reflect a new conclusion.

Further, on July 1, 2020, Illinios changed its minimum threshold for training to one employee. This change is reflected below.

The seven states mandating employers to provide sexual harassment training require several common topics to be covered, but also vary in several significant ways.

Courts will likely apply these statutes to claims against church employers, unless the courts recognize a religious exception.

Here, then, are key highlights for each state’s statutes.

California

Beginning in 2021, all California employers with five or more employees must provide two hours of training regarding sexual harassment to all supervisorial employees, and one hour of training to other employees. California exempts nonprofit religious corporations from its fair employment laws generally. However, to the extent that religious organizations employ five or more people in taxable unrelated business, the exemption from this regulation does not apply. Thus, most churches do not need to conduct mandatory sexual harassment prevention training.

For those churches and other religious organizations that employ five or more individuals in taxable unrelated business activities, and thus must provide training, the training must take place at least once every two years. The training must be provided within six months of hire, or promotion to a supervisorial position. For those who are to be employed less than six months, the training must take place within 30 days or 100 hours of work. In determining whether the employer has five employees, all persons under the direction and control of the employer are counted, including out-of-state employees, volunteers, and unpaid interns, even though the actual training is only provided to California-based paid employees. Notably, sexual harassment training must include training that includes harassment based on gender identity, gender expression, and sexual orientation as part of the training. Cal. Gov. Code §§12950-12950.1.

Connecticut

All employers in Connecticut with three or more employees must post a notice regarding the illegality of sexual harassment, as well as remedies, in a prominent location in the workplace, and provide written materials on the subject within three months of hiring. Two hours of training are required within six months of hire. The training must be supplemented every three years. Connecticut’s law requires that employers of fewer than three employees provide the same training within six months to employees who take on supervisorial roles. Conn. Gen.Stat. Ann. §46a-54.

Delaware

Employers with 50 or more employees must provide training in sexual harassment prevention within one year of hiring, and every two years thereafter. The statute provides specific topics that must be covered in the training. Additional training is required for supervisors. However, the statute does not provide a specific length of time for the training. Del. Code Ann. title 19§711A(g).

Hawaii

All employers are subject to the state’s statute, which borders on a recommendation for training, but nonetheless reads as a requirement. The law states:

Employers should affirmatively raise the subject [of sexual harassment], express strong disapproval, develop appropriate sanctions, inform employees of their right to raise and how to raise the issue of sexual harassment, and take any other steps necessary to prevent sexual harassment from occurring. Haw. Code R. §12-46-109(g).

Illinois

Employers of one or more employees are required to provide annual training that equals or exceeds information provided by the Department of Human Rights in a model sexual discrimination prevention training program. 775 ILCS 5/2-109.

Maine

All employers of 15 or more employees are required to provide training within one year of hiring any employee, including supervisors. While the statute addressing the form of training is not specific about the duration or method of training, it provides a lengthy description of what must be covered, including a description of sexual harassment with examples, the complaint process, and prohibitions on retaliation. Me. Rev. Stat. Ann. title 26 § 807.

New York

Every employer must adopt a sexual harassment prevention policy. It must be a policy that prohibits sexual harassment, gives examples of harassment, discusses remedies, provides a complaint form, features a procedure for investigation of complaints, informs employees of their rights of redress, clearly states that sexual harassment is a form of misconduct and that supervisors who knowingly allow such behaviors to continue are subject to sanction, and prohibits retaliation.

The training must be given annually. Notably, under New York’s model policy—which must be met or exceeded by the employer through a separately drafted policy—states that sexual harassment includes harassment based on sexual orientation, self-identified or perceived gender, gender identity, and transgender status. Gender stereotyping, which is prohibited under the model policy, occurs when personality traits “are considered inappropriate because they do not conform to other people’s ideas.” N.Y. Labor Law § 201-g.

Myron Steeves is founder and senior attorney at the Church Law Center of California, and dean emeritus of Trinity Law School. He is an active member of the nonprofit committees of both the California Bar Association and the American Bar Association (ABA), and chairs the ABA's Religious Organizations Subcommittee.

Downloadable Checklist: Understand the Effects of Your Church’s Political Activity

Use this checklist to understand the potential effects of your church’s political activity.

When it comes to political activity, churches need to understand their constitutional protections, as well as the Internal Revenue Code’s restrictions for 501(c)(3) tax-exempt organizations. Take the following quiz to test your knowledge. The answer key is at the end of the article.

Download a PDF version of this assessment.

There are two distinct limitations in the tax code. First, churches may not engage in substantial efforts to influence legislation. Second, churches may not participate or intervene in any political campaign, even to an insubstantial degree. The first limitation is referred to as the “lobbying” limitation. The second limitation is referred to as the “campaign” limitation.

The income tax regulations interpreting the limitation on political campaign intervention provide that neither a church nor any other organization can be exempt from federal income taxation if its charter empowers it “directly or indirectly to participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office.” The regulations further provide that:

The term “candidate for public office” means an individual who offers himself/herself, or is proposed by others, as a contestant for an elective public office, whether national, state, or local. Activities that constitute participation or intervention include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate.

Consequences of Church Political Activity

None of the political activities described above are “illegal.” The primary legal consequence of church political activity is that the church’s exemption from federal income taxation may be jeopardized.

Loss of a church’s federal income tax exemption would have several potential penalties, including the following: (1) the church’s net income would be subject to federal income taxation; (2) the church’s net income would be subject to state income taxation (except in those few states not having an income tax); (3) donors no longer could deduct charitable contributions they make to the church; (4) the church would be ineligible to establish or maintain “403(b)” tax-sheltered annuities; (5) possible loss of property tax exemption under state law; (6) possible loss of sales tax exemption under state law; (7) possible loss of exemption from unemployment tax under state and federal law; (8) loss of preferential mailing rates; (9) a minister’s housing allowance might be affected; (10) the significant protections available to a church under the Church Audit Procedures Act may no longer apply; and (11) the exemption of the church from the ban on religious discrimination under various federal and state civil rights laws may be affected.

These consequences should be considered when deciding whether or not to engage in political activities that may jeopardize the church’s tax-exempt status.

Answer Key: (1) F (2) F (3) F (4) F (5) T (6) T

The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.

Can Churches Dismiss an Employee Without Cause?

Understanding the limitations of “employment at will,” and the idea that an employee can leave a job without cause, too.

While “employment at will” is a phrase most church leaders have heard, not everyone knows what it truly means.

The employment at-will rule means an employment relationship is indefinite. It also means it can be ended by the employee or employer at any time.

The rule is a presumption courts use that employment may be ended without notice and without consequences. Unless, of course, the employer and employee have agreed to a different type of arrangement.

We often think of the rule from the perspective of the employer’s right to discharge a worker at will. It may be helpful to understand it from the employee’s perspective. A worker may walk away from a job at any time, for any reason or no reason.

Perhaps, at one time or another, most of us have felt like doing just that. If so, we had no reason to worry whether our employer would try to sue us for quitting.

So, is everyone employed “at will”? Again, the law presumes so, but the parties can voluntarily change that. The simplest way to do that is in a contract. In addition, federal and state laws that protect employee rights undercut the strength of the at-will rule, as discussed below.

Explicit contract limitations

A candidate might accept a job offer on the condition that it will last at least two years.

If the employer agrees and makes that promise, the parties will have negated the at-will presumption.

Consequently, if the employer releases the employee after just six months, the employee could bring a claim for damages.

Other types of contract provisions also limit the at-will arrangement.

Contracts with high-ranking employees (in the ministry context, say, a senior pastor) often contain a “just cause” provision. This means the employer can release the employee for “just cause.”

“Just cause” is sometimes left undefined. Other times it refers to specific types of misconduct or other events.

In the context of contracts, a just cause provision often simply helps determine if severance benefits are owed.

If any employee is discharged for “just cause,” it means they may not be entitled to severance benefits.

As another example, a deferred compensation agreement between a church and pastor might include a provision under which compensation is forfeited if the pastor engages in specified misconduct. Ultimately, the parties’ obligations depend on the language of the contract they negotiate.

As a caution, it is important that contract provisions regarding “cause” for termination are carefully drafted to avoid unnecessary conflict that might arise from ambiguities. For such provisions, employers should seek guidance from an attorney with expertise in labor and employment law.

Implied contract limitations

Contracts that abrogate the at-will presumption might not always look like formal, written agreements bearing official signatures. Though many might not realize it, employment policies and handbooks can create contracts between an employer and its workers. If so, the employer must abide by the agreement.

Policies that describe an employer’s procedures in unambiguous, mandatory language (e.g., “shall” or “will”) may be deemed binding, and deviation from the promise can be a breach of contract. For that reason, policies and handbooks should explicitly disclaim that they constitute a promise of employment for any certain period of time or restrict the bases for discharge. They should also state—up front and in bold language—that employment is at will and that the policy/handbook does not alter that relationship.

Federal and state laws have significantly eroded the force, if not the letter, of the at-will rule. Countless statutes prohibit the discharge of an employee (at will or not) if the employer acted for an illegal reason.

For example, while a church employer may discharge a 65 year-old worker at the employer’s will (assuming it did not enter a contract with the worker), it usually may not do so if the reason is the worker’s age. (Small employers, however, may not be covered by age discrimination laws.)

The same is true for other protected characteristics (e.g., race, gender, disability) or protected conduct (e.g., blowing the whistle on fraud, filing a claim for workers’ comp, refusing to engage in illegal conduct, or opposing discrimination). Those protections differ from one state to the next. Church leaders should check their state’s law in these matters.

Keep in mind that religious groups may have a defense to statutory and other employment claims by virtue of the ministerial exception.

Practicalities

Assume that a recently discharged at-will worker sues over the termination. Logically, the employer should be able to argue that it does not need to give any reason for discharging the worker because he or she was employed at will. But here is where the at-will rule is sometimes misunderstood.

At-will employment does not mean that the employee is barred from pursuing a lawsuit against the employer. It only means that the employer and employee haven’t agreed between themselves to limit either party’s right to end the job relationship.

Indeed, in practical terms, employers must always be prepared to articulate a legitimate reason for discharging a worker. In a sense, that is not an undue burden: there always will be a reason for the employer’s decision—say, the employee isn’t performing well or the employer didn’t need or couldn’t afford to keep the worker.

On the other hand, because there are so many employee protections under federal and state laws, nearly any employee who believes he or she was unfairly discharged has a basis for filing a complaint. The moral of the story here is that at-will workers have every right to contest their discharge in court.

Note that some states liberally allow employees to file lawsuits challenging disciplinary actions less severe than a discharge, such as a demotion. Again, church leaders should check their state’s law in these matters.

All in all, an employee’s at-will status provides limited protection for employers. Accordingly, employers should not expect the at-will rule, although a highly touted staple of American employment law, to offer a reliable defense if an employment claim arises.

Adapted from an article that first appeared in the Employment Law for Ministries newsletter from Conner & Winters. Used with permission.

Donn Meindertsma is a partner in the Washington, D.C., office of Conner & Winters, LLP, and specializes in employment law.

Downloadable Checklist: Do We Follow Sound Employment Practices?

A 12-question checklist to find out.

Use the following checklist to gauge how your church is doing at following good employment practices.

Download a PDF version of this checklist.

The federal government oversees a complex array of laws designed to protect employees from being taken advantage of by employers. These regulations affect about 10 million employers, including many churches.

Whether your ministry employs one person or one hundred, it may need to comply with many of the federal, state, or common law provisions that apply to employers.

Here are just some of the areas that labor laws regulate:

  • Wages and hours
  • Wage garnishment
  • Workplace safety and health
  • Workers’ compensation
  • Employee benefits
  • Family and medical leave
  • Veterans’ employment rights
  • Discrimination (age, race, gender, genetic information, disability, national origin, religion)
  • Sexual Harassment
  • Accommodation for employees with disabilities
  • Wrongful termination
  • Invasion of privacy

That is why it’s important for you to be aware of current labor laws and create policies and procedures that help your ministry to abide by them.

Download and Use This Lay Counseling Checklist for Churches

Have you created a safe, secure environment for your spiritual care ministry?

Use the following checklist to gauge how your church’s lay counseling ministry is doing.

Creating a safe, secure environment for a spiritual care ministry calls for specific policies and procedures that protect your church, lay caregivers, and those who receive care. The effectiveness of any church program begins with the understanding and support of church leadership. That’s especially true of lay counseling and spiritual care ministries.

For this reason, include church leaders in your planning process. Ensure that the governing body of your church not only understands the rationale for your ministry, but also fully supports and approves of spiritual care ministry policies and procedures before you implement a new program. It’s also important to confirm that the policies and procedures you develop do not conflict with the church’s by-laws or other governing documents.

Download a PDF version of this checklist.

Evaluate Risk Management Aspects of Any Spiritual Care Ministry

It’s important that you consult with an attorney as you prepare a lay counseling policy and any related forms. Your attorney should give you a legal evaluation of the risk management issues of any spiritual care ministry program that your church develops. With the help of legal counsel, church leaders should consider how lay counseling policy elements discussed in this publication may apply to other spiritual care ministries that the church sponsors.

The attorney your church selects should be familiar with various federal and state laws that have an impact on churches with spiritual care ministries. Very few attorneys concentrate in “church law,” so you may want to seek attorney recommendations from other churches or trusted sources.

Check with Your Insurance Provider

There are several insurance policy liability coverages that are potentially relevant to your church’s lay counseling ministry and other spiritual care ministries. There are church specialty insurers that design insurance programs specifically for churches and other ministries.

Review Your Plan Regularly; Follow It Carefully

Laws change, as do the makeup and needs of a church. Review and update your lay counseling policy and forms annually, together with any other relevant spiritual care ministry policies and procedures. Church leaders should actively apply the church’s lay counseling and spiritual care ministry policies and procedures.

Are We Prepared for Disaster? A Checklist for Churches.

A 10-question checklist to determine steps to take.

Use the following checklist to gauge how your church is doing at preparing for a disaster.

Download a PDF version of this checklist.

When churches plan for disasters, it’s always with the hope that the plans will be unnecessary. But if a disaster—be it a hurricane, a tornado, a fire, flooding, or something else—does strike your church, you’ll be glad you’ve taken the following things into account.

Take inventory. Having a record of the church’s possessions is extremely helpful in the event of a disaster. But this needs to be done prior to the disaster. A post-disaster inventory undoubtedly will be incomplete—and it will lack the photos (or video) that can streamline the post-disaster process.

Think “when” not “if.” When discussing the potential for disasters, it’s easy to focus on the unlikelihood of each scenario. Focusing on what to do when it happens, however, forces church leaders to take the risks seriously—no matter how slim the chances are. And if the unlikely becomes a reality, your church community will be grateful that its leaders took the planning process seriously.

Creating a crisis response team. A crisis response team should be well-trained and authorized to act when necessary. Most importantly, this team needs to be familiar with the necessary procedures in the event of a variety of different disasters—because the immediate needs will vary depending on the type of emergency.

A crisis response team should also be prepared to see the church through the crisis—not just immediately, but also following up on any needs that emerge after the initial phase of the crisis.

Focus on the people—not just the problem. When a disaster strikes, people are going to be impacted. The more traumatic the disaster is, the more people will need spiritual and emotional support. Focusing on physical needs (such as rebuilding, cleaning up, replacing destroyed or damaged property, etc.) often is easier than ministering to those who might be reeling—emotionally and physically.

As you help with the practical needs that surface in the wake of a disaster, be constantly looking for people who need a word of encouragement or someone willing to process things with them. Plan to ask the questions, “How are you doing?” and “Do you want to talk about it?” And be sure to listen—to really listen—to their responses.

Stay disciplined. In the aftermath of a disaster, people are often eager to lend a hand—willing to do anything necessary. But in these times, one’s spiritual disciplines are often put on hold. Ignoring spiritual disciplines is a recipe for another type of disaster. When things are difficult, relief workers need to make their spiritual lives a priority—even when it seems like there are more pressing needs.

A 12-Point Checklist for Setting Church Fundraising Guidelines

This downloadable 12-point checklist is created for those wondering how to establish church fundraising guidelines.

Last Reviewed: November 1, 2023

Download a PDF version of the 12-point checklist below, and use it to gauge how your church is doing at setting church fundraising guidelines.

Before you launch your next fundraising effort, be sure to consider some aspects that may be putting your church and your members at risk. Use the simple tips below help ensure that your next fundraiser is safe.

Physical Safety

Outside Vendors. Most vendors are reputable. However, some may be inexperienced or unprofessional. Be sure to select vendors who have references. Utilize a written contract outlining their duties and get proof that they have adequate insurance.

Equipment. All equipment, whether owned by the church, rented, or brought in by a vendor should be safe. The only way to insure this is to have it inspected by a certified inspector. Further, all equipment should be run by a trained, responsible person who has safety in mind.

Food Sales. Anytime you are selling food, extra care should be provided. Adults should make sure the food is kept at the proper temperatures and safe to sell.

Financial Safety

Cash. Every effort should be made to secure the funds as soon as possible, even as it accumulates during the event. A responsible security team (of two or more) should take cash to a secure room, and lock it up until it can be counted. Once the money is secured, it should be handled in the same way as the church collection. Use two or more people to count the money, document it, and ensure its safe deposit. Never allow cash to be taken home or counted by just one person.

Tax-Deductible Donations. Some churches raise funds by asking people to donate items to the church. The church then sells or uses these donations, and the donor can receive a tax deduction. Take care to follow proper IRS guidelines for accepting donations and reporting them. Churches should consult a competent tax person who knows the law regarding nonprofits.

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