What the “Ministerial Exception” Ruling means for Churches

The implications of the Supreme Court’s unanimous decision

• Key point 8-10.1. The civil courts have consistently ruled that the First Amendment prevents the civil courts from applying employment laws to the relationship between a church and a minister.

In a ringing endorsement of religious liberty, the United States Supreme Court in January unanimously affirmed the so-called “ministerial exception” barring civil court review of employment disputes between churches and ministers. The ministerial exception has been applied to a wide range of employment disputes by state and federal courts over the past half century, but has never before been addressed by the Supreme Court. This Feature Article will review the facts of the case, explain the Court’s ruling, and evaluate the impact of the case on churches and church leaders.

Background

A Michigan church (the “Church”) affiliated with the Lutheran Church-Missouri Synod (LCMS) operated a small school offering a “Christ-centered education” to students in kindergarten through eighth grade. The Synod classifies teachers into two categories: “called” and “lay.” “Called” teachers are regarded as having been called to their vocation by God through a congregation. To be eligible to receive a call from a congregation, a teacher must satisfy certain academic requirements. One way of doing so is by completing a “colloquy” program at a Lutheran college or university. The program requires candidates to take eight courses of theological study, obtain the endorsement of their local Synod district, and pass an oral examination by a faculty committee. A teacher who meets these requirements may be called by a congregation. Once called, a teacher receives the formal title “Minister of Religion, Commissioned,” and serves until his or her call is rescinded for cause and by a supermajority vote of the congregation.

“Lay” or “contract” teachers, by contrast, are not required to be trained by the LCMS or even to be Lutheran. At the Church, they were appointed by the school board, without a vote of the congregation, to one-year renewable terms. Although teachers at the school generally performed the same duties regardless of whether they were lay or called, lay teachers were hired only when called teachers were unavailable.

A woman (the “plaintiff”) was first employed by the Church as a lay teacher in 1999. After she completed her colloquy later that school year, the Church asked her to become a called teacher. She accepted the call and received a “diploma of vocation” designating her as a commissioned minister. She taught kindergarten during her first four years at the Church’s school and fourth grade during the 2003-2004 school year. She taught math, language arts, social studies, science, gym, art, and music. She also taught a religion class four days a week, led the students in prayer and devotional exercises each day, and attended a weekly school-wide chapel service. She led the chapel service herself about twice a year.

The plaintiff became ill in June 2004 with what was eventually diagnosed as narcolepsy. Symptoms included sudden and deep sleeps from which she could not be roused. Because of her illness, she began the 2004-2005 school year on disability leave. On January 27, 2005, however, the plaintiff notified the school principal that she would be able to report to work the following month. The principal responded that the school had already contracted with a lay teacher to fill her position for the remainder of the school year. The principal also expressed concern that the plaintiff was not yet ready to return to the classroom.

On January 30, 2005, the Church held a meeting of its congregation at which school administrators stated that the plaintiff was unlikely to be physically capable of returning to work that school year or the next. The congregation voted to offer her a “peaceful release” from her call, whereby the congregation would pay a portion of her health insurance premiums in exchange for her resignation as a called teacher. The plaintiff refused to resign and produced a note from her doctor stating that she would be able to return to work on February 22, 2005. The school board urged her to reconsider, informing her that the school no longer had a position for her, but she stood by her decision not to resign.

On the morning of February 22, 2005—the first day she was medically cleared to return to work—the plaintiff presented herself at the school. The principal asked her to leave but she would not do so until she obtained written documentation that she had reported to work. Later that afternoon, the principal called the plaintiff at home and told her that she would likely be fired. The plaintiff responded that she had spoken with an attorney and intended to assert her legal rights.

Following a school board meeting that evening, the board chairman sent the plaintiff a letter stating that the Church was reviewing the process for rescinding her call in light of her “regrettable” actions. The board chairman sent a second letter advising the plaintiff that the congregation would consider whether to rescind her call at its next meeting. As grounds for termination, the letter cited her “insubordination and disruptive behavior” on February 22, 2005, as well as the damage she had done to her “working relationship” with the school by “threatening to take legal action” contrary to the Lutheran view that internal church disputes should be resolved within the church and not in the civil courts. The congregation voted to rescind the plaintiff’s call on April 10, 2005, and the Church sent her a letter of termination the next day.

The plaintiff filed a charge with the Equal Employment Opportunity Commission (EEOC) alleging that her employment had been terminated in violation of the Americans with Disabilities Act (ADA). The ADA prohibits an employer from discriminating against a qualified individual on the basis of disability. It also prohibits an employer from retaliating “against any individual because such individual has opposed any act or practice made unlawful by [the ADA] or because such individual made a charge, testified, assisted, or participated in any manner in an investigation, proceeding, or hearing under [the ADA].”

The EEOC brought suit against the Church, alleging that the plaintiff had been fired in retaliation for threatening to file an ADA lawsuit. The plaintiff intervened in the litigation, claiming unlawful retaliation under both the ADA and a state disabilities law. The plaintiff and EEOC sought her reinstatement to her former position along with backpay, compensatory and punitive damages, attorney’s fees, and other relief.

The Church asked the court to dismiss the case. Invoking what is known as the “ministerial exception,” the Church argued that the suit was barred by the First Amendment because the claims at issue concerned the employment relationship between a religious institution and one of its ministers. According to the Church, the plaintiff was a minister, and she had been fired for a religious reason—namely, that her threat to sue the Church violated the Synod’s belief that Christians should resolve their disputes internally.

Ministerial Exception—An Executive Summary

• In a ringing endorsement of religious liberty, the United States Supreme Court unanimously affirmed the so-called “ministerial exception” barring civil court review of employment discrimination disputes between churches and ministers. The Court dismissed the claim of a teacher at a Lutheran school (who was a commissioned minister) that the school unlawfully discriminated against her on account of her disability.
• The Court concluded that the First Amendment prevents the civil courts from “interfering with the freedom of religious groups to select” their clergy.
• The Court declined “to adopt a rigid formula for deciding when an employee qualifies as a minister” for purposes of the ministerial exception. It concluded that the Lutheran teacher in this case was undoubtedly a minister due to the following four factors: (1) she was a commissioned minister and called teacher; (2) her ministerial status was conferred following extensive religious training and an oral exam; (3) the teacher held herself out as a minister by claiming a housing allowance and accepting the church’s formal call to religious service; and (4) the teacher’s job duties demonstrated a role in conveying the church’s message and carrying out its mission.
• The Court’s ruling only applied the ministerial exception in the context of employment discrimination claims involving ministers. The Court left to future litigation the task of more fully defining the reach of the ministerial exception and the definition of “ministers” to whom the exception applies.
• The Court rejected the claim that its prior ruling in Employment Division v. Smith (1990) prevented recognition of any ministerial exception.
• The Court noted that the purpose of the First Amendment’s ban on the establishment of religion was to prevent the new federal government from establishing a church as most of the colonies had done. This explicit understanding of the intent of the establishment clause, by a unanimous Court, may lead to broader accommodation of religion by state and federal agencies and courts.
• The Court noted that the teacher’s status as a commissioned minister did not, by itself, “automatically ensure coverage” under the ministerial exception. But, it concluded that “the fact that an employee has been ordained or commissioned as a minister is surely relevant, as is the fact that significant religious training and a recognized religious mission underlie the description of the employee’s position.” This aspect of the Court’s opinion could serve as justification for liberalizing the current definition of “minister” in the context of federal tax law.
• The Court concluded that a finding of ministerial status cannot be based solely on the amount of time a person spends on religious functions. It observed: “The issue before us, however, is not one that can be resolved by a stopwatch. The amount of time an employee spends on particular activities is relevant in assessing that employee’s status, but that factor cannot be considered in isolation, without regard to the nature of the religious functions performed.”
• The Court’s ruling will reduce the number of employment discrimination and termination claims against churches. This is especially significant given the fact that most church insurance policies exclude “employment practices” from coverage, meaning that churches must retain their own attorneys and pay any settlement or judgment out of church funds.

The trial court’s decision

A federal district court in Michigan dismissed the lawsuit on the basis of the ministerial exception. The court began its opinion by observing that “for the ministerial exception to bar an employment discrimination claim, the employer must be a religious institution and the employee must have been a ministerial employee.” There was no dispute that the school was a religious institution and so the focus shifted to the question of whether the plaintiff was a ministerial employee. The court concluded that she was. It noted that the exception “most clearly applies to clergy and ordained ministers,” but “it is not limited to such employees.”

To determine if other employees fall within the exception, courts consider whether “the employee’s primary duties consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship.” Accordingly, “an employee may be considered ministerial, although not ordained, depending on the function and actual role of his or her position in the religious institution.” The court concluded that the duties of the plaintiff in this case clearly made her a ministerial employee to whom the ministerial exception applied:

The separation of church and state in the United States has made federal courts inept when it comes to religious issues; the inquiry into the value of an employee in furthering a religious institution’s sectarian mission is no different. The lack of clarity in federal court cases regarding elementary school teachers should not hinder churches from valuing teachers as important spiritual leaders and deciding who will fill those positions as ministerial employees, subject, of course, to inappropriate uses of the title “minister” as subterfuge. For these reasons, it seems prudent in this case to trust [the school’s] characterization of its own employee in the months and years preceding the events that led to litigation. Because it considered the plaintiff to be a “commissioned minister” and the facts surrounding her employment in a religious school with a sectarian mission support this characterization, the court concludes that the plaintiff was a ministerial employee. If, on these circumstances, the Court were to conclude otherwise, it would risk infringing upon the school’s right to choose its spiritual leaders.

Having found that the school was a religious institution, and the plaintiff was a ministerial employee, the court concluded that it had no alternative but to dismiss the case. E.E.O.C. v. Hosanna- Tabor Church and School, 582 F.Supp.2d 881 (E.D. 2008).

The appeals court’s decision

The plaintiff appealed, and a federal appeals court vacated the district court’s ruling and ordered the case to proceed to trial. E.E.O.C. v. Hosanna-Tabor Evangelical Lutheran Church and School, 597 F.3d 769 (6th Cir. 2010). The appeals court acknowledged that the ministerial exception “precludes jurisdiction over claims involving the employment relationship between a religious institution and its ministerial employees, based on the institution’s constitutional right to be free from judicial interference in the selection of those employees.” It quoted from an earlier federal appeals court ruling: “The right to choose ministers without government restriction underlies the well-being of religious community … for perpetuation of a church’s existence may depend upon those whom it selects to preach its values, teach its message, and interpret its doctrine both to its own membership and to the world at large.” Rayburn v. General Conference of Seventh Day Adventists, 772 F.2d 1164 (4th Cir. 1985).

The court observed that “as a general rule, an employee is considered a minister if the employee’s primary duties consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship.” It added that “the overwhelming majority of courts that have considered the issue have held that parochial school teachers who teach primarily secular subjects, do not classify as ministerial employees for purposes of the exception …. By contrast, when courts have found that teachers classify as ministerial employees for purposes of the exception, those teachers have generally taught primarily religious subjects or had a central role in the spiritual or pastoral mission of the church.”

The court concluded that the plaintiff was not a ministerial employee:

Her employment duties were identical when she was a contract teacher and a called teacher … she taught math, language arts, social studies, science, gym, art, and music using secular textbooks. Furthermore, the record indicates that she taught a religion class four days per week for thirty minutes and that she attended a chapel service with her class once a week for thirty minutes. She also led each class in prayer three times a day for a total of approximately five or six minutes. The record also indicates that she seldom introduced religion during secular discussions. Approximately twice a year, she led the chapel service in rotation with other teachers. However, teachers leading chapel or teaching religion were not required to be called or even Lutheran, and, in fact, at least one teacher was not. In all, the record supports the district court’s finding that activities devoted to religion consumed approximately forty-five minutes of the seven hour school day.

[In summary] she spent approximately six hours and fifteen minutes of her seven hour day teaching secular subjects, using secular textbooks, without incorporating religion into the secular material. Thus, it is clear that her primary function was teaching secular subjects, not “spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship.” The fact that she participated in and led some religious activities throughout the day does not make her primary function religious. This is underscored by the fact that teachers were not required to be called or even Lutheran to conduct these religious activities, and at least one teacher was not Lutheran.

In addition, that [the school] has a generally religious character—as do all religious schools by definition—and characterizes its staff members as “fine Christian role models” does not transform a teacher’s primary responsibilities in the classroom into religious activities. This is underscored by the fact that the plaintiff can only recall twice in her career when she introduced the topic of religion during secular discussions.

“The Establishment Clause prevents the Government from appointing ministers, and the Free Exercise Clause prevents it from interfering with the freedom of religious groups to select their own.”

The court conceded that the school gave the plaintiff the title of “commissioned minister,” but concluded that “the title of commissioned minister does not transform the primary duties of these called teachers from secular in nature to religious in nature. The governing primary duties analysis requires a court to objectively examine an employee’s actual job function, not her title, in determining whether she is properly classified as a minister. In this case, it is clear from the record that [the plaintiff’s] primary duties were secular, not only because she spent the overwhelming majority of her day teaching secular subjects using secular textbooks, but also because nothing in the record indicates that the Lutheran church relied on her as the primary means to indoctrinate its faithful into its theology.”

The court also pointed out that the primary duties of “called” teachers were identical to those of contract teachers who do not have the title of minister.

The court concluded:

Given the undisputed evidence that all teachers at [the school] were assigned the same duties, a finding that [the plaintiff] is a “ministerial” employee would compel the conclusion that all teachers at the school—called, contract, Lutheran, and non-Lutheran—are similarly excluded from coverage under the ADA and other federal fair employment laws. However, the intent of the ministerial exception is to allow religious organizations to prefer members of their own religion and adhere to their own religious interpretations. Thus, applying the exception to non-members of the religion and those whose primary function is not religious in nature would be both illogical and contrary to the intention behind the exception.

One judge filed a concurring opinion in which she observed:

[The plaintiff’s] daily duties resemble to some extent those of the plaintiffs in [several other] cases in which the courts found the [teacher’s] primary duties to be ministerial in nature. Tipping the scale against the ministerial exception in this case is that, as the majority points out, there is evidence here that the school itself did not envision its teachers as religious leaders, or as occupying “ministerial” roles. The teachers are not required to be called or even Lutheran to teach or to lead daily religious activities. The fact that the duties of the contract teachers are the same as the duties of the called teachers is telling. This presence (or lack) of a predominantly religious yardstick for qualification as a teacher is a key factor in decisions finding the ministerial exception applicable and those finding it inapplicable alike …. By this measure, even courts that have found ministerial plaintiffs who have daily schedules that have roughly the same ratio of religious to non-religious activities as the plaintiff would find that the ministerial exception should not apply here.

The Supreme Court’s ruling

The Church appealed the case to the United States Supreme Court. In January of 2012 the Court issued a decision explicitly recognizing the ministerial exception and concluding that it barred the civil courts from resolving the plaintiff’s disability and retaliation claims. The Court concluded that the First Amendment prevents the civil courts from “interfering with the freedom of religious groups to select” their clergy.

History of religious freedom

The Court began its opinion by providing a brief history of religious freedom. It noted that the very first sentence of the English Magna Carta (1215) declared that “the English church shall be free, and shall have its rights undiminished and its liberties unimpaired.” But this freedom was often “more theoretical than real.” The Court recounted several limitations on the right of churches to select their clergy, including:

• The Act of Supremacy of 1534 made the English monarch the supreme head of the Church of England.
• The Act in Restraint of Annates (1534) gave the monarch the authority to appoint the Church’s high officials.
• The Uniformity Act of 1662 limited service as a minister to those who formally assented to prescribed tenets and pledged to follow the mode of worship set forth in the Book of Common Prayer. Any minister who refused to make that pledge was “deprived of all his Spiritual Promotions.”

The Court continued:

Seeking to escape the control of the national church, the Puritans fled to New England, where they hoped to elect their own ministers and establish their own modes of worship …. It was against this background that the First Amendment was adopted. Familiar with life under the established Church of England, the founding generation sought to foreclose the possibility of a national church. By forbidding the “establishment of religion” and guaranteeing the “free exercise thereof,” the Religion Clauses ensured that the new Federal Government—unlike the English Crown—would have no role in filling ecclesiastical offices. The Establishment Clause prevents the Government from appointing ministers, and the Free Exercise Clause prevents it from interfering with the freedom of religious groups to select their own.

The Court noted that this understanding of the First Amendment was reflected in an 1806 letter written by secretary-ofstate James Madison, “the leading architect of the religion clauses of the First Amendment,” in response to a request by the first Catholic bishop in the United States regarding who should be appointed to direct the affairs of the Catholic Church in the territory newly acquired by the Louisiana Purchase. After consulting with President Jefferson, Madison responded that the selection of church “functionaries” was an “entirely ecclesiastical” matter left to the Church’s own judgment. The “scrupulous policy of the Constitution in guarding against a political interference with religious affairs,” Madison explained, prevented the government from rendering an opinion on the “selection of ecclesiastical individuals.”

Church property cases

The Court noted that while it had not directly addressed the issue of state control over a church’s right to select its own clergy, it had indirectly done so in a couple of church property cases.

(1) Watson v. Jones, 13 Wall. 679 (1872). The Supreme Court observed:

Whenever the questions of discipline, or of faith, or ecclesiastical rule, custom, or law have been decided by the highest of [the] church judicatories to which the matter has been carried, the legal tribunals must accept such decisions as final, and as binding on them.

(2) Kedroff v. Saint Nicholas Cathedral of Russian Orthodox Church in North America, 344 U. S. 94 (1952). The Court observed:

[The Watson decision] radiates … a spirit of freedom for religious organizations, an independence from secular control or manipulation—in short, power to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine …. Freedom to select the clergy, where no improper methods of choice are proven [is] part of the free exercise of religion [protected by the First Amendment against government interference].

(3) Serbian Eastern Orthodox Diocese for United States and Canada v. Milivojevich, 426 U. S. 696 (1976). The Court observed that the First Amendment “permits hierarchical religious organizations to establish their own rules and regulations for internal discipline and government, and to create tribunals for adjudicating disputes over these matters.” When ecclesiastical tribunals decide such disputes, “the Constitution requires that civil courts accept their decisions as binding upon them.”

The ministerial exception—in general

Significantly, the Supreme Court for the first time explicitly acknowledged that the ministerial exception is required by the First Amendment:

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.

The plaintiff and EEOC asked the Court to repudiate the ministerial exception on two grounds. First, there was no need for such a special exception since the First Amendment right of “association” was sufficient protection for all groups, both religious and secular, to determine their memberships. The Court found this position, which would treat all employers the same “whether the association in question is the Lutheran Church, a labor union, or a social club,” as “hard to square with the text of the First Amendment itself, which gives special solicitude to the rights of religious organizations.” The Court added, “we cannot accept the remarkable view that the Religion Clauses [of the First Amendment] have nothing to say about a religious organization’s freedom to select its own ministers.”

The plaintiff and EEOC also claimed that a 1990 Supreme Court decision effectively repudiated the ministerial exception. In Employment Division v. Smith, 494 U. S. 872 (1990), two members of the Native American Church were denied state unemployment benefits after it was determined that they had been fired from their jobs for ingesting peyote, a crime under Oregon law. The Court held that this did not violate the First Amendment’s Free Exercise Clause, even though the peyote had been ingested for sacramental purposes, because the “right of free exercise does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability on the ground that the law proscribes (or prescribes) conduct that his religion prescribes (or proscribes).”

The Court conceded that the ADA’s prohibition against disability discrimination is a valid and neutral law of general applicability. But “a church’s selection of its ministers is unlike an individual’s ingestion of peyote. Smith involved government regulation of only outward physical acts. The present case, in contrast, concerns government interference with an internal church decision that affects the faith and mission of the church itself. The contention that Smith forecloses recognition of a ministerial exception rooted in the Religion Clauses has no merit.”

Does the ministerial exception apply in this case?

Having concluded that there is a ministerial exception that bars the civil courts from resolving employment disputes between churches and their ministers, the Court examined whether the exception applied to the plaintiff in this case. It concluded that it did.

The Court declined “to adopt a rigid formula for deciding when an employee qualifies as a minister.” But it concluded that the plaintiff in this case, a called teacher and commissioned minister in a Lutheran school, was a minister to whom the ministerial exception applied. As a result, her claims of disability discrimination and retaliation against a church-operated school had to be dismissed.

The Supreme Court noted that the federal appeals court had made three errors in concluding that the plaintiff was not a ‘minister.’

In support of its decision that the plaintiff was a minister, the Court cited the following facts:

(1) The church held out the plaintiff as a minister, with a role distinct from that of most of its members.

• When the church extended her a call, it issued her a “diploma of vocation” granting her the title “Minister of Religion, Commissioned.”
• She was tasked with performing her duties “according to the Word of God and the confessional standards of the Evangelical Lutheran Church as drawn from the Sacred Scriptures.”
• The congregation prayed that God “bless her ministrations to the glory of His holy name, and the building of His church.”
• In a supplement to the diploma, the congregation undertook to periodically review the plaintiff’s “skills of ministry” and “ministerial responsibilities,” and to provide for her “continuing education as a professional person in the ministry of the Gospel.”

(2) The plaintiff’s title as a minister reflected a significant degree of religious training followed by a formal process of commissioning.

• To be eligible to become a commissioned minister, the plaintiff had to complete eight college-level courses in subjects including biblical interpretation, church doctrine, and the ministry of the Lutheran teacher.
• She also had to obtain the endorsement of her local Synod district by submitting a petition that contained her academic transcripts, letters of recommendation, personal statement, and written answers to various ministry- related questions.
• She had to pass an oral examination by a faculty committee at a Lutheran college.
• It took her six years to fulfill these requirements. And when she eventually did, she was commissioned as a minister only upon election by the congregation, which recognized God’s call to her to teach. At that point, her call could be rescinded only upon a supermajority vote of the congregation—a protection designed to allow her to “preach the Word of God boldly.”

(3) The plaintiff held herself out as a minister of the church.

• She accepted the formal call to religious service.
• She claimed a special housing allowance on her taxes that was available only to employees earning their compensation “in the exercise of the ministry.”
• In a form she submitted to the Synod following her termination, the plaintiff again indicated that she regarded herself as a minister at Hosanna-Tabor, stating: “I feel that God is leading me to serve in the teaching ministry …. I am anxious to be in the teaching ministry again soon.”

(4) The plaintiff’s job duties reflected a role in conveying the church’s message and carrying out its mission.

• The church expressly charged her with “leading others toward Christian maturity” and “teaching faithfully the Word of God, the Sacred Scriptures, in its truth and purity and as set forth in all the symbolical books of the Evangelical Lutheran Church.”
• In fulfilling these responsibilities, the plaintiff taught her students religion four days a week, and led them in prayer three times a day. Once a week, she took her students to a school-wide chapel service, and—about twice a year—she took her turn leading it, choosing the liturgy, selecting the hymns, and delivering a short message based on verses from the Bible.
• During her last year of teaching, she also led her fourth-graders in a brief devotional exercise each morning.
• As a source of religious instruction, she performed an important role in transmitting the Lutheran faith to the next generation.

The Supreme Court noted that the federal appeals court had made three errors in concluding that the plaintiff was not a “minister.” First, it failed to see any relevance in the fact that the plaintiff was a commissioned minister. The Supreme Court observed: “Although such a title, by itself, does not automatically ensure coverage, the fact that an employee has been ordained or commissioned as a minister is surely relevant, as is the fact that significant religious training and a recognized religious mission underlie the description of the employee’s position. It was wrong for the Court of Appeals … to say that an employee’s title does not matter.”

Second, the appeals court “gave too much weight to the fact that lay teachers at the school performed the same religious duties as [the plaintiff].” The Supreme Court observed: “Though relevant, it cannot be dispositive that others not formally recognized as ministers by the church perform the same functions—particularly when, as here, they did so only because commissioned ministers were unavailable.”

And, in rejecting the appeals court’s conclusion that the ministerial exception did not apply because of the limited time that the teacher devoted to religious tasks, the Court observed: “The issue before us, however, is not one that can be resolved by a stopwatch. The amount of time an employee spends on particular activities is relevant in assessing that employee’s status, but that factor cannot be considered in isolation, without regard to the nature of the religious functions performed.”

The Court acknowledged that the teacher’s religious duties “consumed only 45 minutes of each workday, and that the rest of her day was devoted to teaching secular subjects.” However, the Court noted that it was unsure whether any church employees devoted all their time to religious tasks: “The heads of congregations themselves often have a mix of duties, including secular ones such as helping to manage the congregation’s finances, supervising purely secular personnel, and overseeing the upkeep of facilities.”

Finally, the Court rejected the claim of the plaintiff and EEOC that the civil courts should be free to review a church’s decision to terminate a minister where the alleged “religious” basis for the church’s decision is a mere “pretext” for what in reality was unlawful discrimination based on disability or some other ground. The Court noted that this argument “misses the point of the ministerial exception. The purpose of the exception is not to safeguard a church’s decision to fire a minister only when it is made for a religious reason. The exception instead ensures that the authority to select and control who will minister to the faithful—a matter ‘strictly ecclesiastical’—is the church’s alone.

The Court concluded:

The case before us is an employment discrimination suit brought on behalf of a minister, challenging her church’s decision to fire her. Today we hold only that the ministerial exception bars such a suit ….

The interest of society in the enforcement of employment discrimination statutes is undoubtedly important. But so too is the interest of religious groups in choosing who will preach their beliefs, teach their faith, and carry out their mission. When a minister who has been fired sues her church alleging that her termination was discriminatory, the First Amendment has struck the balance for us. The church must be free to choose those who will guide it on its way.

Application to Churches and Church Leaders

What is the relevance of this ruling to churches and church leaders? Consider the following points:

1. The ministerial exception is now settled law While the ministerial exception has been recognized by many state and federal courts over the past half century, it was rejected by a handful of courts. The Supreme Court’s decision unequivocally establishes the ministerial exception as a matter of law. This conclusion is reinforced by the fact that the Court’s decision was unanimous.

However, note that the Court clarified that:

The case before us is an employment discrimination suit brought on behalf of a minister, challenging her church’s decision to fire her. Today we hold only that the ministerial exception bars such a suit. We express no view on whether the exception bars other types of suits, including actions by employees alleging breach of contract or tortious conduct by their religious employers. There will be time enough to address the applicability of the exception to other circumstances if and when they arise.

Nevertheless, there are numerous forms of “employment discrimination” claims under state and federal laws that are directly affected by the Court’s ruling, including those banning employment discrimination on the basis of race, color, national origin, gender, disability, military status, marital status, sexual orientation, and use of lawful products.

A number of courts in recent years have applied the ministerial exception to compensation disputes between churches and ministers, including claims for backpay, fringe benefits, and overtime compensation. The Court’s decision in the Hosanna-Tabor case does not directly address these claims. Its decisive recognition of the ministerial exception in employment discrimination cases undoubtedly makes it more likely that the exception will apply to compensationbased disputes, as many state and lower federal courts have ruled.

2. Who is a “minister?”

After recognizing the existence of a ministerial exception, the Court turned its attention to the meaning of the term “minister.” It is important to define this term, since the ministerial exception only insulates employment disputes between churches and ministers from civil court interference.

Who Is a “Minister?”

Note: The Supreme Court’s decision in the Hosanna-Tabor case affirming the existence of a ministerial exception in employment disputes between churches and their ministers prevents the civil courts from resolving these claims. The Court concluded that a called teacher in a Lutheran school was a minister, due to the four factors listed in the table below. The table applies the Court’s definition to common church staff positions. Also, note that the term “minister” has different meanings in different contexts. This table is only addressing the definition in the context of the ministerial exception. The letters at the top of the columns refer to different kinds of ministers as explained below the table.

The four factors applied by the Supreme Court in determining “minister” statusABCDEF

1. Formal title (i.e., commissioned minister) bestowed by the church	X	X	X			X
2. Ministerial status conferred following formal religious training and an oral exam	X	X	X			X
3. The individual holds himself or herself out as a minister (i.e., by claiming a housing allowance, accepting a formal call to religious service)	X	X	X
4. Job duties demonstrate a role in conveying the church’s message and carrying out its mission	X	X	X	X	X
The individual is a minister	yes	yes	probably	unlikely	no	unlikely

A: The plaintiff in the Hosanna-Tabor case.

B: Jon is an ordained lead pastor of a church, and a seminary graduate. He was ordained by a denominational entity following the satisfaction of several requirements, including education, references, interview, and written examination. His church treats him as a minister for tax purposes (it does not withhold income taxes or FICA taxes from his wages, and designates a portion of his wages each year as a housing allowance).

C: Jan is a licensed minister who serves as the music minister of her church. She is authorized to perform most, if not all, of the religious functions of an ordained minister in her church. She has not had any formal religious education (her undergraduate degree is in music from a state university). She was licensed by a denominational entity following the satisfaction of several requirements, including education, references, interview, and written examination. Jan’s church treats her as a minister for tax purposes (it does not withhold income taxes or FICA taxes from her wages, and designates a portion of her wages each year as a housing allowance).

D: Same facts as “C,” except that Jan is not an ordained or licensed minister and is not treated as a minister by her church for tax purposes.

E: Tim is employed full-time by a church as a youth pastor. He is not licensed or ordained, but his church considers him to be a “minister” because his duties are directly linked to carrying out the church’s mission. However, Tim does not believe he qualifies as a minister for tax purposes because he is not ordained or licensed, and so he advises the church to treat him as a nonministerial employee (the church withholds income taxes and FICA taxes from his wages, and does not designate any portion of his wages as a housing allowance).

F: Ted is an ordained minister who is serving as the business administrator for a church. The church does not treat him as a minister for tax purposes, and his duties are almost exclusively administrative with no direct association with the church’s mission.

The Court noted that the term “minister” is not limited “to the head of a religious congregation.” But, it declined “to adopt a rigid formula for deciding when an employee qualifies as a minister.” Rather, it chose to address only the plaintiff in this case, a called teacher and commissioned minister in a Lutheran school, and concluded that she was a minister to whom the ministerial exception applied. As a result, her claims of disability discrimination and retaliation against a church-operated school had to be dismissed.

The Supreme Court declined to define the term “minister” in the context of the ministerial exception, choosing rather to let the civil courts define the term in the course of future litigation. Several courts have done so. The two leading definitions are the following:

The Rayburn test

The most frequently cited definition of “minister” applied by state and lower federal courts in the context of the ministerial exception was announced by a federal appeals court in 1985. Rayburn v. General Conference of Seventh-Day Adventists, 772 F.2d 1164 (4th Cir. 1985). In concluding that an “associate in pastoral care” was a minister, the court laid down the following definition: “The fact that an associate in pastoral care can never be an ordained minister in her church is likewise immaterial. The ministerial exception to Title VII … does not depend upon ordination but upon the function of the position. As a general rule, if the employee’s primary duties consist of teaching, spreading the faith, church governance, supervision of a religious order, or supervision or participation in religious ritual and worship, he or she should be considered clergy.”

The Starkman test

A woman began her employment as choirmaster of a church and thereafter became the director of music. While employed, she allegedly suffered from a variety of disabilities, including asthma, osteoarthritis of both knees, migraine headaches, and endometriosis. She claimed that the church refused to modify her work schedule to allow full recovery from knee surgery and, after she suffered chemical exposures from cleaning materials, refused to accommodate her chemical sensitivities. Her employment was terminated, and she sued the church claiming that she was discharged in violation of the Americans with Disabilities Act.

“By forbidding the ‘establishment of religion’ and guaranteeing the ‘free exercise thereof,’ the Religion Clauses ensured that the new Federal Government—unlike the English Crown—would have no role in filling ecclesiastical offices.”

The church claimed that the woman’s lawsuit was barred by the First Amendment’s religion clauses. The court concluded that the woman’s position at the church was “within the parameters” of the ministerial exception from civil rights laws. It pointed out that “the Director of Music was responsible for duties squarely within the conventional understanding of ecclesiastical or religious functions, and was not a position mainly performing tasks which are not traditionally ecclesiastical or religious.” The court noted that “the ministerial exception has not been limited to members of the clergy,” but rather, “encompasses all employees of a religious institution, whether ordained or not, whose primary functions serve its spiritual and pastoral mission.”

This ruling was affirmed by a federal appeals court. The court noted the following three factors to consider in deciding if a church employee is a “minister” for purposes of the ministerial exception: (1) Are employment decisions regarding the position at issue made “largely on religious criteria”? (2) Is the employee authorized to perform the ceremonies of the church? (3) Does the employee engage in activities traditionally considered ecclesiastical or religious?

The court concluded that the music director was a minister based on an analysis of these three factors. The court cautioned that the role of the civil courts in applying the “ministerial exception” was to focus on “the action taken, not possible motives,” and that a church is “not required to advance a theological or religious explanation regarding its allegedly illegal employment actions.”

In deciding if someone is a minister, the following three factors must be considered: (1) are employment decisions regarding the position made “largely on religious criteria”; (2) is the person authorized to perform the ceremonies of the church; and (3) is the person “engaged in activities traditionally considered ecclesiastical or religious,” including whether he or she “attends to the religious needs of the faithful.” Starkman v. Evans, 198 F.3d 173 (5th Cir. 1999).

It is likely that the Rayburn and Starkman cases will continue to be used in defining the term “minister” in employment discrimination cases brought by employees who do not satisfy the four factors enumerated by the Supreme Court in the Hosanna-Tabor case.

3. The purpose of the First Amendment’s establishment clause

The First Amendment to the United States Constitution provides, in part: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” The meaning of these words is apparent to even a casual reader: Congress, our national legislature, can neither establish a religion nor prohibit its free exercise. These provisions were incorporated into the Constitution because of the fear that the new federal government would create an established church, as many of the colonies had done. Since Congress never attempted to establish a national church, these constitutional provisions were all but forgotten by the beginning of the twentieth century. However, since 1940, the many courts have interpreted the historical precedent as supporting a much broader interpretation of the establishment clause that essentially outlaws any public expression or accommodation of religion by any agency of government.

As a result, the Court’s discourse on the history and purpose of the First Amendment’s establishment clause is significant. The Court unanimously accepted the historical view that the purpose of the establishment clause was not to outlaw all accommodations of religion, but rather, to prevent the establishment of a national church:

Seeking to escape the control of the national church, the Puritans fled to New England, where they hoped to elect their own ministers and establish their own modes of worship …. It was against this background that the First Amendment was adopted. Familiar with life under the established Church of England, the founding generation sought to foreclose the possibility of a national church. By forbidding the “establishment of religion” and guaranteeing the “free exercise thereof,” the Religion Clauses ensured that the new Federal Government—unlike the English Crown—would have no role in filling ecclesiastical offices. The Establishment Clause prevents the Government from appointing ministers, and the Free Exercise Clause prevents it from interfering with the freedom of religious groups to select their own.

This language may lead to broader accommodation of religion by state and federal agencies and courts.

4. Employment Division v. Smith (1990)

The Court rejected the argument by the plaintiff and the EEOC that a ministerial exception could not survive its 1990 ruling in the Smith case. This is a significant conclusion that will bolster religious liberty and the autonomy of religious organizations.

Oregon law prohibits the intentional possession of a “controlled substance,” including the drug peyote. Two employees of a private drug rehabilitation organization were fired from their jobs because they consumed peyote for “sacramental purposes” at a ceremony of the Native American Church. The two individuals applied for unemployment benefits under Oregon law, but their application was denied on the grounds that benefits are not payable to employees who are discharged for “misconduct.” The two former employees claimed that the denial of benefits violated their constitutional right to freely exercise their religion. The state supreme court agreed with the discharged employees, and the state appealed to the United States Supreme Court.

The Supreme Court reversed the Oregon court’s decision, and ruled that (1) the constitutional guaranty of religious freedom did not prohibit a state from criminalizing the sacramental use of a narcotic drug, and (2) the state of Oregon could deny unemployment benefits to individuals who were fired from their jobs for consuming peyote.

The Court noted that “we have never held that an individual’s religious beliefs excuse him from compliance with an otherwise valid law prohibiting conduct that the state is free to regulate.” On the contrary, the constitutional guaranty of religious freedom “does not relieve an individual of the obligation to comply with a valid and neutral law of general applicability on the ground that the law [prohibits] conduct that his religion prescribes.” (emphasis added)

The plaintiff and EEOC argued that the Americans with Disabilities Act, which they claimed the church and school had violated, was a “neutral law of general applicability” which not only was constitutionally valid, but also negated recognition of ministerial exception. The Court conceded that the ADA’s prohibition against disability discrimination is a valid and neutral law of general applicability. But it concluded that

a church’s selection of its ministers is unlike an individual’s ingestion of peyote. Smith involved government regulation of only outward physical acts. The present case, in contrast, concerns government interference with an internal church decision that affects the faith and mission of the church itself. The contention that Smith forecloses recognition of a ministerial exception rooted in the Religion Clauses has no merit.

The importance of this conclusion cannot be overstated. Had the Court accepted the argument of the plaintiff and the EEOC, this would have had the effect of allowing virtually any form of governmental regulation of religious organizations so long as the law in question was neutral and of general applicability (to all entities, whether religious or secular). It should be noted that the Court unanimously ruled that this argument “has no merit.”

5. Significance of being ordained, commissioned, or licensed

The Supreme Court noted that the plaintiff’s status as a commissioned minister did not, by itself, “automatically ensure coverage” under the ministerial exception. But, it concluded that “the fact that an employee has been ordained or commissioned as a minister is surely relevant, as is the fact that significant religious training and a recognized religious mission underlie the description of the employee’s position.”

While one’s status as an ordained, commissioned, or licensed minister is not determinative or even essential, it is relevant in deciding if a person is a “minister” for purposes of the ministerial exception.

This aspect of the Court’s opinion could serve as justification for liberalizing the current definition of “minister” in the context of federal tax law. There are several provisions in the federal tax code that apply to “ministers,” most notably including the housing allowance. The tax code and regulations refer to “ordained, commissioned, or licensed” ministers in describing persons who qualify as ministers for tax purposes. The Tax Court amplified upon this definition in a 1989 ruling, Knight v. Commissioner, 92 T.C. 199 (1989). This definition has been endorsed by the IRS in its audit guidelines for ministers.

The Court noted that ‘the heads of congregations themselves often have a mix of duties, including secular ones such as helping to manage the congregation’s finances, supervising purely secular personnel, and overseeing the upkeep of facilities.’

Under this test, the following five factors must be considered in deciding whether a person is a minister for federal tax reporting: (1) Does the individual administer the “sacraments”? (2) Does the individual conduct worship services? (3) Does the individual perform services in the “control, conduct, or maintenance of a religious organization” under the authority of a church or religious denomination? (4) Is the individual “ordained, commissioned, or licensed”? (5) Is the individual considered to be a spiritual leader by his or her religious body? Only the fourth factor is required in all cases (the individual must be ordained, commissioned, or licensed). The remaining four factors need not all be present for a person to be considered a minister for tax reporting.

By defining the term “minister” to apply only to “ordained, commissioned, or licensed ministers,” the tax code, regulations, Tax Court, and the IRS adopted a definition more restrictive than the analysis applied by the Supreme Court in the Hosanna-Tabor case, and this may serve as a basis for liberalizing the Tax Court definition to include persons who perform ministerial functions but who are not formally recognized as ordained, commissioned, or licensed ministers.

6. Time spent performing religious duties

Another important aspect of the Court’s ruling in the Hosanna-Tabor case was its conclusion that a finding of ministerial status cannot be based solely on the amount of time a person spends on religious functions. In rejecting the appeals court’s conclusion that the ministerial exception did not apply because of the limited time that the teacher devoted to religious tasks, the Court observed: “The issue before us, however, is not one that can be resolved by a stopwatch. The amount of time an employee spends on particular activities is relevant in assessing that employee’s status, but that factor cannot be considered in isolation, without regard to the nature of the religious functions performed.”

The Court acknowledged that the teacher’s religious duties “consumed only 45 minutes of each workday, and that the rest of her day was devoted to teaching secular subjects.” However, the Court noted that it was unsure whether any church employees devoted all their time to religious tasks: “The heads of congregations themselves often have a mix of duties, including secular ones, such as helping to manage the congregation’s finances, supervising purely secular personnel, and overseeing the upkeep of facilities.”

This aspect of the Court’s rulings will be helpful in several contexts, including the following:

Ministerial status for tax purposes

The IRS and the Tax Court in some cases have contended that a person is not a minister for tax purposes because of the limited time the person devotes to religious functions. The Supreme Court concluded in the Hosanna-Tabor case that the plaintiff was a minister, despite the fact that her religious duties occupied less than 45 minutes per day. The Court noted that ministerial status cannot be resolved by a stopwatch.

The Court also noted that many ministers devote less than all their time to religious tasks: “The heads of congregations themselves often have a mix of duties, including secular ones such as helping to manage the congregation’s finances, supervising purely secular personnel, and overseeing the upkeep of facilities.”

This will be a helpful precedent to persons whose ministerial status is challenged by the IRS on the basis of the limited time spent on religious duties.

Property tax exemption

Many churches own tracts of vacant land for recreation or future expansion. Are such properties exempt from taxation? Many courts have said no based on the requirement of many state property tax exemption laws that exempt property be used “exclusively” for exempt purposes. How can this requirement be satisfied when a tract of church-owned vacant land is used sporadically or not at all for religious purposes?

Some courts have taken the opposite view, and have ruled that churchowned vacant land may be exempt from tax even though used infrequently for religious purposes. To illustrate, the Kentucky Supreme Court ruled that a 10-acre tract of largely vacant property that a church had acquired for future expansion was exempt from property taxation due to its occasional use for church purposes. Freeman v. St. Andrew Orthodox Church, Inc., 294 S.W.3d 425 (Ky. 2009). The tax assessor determined that the property was subject to taxation based on its infrequent use for religious purposes. In rejecting the assessor’s denial of exemption, the court made the following significant comment:

We recognize that churches are unique. For the most part, they are never “occupied” in the conventional sense. A vast majority of properties owned by institutions of religion such as churches, mosques, tabernacles, temples, and the like, are used for places of worship at specified times and may remain vacant for substantial periods during the week. We further recognize that adjacent facilities, such as activity buildings, gymnasiums, even shelters, may be owned by religious institutions, but perhaps utilized irregularly on an as needed basis. School buildings owned by religious institutions may, in fact, sit idle for a great deal of time. This would not preclude these buildings from being occupied …. It is precisely for these reasons that we find that the trial court’s findings were supported substantially by the evidence in this case as to the property not being rented out as residences.

This case is significant because of the court’s recognition that many buildings owned by religious, educational, and charitable institutions are vacant for significant periods of time but are nevertheless entitled to exemption because of their occasional exempt use. A university classroom building comes to mind. Such buildings are often vacant for several months during the year. The same is true for many churches, whose property is used for religious purposes for no more than a few hours each week. In many states, the exemption of church property from taxation is limited to property that is “used exclusively for religious worship.” And yet, the exempt status of churches that conduct a single, one-hour worship service weekly has never been questioned on the ground of infrequent use.

This conclusion is reinforced by the Supreme Court’s ruling in the Hosanna-Tabor case because of the Court’s conclusion that the plaintiff was a minister despite the fact that her religious duties “consumed only 45 minutes of each workday, and that the rest of her day was devoted to teaching secular subjects.” The Court noted that “the heads of congregations themselves often have a mix of duties, including secular ones such as helping to manage the congregation’s finances, supervising purely secular personnel, and overseeing the upkeep of facilities.” This language will be helpful to churches in demonstrating that churchowned vacant land is exempt from taxation despite infrequent use.

7. Ministerial exception not avoided by claims of “pretext”

Federal courts apply a “burden-shifting” analysis in resolving employment discrimination cases under federal law. The plaintiff (the aggrieved person) bears the initial burden of proving that the employer engaged in the discriminatory practice. This can be done by direct evidence of discrimination, but more often it is done by showing “disparate treatment”—that is, the aggrieved party was treated less favorably than other employees who were not members of a protected group.

The courts have ruled that 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 Supreme Court, in the Hosanna-Tabor case, rejected the claim of the plaintiff and EEOC that the civil courts should be free to review a church’s decision to terminate a minister where the alleged “religious” basis for the church’s decision is a mere “pretext” for what in reality was unlawful discrimination based on disability or some other ground. The Court noted that this argument “misses the point of the ministerial exception. The purpose of the exception is not to safeguard a church’s decision to fire a minister only when it is made for a religious reason. The exception instead ensures that the authority to select and control who will minister to the faithful—a matter ‘strictly ecclesiastical’—is the church’s alone.

In a concurring opinion (see below) two Justices had this to say about the issue of pretext:

For civil courts to engage in the pretext inquiry that [the plaintiff and EEOC] urge us to sanction would dangerously undermine the religious autonomy that lower court case law has now protected for nearly four decades. In order to probe the real reason for [the plaintiff’s] firing, a civil court—and perhaps a jury—would be required to make a judgment about church doctrine. The credibility of Hosanna-Tabor’s asserted reason for terminating the plaintiff’s employment could not be assessed without taking into account both the importance that the Lutheran Church attaches to the doctrine of internal dispute resolution and the degree to which that tenet compromised respondent’s religious function. If it could be shown that this belief is an obscure and minor part of Lutheran doctrine, it would be much more plausible for respondent to argue that this doctrine was not the real reason for her firing. If, on the other hand, the doctrine is a central and universally known tenet of Lutheranism, then the church’s asserted reason for her discharge would seem much more likely to be nonpretextual. But whatever the truth of the matter might be, the mere adjudication of such questions would pose grave problems for religious autonomy: It would require calling witnesses to testify about the importance and priority of the religious doctrine in question, with a civil factfinder sitting in ultimate judgment of what the accused church really believes, and how important that belief is to the church’s overall mission.

As a result, the courts will not apply the burden-shifting analysis to employment disputes covered by the ministerial exception. Ministers will not be allowed to prove that their church’s purported religious reason for terminating or discriminating against them was a mere pretext for what in reality was unlawful discrimination based on a state or federal employment discrimination law.

8. The ministerial exception is an affirmative defense

The Supreme Court concluded that the ministerial exception “operates as an affirmative defense to an otherwise cognizable claim, not a jurisdictional bar. That is because the issue presented by the exception is whether the allegations the plaintiff makes entitle him to relief, not whether the court has power to hear the case.”

An affirmative defense is a legal defense that, even assuming all of the allegations in a plaintiff’s lawsuit are true, precludes recovery. An example is a statute of limitations. Even assuming that all of the allegations in a plaintiff’s lawsuit are true, the plaintiff cannot pursue a lawsuit that was filed after the expiration of the applicable statute of limitations. It is critical to note that affirmative defenses generally must be pleaded in a defendant’s answer to a lawsuit or they will be waived.

As a result, it is important for church leaders, and attorneys who represent churches, to recognize that the ministerial exception is an affirmative defense that must be mentioned in an answer to an employment discrimination claim or it will be waived.

9. A concurring opinion

Justice Alito filed a concurring opinion in the Hosanna-Tabor case that was joined by Justice Kagan. While not binding precedent, the concurring opinion can be cited as persuasive authority. There are two aspects to the concurring opinion that should be noted.

definition of minister

While agreeing with the Court that a ministerial exception exists, and that it applied to the plaintiff in this case since she was a “minister,” the concurring opinion provided a more expansive definition of the term “minister.” While this definition is not binding since it was adopted by only two of the Court’s nine Justices, it nevertheless contains useful information that may be cited as persuasive precedent in future cases. The concurring opinion defined “minister” as follows:

The “ministerial” exception should be tailored to this purpose. It should apply to any “employee” who leads a religious organization, conducts worship services or important religious ceremonies or rituals, or serves as a messenger or teacher of its faith. If a religious group believes that the ability of such an employee to perform these key functions has been compromised, then the constitutional guarantee of religious freedom protects the group’s right to remove the employee from his or her position.

The concurring Justices stressed that while a minister’s title as ordained, commissioned, or licensed “is undoubtedly relevant in applying the First Amendment rule at issue, such a title is neither necessary nor sufficient.” The concurring Justices noted that “most faiths do not employ the term ‘minister,’ and some eschew the concept of formal ordination. And at the opposite end of the spectrum, some faiths consider the ministry to consist of all or a very large percentage of their members.” As a result, these Justices preferred a “functional approach” that defined the term “minister” on the basis of function rather than title.

Internal resolution of employment disputes

The concurring opinion also addressed the relevance of the church’s doctrine of “internal dispute resolution”:

Hosanna-Tabor discharged [the plaintiff] because she threatened to file suit against the church in a civil court. This threat contravened the Lutheran doctrine that disputes among Christians should be resolved internally without resort to the civil court system and all the legal wrangling it entails. In Hosanna-Tabor’s view, the plaintiff’s disregard for this doctrine compromised her religious function, disqualifying her from serving effectively as a voice for the church’s faith. The plaintiff does not dispute that the Lutheran Church subscribes to a doctrine of internal dispute resolution, but she argues that this was a mere pretext for her firing, which was really done for nonreligious reasons.

As noted above, the Court concluded that the application of the ministerial exception in employment discrimination claims cannot be avoided by an allegation that a church’s decision to terminate or discipline a ministerial employee on religious grounds was a pretext covering what in reality amounted to unlawful discrimination in violation of state or federal law.

Many churches have doctrinal opposition to employees and members resolving disputes in the civil courts, preferring rather to have them resolved internally by the church. One of the leading biblical references to this subject is 1 Corinthians 6:1-6, which was quoted by the concurring Justices: “If any of you has a dispute with another, dare he take it before the ungodly for judgment instead of before the saints?”

The concurring opinion clearly affirmed the inherent authority of churches to adopt what it called “the doctrine of internal dispute resolution.” Churches that adhere to this principle should have it embodied in the church’s governing document, or in some other authoritative document (member application, policy, and so on).

In deciding whether or not to have a policy compelling employees to resolve disputes internally (by mediation or arbitration), there are several factors to consider, including the following:

• Employment claims represent a common basis for lawsuits involving churches.
• Is your church subject to state or federal civil rights laws protecting employees against various forms of discrimination? What about other kinds of employment claims, such as wrongful dismissal?
• Employment lawsuits generally are not covered under church general liability insurance policies. This means that if your church is sued for such a claim, you may be required to hire and pay your own attorney, and pay any settlement or court judgment. The costs associated with a single claim can be substantial.
• Check with your insurance agent to see if your church has insurance to cover employment claims. Remember that such coverage may be available under a directors and officers insurance policy, if you have one, even if it is not provided under your general liability policy. If you don’t have coverage for employment claims, then arbitration may help your church limit the costs associated with such claims. But remember, the costs associated with a single claim may be substantial. As a result, church leaders should discuss with their insurance agent or broker the availability of employment practices insurance coverage. And, they should take steps to minimize or manage the risk of employment-related legal claims.
• If you have insurance to cover employment claims, then check with your insurance company to be sure that an arbitration award would be honored under your insurance policy up to your coverage limits.

If your church decides to implement an arbitration policy for the resolution of disputes with employees, how do you do so? Given the importance of having a policy that complies with applicable state and federal laws, it is imperative that any church wanting to adopt an arbitration policy retain the services of an attorney who specializes in employment law. The last thing you want is a false sense of security based on a home-made and unenforceable arbitration policy. Here are some recommendations you may want to share with your attorney:

• Check with other churches in your state and find some that have adopted arbitration policies. Ask if you can see their policies.
• Ask your insurance company if it has sample arbitration policies for churches.
• Be sure that the arbitration policy covers claims under federal, state, and local civil rights and employment laws. Ideally, you will want to refer to applicable laws by name. If you don’t, then employees may be able to avoid arbitration by saying that they did not understand what they were agreeing to arbitrate because the arbitration clause was not specific enough.
• Be sure the arbitration policy contains a “severability” clause. Such a clause states that if any provision of the policy is determined to be invalid by a court of law, the remaining provisions will remain valid. To illustrate, if the Supreme Court reverses the Waffle House case, then employees cannot be compelled to arbitrate claims under federal civil rights laws. A church arbitration clause that covers both federal and state claims will likely remain valid as to state claims, and this conclusion will be reinforced by the presence of a savings clause.

Your attorney will assist you in deciding whether to place the arbitration policy in your employment application, an employee handbook, or your church’s governing document.

There is no reason to exclude ministers from a church’s arbitration policy. However, note the following unique rules:

• Based on the Supreme Court’s decision in the Hosanna-Tabor case, the ministerial exception prohibits the civil courts from resolving employment discrimination disputes between churches and their ministers. Therefore, you may want to exclude employment disputes involving your church and a minister (or those serving in positions that would be deemed “ministerial”) from your arbitration policy. In other words, why submit claims to arbitration that the civil courts would not accept? On the other hand, some churches may prefer to arbitrate all employee claims, including those brought by ministers. Be sure to seek your attorney’s recommendations on this point.
• In some churches, ministers are selected and removed only through action of a parent denominational agency. Employment claims involving ministers may be resolved within the denomination using existing procedures. Arbitrating such claims may conflict with denominational rules. This issue must be clarified with denominational officers before adopting an arbitration policy.

This section is addressing only the arbitration of employment disputes. Church leaders may want to consider adopting a separate policy to resolve disputes involving members and the church, or disputes between members.

Church Law & Tax Report is published six times a year by Christianity Today International, 465 Gundersen Dr. Carol Stream, IL 60188. (800) 222-1840. © 2011 Christianity Today International. editor@churchlawandtax.com All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. “From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations.” Annual subscription: $69. Subscription correspondence: Church Law & Tax Report, PO Box 37012, Boone, IA 50037-0012.