In states that have adopted the Neutral Principles Doctrine in non-religious issue church disputes employment contracts with non-clergy are enforceable in court. A church can contractually impair or limit the First Amendment Ecclesiastical Abstention Doctrine and the Ministerial Exception Doctrine. The financial aspect of the contract will typically not be deemed ecclesiastical even if reinstatement as a remedy is not available under these Doctrines. Courts will be reluctant to try to force reinstatement on a religious organization even for non-clergy and prefer a financial remedy. But, the remedy could be technically available.
In Saint Augustine School v Cropper, Slip Op. (KY 2017), the very brief opinion of the state supreme court did not explain why the elementary school “lay administrator” was in fact “lay.” The “lay administrator” was rehired under a written contract but then shortly after that terminated in what the court seemed to describe as a reduction in force required by a financial downturn at the school or the church. The opinion was silent as to any other reason for termination. The lower court granted summary judgment to the church based on the Ecclesiastical Abstention Doctrine. The Ministerial Exception Doctrine was not asserted by the church. Thus, the Kentucky Supreme Court reversed the lower court on neutral principles grounds.
Written employment contracts are two edged swords. Churches should use them as do businesses to reduce their exposures. But, doing it badly or autonomically usually leads to unintended consequences. Most states in the west have adopted the “at will” employment doctrine. It applies when there is no written or implied contract. State law regarding “at will” employment doctrine should be considered in the evaluation of the need for and contents of an employment contract. Written employment contracts should have a limited duration, typically short, and expressly state renewal is not automatic even if employment continues beyond expiration. There are many other considerations.