Tag: church employment

2018 Begins: UNENFORCEABILITY OF EMPLOYMENT CONTRACTS UNDER THE ECCLESIASTICAL ABSTENTION DOCTRINE

The New Year commenced with a step along the path of the development of the law known as the Ecclesiastical Abstention Doctrine.  Indeed, this development may be an outlier or even a step too far.  Because the development is in an unpublished court opinion, it may be cited only for persuasive effect and is not precedential (aka stare decisis).  Nevertheless, the opinion is from a United States Court of Appeals and those are always significant, especially in the federal district courts that report to that circuit.

In Myhre v Seventh Day Adventist, Slip Op. (11th Cir. 2018), a retired clergyman (assumed so because he was “defrocked”) retired in 2009 and began collecting retirement benefits.  In 2013, an unspecified “theological disagreement” arose.  The opportunity for a retiree to initiate a “theological disagreement” would seem non-existent but to a denominational insider this might seem quite normal.  In addition to being “defrocked” the Plaintiff was excommunicated.  In 2013 the denomination cut off the Plaintiff’s retirement benefits.  The retirement plan document stated eligibility continued only so long as the beneficiary remained a “member of good standing.”  The Plaintiff was no longer such a member after excommunication.  The 11th Circuit affirmed the trial court’s decision that the trial court lacked jurisdiction to hear the breach of contract claim because the case would require an inquiry into the meaning of “member of good standing” and the underlying evidence on that subject.  Such an inquiry, the trial court reasoned, would be blocked by the Ecclesiastical Abstention Doctrine.  The 11th Circuit characterized the dispute as “disciplinary procedure” not appropriate for judicial review.

The argument did not seem to be whether the membership clause was a condition to starting benefits.  There did not seem to be a dispute about whether the membership clause requirement was by its own language perpetually applicable after initial eligibility had been determined.  It would seem that a court could under the Neutral Principles Doctrine determine if the membership clause was an ongoing condition precedent to continuing to receive benefits.  If it was (and it may have been but the opinion was a bit terse), application of the Ecclesiastical Abstention Doctrine would make sense.

DREADED ERISA DOES NOT APPLY

The Employment Retirement Income Security Act of 1980 was a logical attempt to structure and organize employee retirement plans to take pressure off social security, improve employee confidence sufficiently to encourage savings, and to regulate the tax sheltered nature of retirement savings.  Like all federal mandates that are also entangled with the federal income tax it is complicated and regulations it spawned were more so.

From inception ERISA exempted churches.  Church employers could create less regulated employment retirement plans.  The question then became whether para-church organizations could do so.  In Medina v Catholic Health Initiatives, Slip Op. (10th Cir. 2017), the United States Court of Appeals for the Tenth Circuit affirmed a Colorado trial court.  The question was whether Catholic Health Initiatives (“CHI”), a para-church organization of the Roman Catholic Church was a “principal-purpose organization” that would be exempt from ERISA.  CHI operated 92 hospitals, had 90,000 employees in its retirement plan, and the plan had $3 billion in assets.  While the historic connection between churches and hospitals is becoming lost in the mists of time, it remains, and many hospitals in existence would not have existed in the author’s life time had no church stepped up to found them.  But, in the post-modern era, the church hospitals, those that have not been bought or replaced by secular ownership, have grown to proportions that obscure the roots.  Because of the size of these institutions, they must be managed by modern methods and that tends to make them look less like para-church organizations.  Nevertheless, the 10th Circuit upheld the ruling that CHI was a para-church organization, i.e., a principal-purpose organization, and therefore, exempt from ERISA.

The opinion omits a discussion of why the Plaintiff was aggrieved by an employee retirement plan that was not subject to ERISA.  The Plaintiff sought class action status so the compliant had to be the same for many participants to meet the numericity requirement.

EMPLOYMENT CONTRACT BREACH

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.

CHURCH SCHOOL FACULTY EMPLOYMENT CONTRACTS

In order to determine if federal employment discrimination statutes apply to the employee of a para-church organization, a court will look to the descriptions of the employment both sides tender into evidence.  On a Motion to Dismiss at the beginning of a case, this may be a very limited inquiry.  Typically, motions to dismiss look only to the Plaintiff’s allegations in the Complaint or Petition and to any documents attached.  On a Motion for Summary Judgment filed after discovery the range of admissible facts and exhibits may be quite broader.

In Lishu Yin v Columbia International University, Order and Opinion, (D. SC – Columbia, 2017), the Plaintiff attached an employment contract to the Complaint and made certain allegations about her employment role.  The Court overruled the Motion to Dismiss.  The Court determined that the description of the Plaintiff’s job in the employment contract did not establish that Plaintiff was a minister such that the case barred pursuant to the First Amendment’s Ministerial Exception.  The employment contract described the job as “associate professor” and “faculty of the ministry.”  The Plaintiff self-described her role as a full time resident faculty member in the “Masters of Teaching English as a Foreign Language” program.  The Court held that these descriptions were not sufficient to persuade that Plaintiff was a “minister” triggering the Ministerial Exception.

The employment handbook of the institution and the employment contract cannot alone trigger the Ministerial Exception if they do not describe the ministry the jobholder is to perform.  Further, the description should reflect the age or maturity level of the students, not simply be overly general boilerplate, and the handbook and contract should dovetail by referring to each other’s latest version, even if the version is not stated.