Most pastors at some point in their lives begin planning retirement and grooming a successor or teaching leaders how to search for one. Sometimes, however, someone else wants to impose retirement on the pastor. In churches that have a high turnover among their pastors, this presents no problem because the revolving door solves the problem. But, when a pastor has been on station a long time, and is not ready to step aside even though someone wants the pastor to do so, disputes arise.
In Gregorio v Hoover, Memorandum Opinion (DDC 2017), the denominational foundation loaned money to the local church and the denomination co-signed. The church in a side contract agreed to pay the loan and the denomination agreed to hold legal title until the loan was repaid or refinanced. Once the loan was retired, the denomination was expected to transfer legal title to the local church corporation. The payments were timely made by the local church and the loan was retired. The local church had no turnover in the position of pastor. The denomination paid a small stipend to the pastor but his income was for the most part earned from the local church. Two decades passed. The denomination stopped paying the small stipend to the pastor. Three years later the denomination advised the pastor of the local church he would retire because the denomination wanted to appoint “younger people” to take his place. The pastor declined and suggested the denomination had no authority to appoint or terminate the pastor of that particular local church. The denomination locked the pastor out.
The pastor withdrew the age discrimination claim probably because the pastor had not exhausted administrative remedies by filing a complaint with the federal EEOC and obtaining a right to sue letter. However, because the pastor was the founding pastor of the local church, the local church’s corporate identity was and had always been owned and controlled by the pastor. Thus, the pastor was able to keep his claim alive by suing the denomination for failing to transfer legal title after the loan was repaid. The pastor was able to make a breach of contract claim also because the promised small stipend was two years in arrears after being paid for nearly two decades. The Ministerial Exception does not override a contract damages claim, even if it might not allow a court to compel reinstatement. Finally, the pastor asserted a claim against the denomination for unjust enrichment because the legal title was not transferred.
The success or failure of these particular claims lies in the future but there are lessons to learn from this order overruling the denomination’s motions to dismiss. Denominations that have longstanding engagements with pastors should review the governing documents, including real estate titles, to make certain current denominational retirement policies are reflected and that a retirement strategy has been agreed upon. A financial incentive to obtain agreement with updated governing documents will almost always be cheaper than litigation. A contract will often be enforced at least as to money damages. Contracts are enshrined in Article 1, Section 10 of the United States Constitution, co-equally with the First Amendment, which is why the Ministerial Exception or the Ecclesiastical Abstention Doctrine may not eclipse the contract.
While a court will typically refuse to reinstate a defrocked or fired pastor under the Ecclesiastical Abstention Doctrine or the “ministerial exception,” in most states a purely contract based dispute will be heard under neutral contract principles. In most states, the contract will be enforced as written or legal defenses to contracts will be considered.
In Bigelow v Sassafras Grove Baptist Church, Slip Op. (NC App. 2016), the Pastor and the church entered into an employment contract that contained a disability provision. In case it is not obvious, the contract did not require that the Pastor remain at his post to receive the disability benefits. The disability benefit provided by the contract was that the church would pay salary and medical benefits if the Pastor became disabled during the twelve year term of the contract, which might turn out to be several years in this particular case if the contract was enforced.
The trial court dismissed the case under the aforementioned 1st Amendment doctrines. The appellate court reversed the dismissal and sent the case back to the trial court for further proceedings, which would probably include discovery and trial until verdict or settlement. The reversal was based on a thorough review of the Ecclesiastical Abstention Doctrine and the “ministerial exception,” and the conclusion that neutral contract law principles governed the dispute.
The contract was, in part, quoted in the court opinion. The contract was clearly not drafted by a lawyer. Drafting errors may have resulted in confusion about the terms agreed upon or the full extent of the promises exchanged, especially duration of the promises. Further, the disability insurance policy in effect at the inception of the contract was no longer in force and it seems likely the church did not anticipate that the loss of that coverage might or might not expand the financial commitment. The portion of the contract quoted did not specify which party had the obligation to keep the disability coverage in force. If that was the Pastor’s duty, then the church might have a setoff to assert.
Employment contracts are generally enforceable between Pastors and churches as to financial terms, but not as to actual employment. If the church removes the Pastor from that position, no court will intervene, even if the financial aspects of the contract are still enforceable.
In the United States Supreme Court case, Hosanna – Tabor Evangelical Lutheran Church and School v EEOC, 565 US___, (01/11/2011), with which everyone is now trying to bring their employment relationships into alignment, the teacher in question was classified as a “minister” because of her religious licensure and her religious teaching responsibilities. As such, employment decisions could not be reviewed by the courts without violation of the First Amendment Ecclesiastical Abstention Doctrine. Other religious organizations have had the idea based on the case that all of their employees, regardless of expertise, are also religious operatives and so described them in employment contracts and employment policy manuals.
Will it work?
So far, it generally has. It probably will if the job, as described in the policy manual, includes religious education or other religious duties. In the absence of a policy manual or job description, there may be other proof of the religious entanglement of even secular positions. If the religious organization accepts government money there may be the need to trace whether the federal programs in which the employees serves is secular, and funded by government, or secular but related to the religious objectives. Absent a financial entanglement with government, most courts will likely allow church schools to enforce the tenants of their religious sponsors and probably most other types of organizations, too.
Another valid question would be, is it necessary? Most courts will see the reality rather than look only to the form. For now, until a few more court decisions come down the pipeline, the better practice is to revise employment agreements and policy manuals of church schools to make clear the religious nature of the duties of the teachers.
Another method of deflecting employment claims will be the “morality clause” inserted in employment contracts or policy manuals. Most denominations have a central document that sets forth a clear statement of the religious morality expected or sought, too. Evangelical churches that do not have a denominational base document usually have corporate bylaws or other constitutional documents upon which the church school or employment policy manual can be based to achieve the same result.