Employment Liability and the Church: Myths and Misconceptions

Lawsuits alleging wrongful employment practices are the fastest-growing area of civil litigation today. Unfortunately, many churches and related ministries are unaware of the legal risks they face as employers. "Hiring, disciplining, compensating, or terminating employees can expose your ministry to expensive litigation if the employment issue is not handled correctly," says attorney Kathleen Turpin, vice president of human resources for Brotherhood Mutual Insurance Company . Mistaken assumptions about employment law can also leave religious organizations vulnerable to employment-related lawsuits, says Turpin, an expert on employment law. Here are some of the common misconceptions that frequently lead to charges of wrongful employment practices:

"We are a religious organization and are protected by the First Amendment."
Unfortunately, there are only a limited number of employment situations in which an organization, operating as a religious institution, is protected by the First Amendment . Terminating clergy, discussing concerns within a board meeting, or requiring certain employees to be of a specific faith may be provided limited protection. However, even in these cases, you cannot count on the First Amendment to protect you from an employment action.

What you can do: Consult with local counsel before making employment decisions to determine whether you are complying with federal and state laws.

"Our employees are like one big family. Even if they were terminated, they would not sue us."
Discrimination lawsuits haWhat you can do: Provide factual information on a strict "need to know" basis. Do not offer opinions. In addition, never reveal information to individuals who are not members of your staff or congregation.

"As long as we were not aware that sexual harassment had taken place, we are not responsible." Employers are, with a few narrow exceptions, responsible for the acts of their supervisory employees, regardless of whether the employer prohibited the conduct and regardless of whether the employer knew about it. Employers may also be liable for sexual harassment that occurs between fellow employees if the employer knew or should have known about the conduct, unless it can be shown that the employer took immediate and appropriate action.

What you can do: Implement a sexual harassment policy that provides for zero tolerance of sexual harassment and educate your staff as to what constitutes sexual harassment. Make sure that the sexual harassment policy and the complaint procedure have been communicated to all employees.

"We can terminate our employees for any reason as long as no written contract exists."
The "at will" employment doctrine says that: "absent a contract between an employer and employee, the employer may terminate an employee for any reason not prohibited by law." The problem with this general rule is that it has been dramatically modified in recent years. In many states, an employer may be bound by oral assurances made to an employee, employment handbook provision, or even an employer's conduct that led the employee to believe he or she would not be terminated, regardless of whether a written contract exits.

What you can do: Do not rely on an assumption of "at will" employment. Always consult a local attorney before firing an employee.

"If we have an employment handbook, we are protected from being sued."
An employment handbook is a great tool that can often be used to limit liability. Unfortunately, if the handbook has not been updated annually, has not been reviewed by an attorney, or is not followed, it may actually cause more damage than it prevents. Without appropriate disclaimers and limiting language, courts may find that your handbook constitutes an employment contract. In these situations, if procedures or policies have not been strictly followed, the organization could be held liable.

What you can do: Ensure that employment handbooks and policies are regularly reviewed by legal counsel.

"Our general liability insurance policy would cover us if an employment lawsuit was filed."
Most general liability insurance and personal injury policies specifically exclude claims arising out the employment relationship. In an effort to provide coverage for these issues, some insurance companies have begun offering employment practices liability coverage. Brotherhood Mutual is among them. The company also offers defense reimbursement coverage, which assists in defense costs if an employment lawsuit is filed. The average cost to defend an employment lawsuit is between $20,000 and $200,000, regardless of the legitimacy of the suit.

What you can do: Contact your insurance agent to request a quote for employment practices liability coverage or defense reimbursement coverage.

Want to learn more? Employment Practices for Ministries offers suggestions for dealing with sticky employment issues that can arise in ministry settings. If your ministry's employment practices haven't been reviewed by an attorney familiar with this area of law, now would be a good time for a review. Court rulings have shown that churches can't consider themselves exempt from the standards that apply to other employers.

Reprinted with permission from Brotherhood Mutual Insurance Company .

Brotherhood Mutual is one of the nation's leading insurers of churches and related ministries.