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Avoid Church Employment Liability

Protect your organization by asking an employment law attorney to review your ministry’s practices.

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

Lawsuits alleging wrongful employment practices are the fastest-growing area of civil litigation today. Unfortunately, many churches and ministries are unaware of the legal risks they face as employers.

Mistaken assumptions about employment law can add to the risks. Protect your organization by asking an employment law attorney to review your ministry’s practices. And take the following steps to avoid serious consequences from eight common misconceptions.

1. “We are a religious organization and are protected by the First Amendment.”

An organization operating as a religious institution may have limited protection under the First Amendment in a few employment situations, e.g., terminating clergy, discussing concerns in a board meeting, or requiring certain employees to be of a specific faith. Even in these cases, you may be vulnerable to legal action.

Do it right: Consult local counsel before making employment decisions to determine whether you are complying with federal and state laws.

2. “Our employees are like family. Even if they were terminated, they would not sue us.”

Discrimination lawsuits have increased in recent years. The fact is most employers do not anticipate problems during the hiring process; issues surface after the employment relationship begins.

Do it right:

  • Conduct annual performance reviews.
  • Document all disciplinary actions.
  • Maintain accurate records.
  • Avoid emotional confrontations.
3. “We only have a few employees, so the laws do not apply to our organization.”

While many federal statutes (such as the Americans with Disabilities Act, Title VII of the Civil Rights Act and the Family and Medical Leave Act) require a minimum number of employees in order to apply, state statutes and case law generally do not. Legislation in many states broadens the scope and damages of federal statutes.

Do it right: Know the federal and state laws affecting your organization.

4. “We have a right to tell our staff/congregation the reasons for disciplining or terminating an employee.”

Confidentiality relating to discipline or termination is extremely important. While many states provide some protection for statements made to a limited number of people with a “need to know,” this protection may be overcome if:

  • False information is provided.
  • Information is given to individuals deemed not to have a “need to know.”
  • Private information about an employee is shared without the employee's prior permission.

Do it right: Provide factual information on a strict “need to know” basis. Never reveal information to people other than your staff or congregation.

5. “We were not aware that sexual harassment had taken place, so we are not responsible.”

With a few narrow exceptions, employers are held responsible for the acts of their supervisory employees, regardless of whether an employer prohibited or was unaware of the conduct. An employer may be liable for sexual harassment between co-workers if the employer knew or should have known about the conduct, unless it can be shown that the employer took immediate and appropriate action.

Do it right:

  • Implement a zero-tolerance policy on sexual harassment.
  • Communicate the policy and the complaint procedure to all employees.
  • Train your staff to recognize and report sexual harassment.
6. “We can terminate employees for any reason as long as no written contract exists.”

The “at will” employment doctrine states: “absent a contract between an employer and employee, the employer may terminate an employee for any reason not prohibited by law.” But this general rule has changed. In many states, an employer may be bound by:

  • Oral assurances made to an employee
  • An employment handbook provision
  • Employer conduct leading the employee to believe he or she would not be terminated (written contract or not)

Do it right: Consult an attorney before firing an employee. Do not rely on an assumption of “at will” employment.

7. “If we have an employment handbook, we are protected from being sued.”

An employment handbook can be used to limit liability, but only if the handbook has been:

  • Updated annually
  • Reviewed by an attorney
  • Consistent with actual practice

Without appropriate disclaimers and limiting language, a handbook may be found to constitute an employment contract. If procedures or policies have not been strictly followed, the organization could be held liable.

Do it right: Have legal counsel review employment handbooks and policies periodically.

8. “Our general insurance would cover us if an employment lawsuit were filed.”

Most general liability insurance and personal injury policies specifically exclude employment relationship claims. Some insurance companies, including Brotherhood Mutual, now offer employment practices liability coverage. Brotherhood also offers defense reimbursement coverage, which could come in handy; average defense costs can range from $20,000 to $200,000, regardless of a suit’s legitimacy.

Do it right: Contact your insurance agent to request quotes on these types of coverage.