Article - Letting Staff Go - Best Practices for Christian Employers

Operating an effective organization involves hiring, coaching, evaluating, and supervising paid staff. For various reasons, Christian employers may realize that an individual—whom they hired to perform specific work—is no longer a good fit for the position. Or they may discover that an employee who originally performed well is no longer succeeding in the job. Budget considerations or changing organizational priorities also may lead to a job reduction. Whatever the cause, parting ways with an employed staff member may become necessary as Christian organizations seek to further their mission.

When terminating an employee, the key is to view termination as a process, not a point-in-time event.

Rushing the process is one of the biggest mistakes that employers can make in terminating an employee. Supervisors may view a staff member’s error as “the last straw” and follow through with a push to quickly terminate the individual’s employment. Despite a natural inclination to promptly deal with the problem, the rush to terminate an employee is a significant employment liability threat.

If an employee poses a safety threat or is significantly disrupting the organization, consider placing the individual on paid leave while leaders take the following steps. It’s much better to ensure that you have reviewed and addressed all factors rather than fire an employee and later learn that a loose end has left the nonprofit vulnerable to liability.

Before leaders let an employee go, they should first take each of the following steps:

STEP 1: Talk to Your Attorney

Employment law can be complex and varies significantly from state to state. It’s important that your organization's leaders recognize and apply all relevant laws and regulations. Accordingly, you should always consult with a locally licensed attorney who can provide a legal opinion before an employee is terminated. Your attorney should help guide you through steps 2-4 below.

STEP 2: Determine Whether the Individual is an At-Will Employee

More often than not, an employment relationship will be “at-will.” This means termination can occur without any particular reason at the discretion of the employee, the employer, or both. The at-will employment doctrine holds that—absent a contract between an employer and employee—the employer may terminate an employee for any reason not prohibited by law.

According to the U.S. Department of Labor, several exceptions have developed regarding the at-will employment rule. An exception may apply when termination would be contrary to public policy (e.g., termination of an employee who has made a workers’ compensation claim or who has reported employer misconduct). Some states also are more likely to view the employer/employee relationship like it’s an employment contract, which makes employee termination much more difficult to carry out in these states.

Factors that can affect at-will employment:

• Verbal assurances to an employee: Some states—whether by statute or case law—have recognized an employment-contract relationship if an employee has received oral assurances from the employer of a continued relationship, such as “we will be able to keep you through year-end,” and other similar statements.
• Employment handbook: The employment handbook is another area that can inadvertently create a contractual relationship. For instance, provisions in an employee handbook that expressly state or imply employment to be year-to-year or termination to be only for “just cause” could be interpreted as developing an employment contract, in effect, eliminating the concept of at-will employment. Including a progressive discipline process in your employee handbook also can create obligations for the ministry employer that erode the at-will status of employment.
• Employer conduct: There are times when an employer’s conduct or statements alone can imply a contractual relationship whether an agreement is put in writing or not. For example, telling an employee that his or her position is secure provided that income remains stable undermines at-will employment principles.

An employer can minimize these risks by clearly stating the relationship as at-will in the employment handbook and any other employment-related documents given to employees.

STEP 3: Documentation and Consistency

Carefully maintain documentation for each employee from the time that you first employ an individual until employment ends. Regular written performance reviews not only help staff members know how they’re performing, but this documentation also can serve as valuable evidence to support employee termination, if it has been properly developed,

Unless proper documentation is placed in the individual’s personnel file, it’s difficult to demonstrate a performance problem after the fact, or to show what factors led to an employee’s termination. It’s best when an organization's supervisors thoroughly document an employee’s performance, including performance problems they have observed, and any disciplinary action they’ve taken. Employment files also should contain screening documents and any references received prior to employment. It’s far better to err on the side of over-documentation because the contents of employee files are often critical when a ministry has to defend its decision to terminate employed staff.

In addition to thorough documentation, consistent application of discipline also is important. Christian organizations should always consistently apply policies and procedures to all employees. If two staff members demonstrate the same weakness, and if one is given a verbal warning and the other is terminated, the organization may face a disparate treatment lawsuit. To minimize this risk, remain consistent in how you treat all employees.

STEP 4: Employment Handbook Review

As you consider employee termination, be sure to review your employment handbook to ensure that the steps you’re taking line up with handbook policies. Involve your attorney in this process and be sure to review your employment handbook regularly and keep it up to date with any changes or new policies you establish. By doing so, you also will help to solidify the at-will status of employment within your organization and help eliminate potential problems when employee performance issue arise and you consider terminating an employee.

You can use the sample policies on this Working Together site to get started.

Several Lines of Reasoning Provide Grounds for Employment-Related Litigation

The termination of employment is nearly always a stressful process, both for the employee and the employer. While the employee may be disappointed or even angry with the decision, in most cases, they will accept the decision and move on. Despite the best preparation and solid reasoning behind an employee termination, some employees who have been fired will pursue legal action against their former employer. If a suit is filed, frequently it will be based on one or more of the following premises:

• Federal Law Violation: There are a wide variety of federal laws that govern employment relationships. These laws range from wage and hour specifications to benefit and hiring/firing requirements. Discrimination claims based on age, gender, race, disability, and other protected classes can arise after a termination. The application of federal employment law often depends on the number of employees within the organization. The U.S. Department of Labor offers a variety of resources that can help employers better understand these laws.
• State Law Violation: State-based court decisions often govern liability when allegations of wrongful termination surface. In addition to case law, some of the same legal requirements addressed by federal laws also are legislated by the states, sometimes even more stringently than under federal law. State statutes and local ordinances vary significantly by jurisdiction, which makes it important for you to seek guidance from your attorney.
• Breach of Contract: Employment relationships were historically based on contract law. Employment essentially involves two parties agreeing to enter into terms of a relationship that will be mutually beneficial. A breach of contract is a claim by one of the parties that the other party did not uphold their end of the agreement. After termination, an employee may argue that a breach of contract has occurred, and use the breach as grounds for a wrongful termination lawsuit. As previously noted, the at-will employment doctrine was created to soften some of the contractual components of the employment relationship.
• Defamation: Another claim that can surface following employee termination is defamation of character. Defamation involves allegations that false statements about the employee were knowingly made by the employer to others. A similar claim, known as invasion of privacy, also can arise following the termination of an employee. Invasion of privacy claims involve true statements that were conveyed by the employer to individuals who did not have a right to receive the information.

U.S. Supreme Court Recognizes Ministerial Exception

In the landmark 2012 Hosanna-Tabor Evangelical Lutheran Church and School vs. EEOC decision, the U.S. Supreme Court formally recognized a ministerial exception that applies to belief-based decisions religious institutions make. The court’s decision effectively bars ministerial staff members from suing their ministry employer in response to the ministry’s belief-based, employment-related decisions.

The Supreme Court was less specific in defining who should be considered a ministerial employee. Generally, the justices said that the court should consider three criteria:

• Whether the religious institution made its decision to hire the individual based “largely on religious criteria.”
• Whether the individual is authorized to perform ceremonies of the church.
• Whether the person engages in ecclesiastical or religious activities, and “attends to the religious needs of the faithful” as a part of their job function.

Senior pastors, associate pastors, and similar roles appear to fit with the three-factor test. The ruling permits ministry organizations to make hiring and firing decisions with less concern about being sued by pastors and other ministerial staff. If an employee falls under this ministerial designation, their ability to succeed in a lawsuit based on a belief-based decision will be very limited.

Protect Your Christian Organization

Be sure your church or religious organization has appropriate employment practices liability insurance coverage in place. Without such coverage, your organization may be self-insuring any employment liability exposures that may surface. Also remember, consulting with a locally licensed attorney is generally your best defense against wrongful termination claims that a dismissed employee may bring against the organization.

Updated January 6, 2022