Administering the Ministerial Exception: The Supreme Court Expands the Defense in Employment Cases

Although the issue of whether someone can sue a church for employment discrimination doesn’t come up often, in Our Lady Of Guadalupe School v. Morrissey-­Berru, the Supreme Court expanded the ministerial exception that precludes certain employment claims. This is big news for religious employers.

Just like every other employer, churches and religious institutions sometimes get sued by an employee claiming a decision was based on a protected status, like race, sex or age. Those defendants sometimes invoke the First Amendment’s prohibition on state interference with religion to exempt themselves from suit.  Known as the “ministerial exception,” most of the case law has turned on whether the plaintiff’s position could be considered a “minister,” in which case, the law cannot interfere with a religious organization’s decisions about who can fill that role. Past cases specifically declined to adopt a “rigid formula” for determining whether a job fit under the ministerial exception, and instead listed multiple factors that courts should consider. However, in one of the Supreme Court’s last cases of this term, the court expanded the types of employees who may fit under the exception.

Then: Importance of a Title

The court began by recognizing its past precedent, Hosanna-Tabor, a case from 2012. In that case, Janet Perich, an elementary teacher at an Evangelical Lutheran school, sued for disability discrimination under the ADA. The Supreme Court held that her claim was barred due to the ministerial exception:

“the establishment clause prevents the Government from appointing ministers, and the free exercise clause prevents it from interfering with the freedom of religious groups to select their own.”

The court applied four factors to determine that Perich’s  position met the exception:  1)  her title was “minister of religion, commissioned”;  2)  her position reflected significant religious training followed by a formal process of commissioning;  3)  she held herself out as a minister of the church (including claiming tax benefits); and 4)  her job duties included “conveying the church’s message and carrying out its mission.”  The court decided all of those factors showed that the elementary teacher was a “minister” under the exception and dismissed the discrimination claim.

Now: Title Isn’t So Important

In the Morrissey-Berru case, two elementary teachers at two Catholic schools in Los Angeles filed employment discrimination claims (one for age and one for disability) after they were terminated.  While neither teacher held the title of “minister” or had specific religious training, they both provided religious education, were evaluated on whether they infused Catholic values into their teaching and prayed with their students. The district courts granted summary judgment in the schools’ favor but the Ninth Circuit, applying the Hosanna-Tabor factors, found that since neither teacher had the title or credentials of a minister and held herself out as a religious leader, the school could not use the ministerial exception to avoid their discrimination claims.

The Supreme Court disagreed.  As an initial matter, the court noted that the four-factor test in Hosanna-Tabor was not intended as a “checklist” for the exception.  Instead, the court focused on the employees’ actual duties.  Even though the two teachers did not have the title “minister,” they had many of the same core responsibilities as the Hosanna-Tabor plaintiff:  they guided their students to live their lives in accordance with their faith and played a vital role in carrying out the church’s mission.  Therefore, while they may not have considered themselves “ministers,” the court held that the teachers fit within the ministerial exception and barred their discrimination claims.

What Does This Mean Going Forward?

First, and importantly, this decision only covers employees of churches and religious institutions. The “ministerial exception” is tied to the First Amendment doctrine that courts are bound to stay out of employment disputes involving those “holding certain important positions with churches and religious institutions.” Private, non-religious organizations cannot use this exception.

Second, while the Morrissey-Berru decision answers some questions, there is still no bright line defining all “important positions” subject to the exception. The court expanded the exception to cover teachers who don’t have the credentials or title of “minister.”  How far does it go?  Because the exception absolutely bars employment discrimination claims, this will be an important question.  It will be interesting to see how broadly the courts apply this decision. For now, however, religious organizations should review their job descriptions and policies to make clear who they are relying upon to minister on their behalf.

There Is More to This than Meets the Eye: Why an Under-the-Radar DOL Wage and Hour Bulletin Is Good News for EmployersThe U.S. Department of Labor issued a Field Assistance Bulletin on June 24, 2020, announcing that it will not routinely assess pre-litigation liquidated damages as part of the settlement process for claims under the Fair Labor Standards Act. Although this announcement has largely gone “under the radar,” it actually has historic significance. The bulletin is an important development and excellent news for both employers and employees as it will likely result in the expedited resolution of many wage and hour claims before the DOL. More importantly, this announcement completes the circuit of the DOL’s return to normalcy after nearly a decade where it was widely perceived as openly anti-employer.

What Does the Field Assistance Bulletin from June 24 Say? 

Effective July 1, 2020, the DOL will not assess pre-litigation liquidated damages if any one of the following circumstances exist:

  • There is not clear evidence of bad faith and willfulness;
  • The employer’s explanation for the violations show that the violations were the result of a bona fide dispute of unsettled law under the FLSA;
  • The employer has no previous history of violations;
  • The matter involves individual coverage only;
  • The matter involves complex issues of white collar and motor carrier exemptions (under section 13(a)(1) and 13(b)(1) exemptions); or
  • The matter involves state and local government agencies or other non-profits.

Furthermore, each request for pre-litigation liquidated damages under the FLSA must be submitted to and approved by both the Wage and Hour Division administrator and the solicitor of labor (or either of her designees) on an individual basis.

A Little History

Once upon a time (prior to 2009), the DOL used a three-pronged approach to address the FLSA’s wage and hour requirements. Prong one was to educate employers about the law and provide advice and assistance when asked. One of the primary ways the DOL accomplished this was by allowing employers to submit questions about wage and hour (or FMLA) issues, which the DOL answered with opinion letters. The FLSA is technical and full of grey areas, but employers could rely on opinion letters from the DOL to make decisions. As long as an employer asked, and followed the direction provided, it did not have to worry about liability. Prong two of the DOL’s approach was to investigate alleged violations and try to resolve them without litigation. The DOL was often able to expedite settlements because it did not seek liquidated damages (double damages) or attorney fees, both of which drive up the cost of litigation and resolution in federal court actions. Employers could resolve claims with the DOL, avoid litigation, and incur less cost. Employees could receive payment relatively quickly and without litigation when they settled cases through the DOL process. Prong three, which was the last resort, was for the DOL to sue employers for alleged violations. DOL litigation was the exception.

Things changed in 2009. After nearly 70 years of issuing opinion letters to answer questions, the DOL stopped the process, withdrew pending letters, and instead began issuing “general guidance” on topics of its choosing. The general guidance was almost always decidedly anti-employer. Not only could employers no longer ask questions about the FLSA and rely on the DOL’s response, but at the same time the DOL was fashioning guidance that often required employers to change existing practices or face liability. The DOL also changed its practice of not assessing liquidated damages during the settlement phase and began demanding that employers pay double damages to settle or the DOL would sue. The DOL was no longer seen by employers as an option for resources and education and instead was viewed as an agency with a clear anti-company agenda.

Why This Is Good News

The DOL’s recent decision to reinstitute opinion letters and this announcement to not seek liquidated damages in all matters are more than just a blip on the radar. These decisions signal an important return to normalcy and suggest that perhaps the DOL will approach matters in a less litigious manner. Of course, the DOL will still look for and pursue violations. With this new turn of events, however, perhaps it will allow employers to avoid and fix mistakes more effectively.

Can You Rely on an Employee’s Prior Salary as a Defense to a Pay Discrimination Suit? The Supreme Court Refuses to Enter the FrayIn hiring employees, can you just give them a salary bump or must you look at their soon-to-be coworkers to decide the correct amount? This is a hotly debated issue right now, and, as with many things, it depends on where you live. In Rizo v. Yovino, Fresno County Superintendent of Schools, the Ninth Circuit (which covers the West Coast) ruled that an employer could not consider salary history. Although not all courts agree on this point, this week the U.S. Supreme Court declined to take the appeal, denying certiorari, and leaving the Ninth Circuit’s decision in place.

How Did We Get Here?

In this current case, in 2009, the Fresno County Office of Education hired Aileen Rizo as a math consultant and, like it did for all employees, set her salary by adding 5% to her last salary. When she learned she was making less than male colleagues hired after her, she filed a complaint under the Equal Pay Act and various state laws. For more details on Ms. Rizo’s case, read our prior blog post.

After a circuitous route (which included a trip to the Supreme Court in light of one of the judges dying before a decision was released), Ms. Rizo’s fate was still up in the air. In February 2020, the Ninth Circuit again ruled in her favor, holding that a “factor other than sex” had to be job related and her prior salary was not. While many courts have ruled similarly to the Ninth Circuit, some have read the “factor other than sex” defense more broadly.

At least for now, the Supreme Court is not going to clear this up.

Now What?

It is not uncommon for an employer to set a new employee’s pay by looking at his or her prior salary and increasing it some. Some people argue that is smart economically and relies on a “factor other that sex.” Others, including the EEOC, argue that this practice results in a pay gap between men and women performing the same job. You should re-evaluate this practice as it could land you in court. Here are a few tips:

  • Check your jurisdiction to see if you can consider prior salary as a “factor other than sex.”
  • Check your state and local laws, as many now prohibit inquiries about prior salary.
  • Consider doing a pay equity audit (with the assistance of counsel) to identify if you have a ticking time bomb just waiting for the right plaintiff to come along.