Thanks to the “Employment At Will Doctrine,” employers have historically been granted broad latitude in the area of hiring and firing employees. Under the Employment At Will Doctrine an employer has the right to fire an employee at any time with or without notice, and with or without cause.

Presently, the doctrine is still a viable legal doctrine, but it has been weakened over the years by numerous court decisions, federal and state laws and regulations and employment contracts.  So while churches must strive to comply with all of these enforced employment rules and regulations, how can they protect their religious beliefs, teachings, morals and values?

An employer may always discharge an employee for good cause, even if an employment contract provides for a definite term of employment. Good cause for discharging an employee is defined as the employee’s failure to perform the duties in the scope of employment that a person of ordinary prudence would have done under the same or similar circumstances.

An employee’s act constitutes good cause for discharge if it is inconsistent with the continued existence of the employer‑employee relationship. The standard for measuring an employee’s job performance is whether the employee performed the duties involved “substantially” or “reasonably well,” rather than whether the employee achieved specific results, unless the employment agreement required specific results.

Employees may sue
However, sometimes ex-employees will sue their former employer (i.e. the church) if they do not agree with the church’s position or reasoning for terminating their employment. If an employee, particularly a pastor, is terminated for a moral failure, and then that terminated employee brings suit against the church for wrongful termination, then the courts will usually apply what is known as the “ministerial exception.”

This exception generally prohibits the civil courts from resolving employment disputes between churches and their ministers because those disputes often involve questions of religious doctrine (which the courts will not touch).  However, it is important to note that the ministerial exception does not apply when the employee in question is one whose duties are primarily secular (for example, the church secretary).  So, what can a church do to protect itself in this area, allowing themselves to terminate an individual who may be living in direct contradiction to the moral values and teachings of the organization?

One possibility would be to include a morals clause in the employment agreements of all employees that allows for termination of the employee if the employee engages in morally offensive conduct or does something to damage the reputation of the employer.

These sorts of provisions are common in certain industries, such as entertainment and even sports (particularly where actors or athletes may have a tendency to engage in activities that, if brought to the public’s attention, could harm the reputations of their employers). Take, for example, the recent events involving actor

Charlie Sheen. Warner Brothers Television released portions of Sheen’s contract, particularly the language of a “moral turpitude clause” that, they argued, allowed them the option to treat his actions as a breach of contract.

What’s moral turpitude?
What, you may ask, is moral turpitude?  Moral turpitude is a legal concept in the United States that refers to “conduct that is considered contrary to community standards of justice, honesty or good morals.”  The case law concerning moral turpitude suggests that, like indecency laws, it will be judged region by region, such that what reaches the level of moral turpitude in Georgia may not reach that level in California.

There does appear to be some consistency in the decisions though. For one, most courts have found that a felony reaches the level of moral turpitude. This is because a felony is a serious crime against society and fits well into the definition. Other than a felony, the most common action found to reach the level of moral turpitude is a wrong action that includes fraud or deceit. Generally, a misdemeanor does not reach the level of moral turpitude. However, when combined with deceit, it does.

Churches can include such provisions in their own standard employment agreements, though it would be appropriate to take such a provision a step farther. Rather than requiring an occurrence of a felony, a church could include a provision allowing for termination of the employment simply if the employee does not live in accordance with the church’s accepted standards of living.

A sample clause that could be included into the church’s standard employment agreement form could be something along the lines of the following:

As an employee of the church, employee must understand that s/he is a part of a Christian church and that his/her employment is a God-ordained vocation. In this regard, employee must fully support and live consistently and in accordance with any Statement of Faith and Christian standards of living as may be set forth in the church’s employee handbook or bylaws, by such directives as may be issued from church leadership, and most importantly by biblical standards.

By including such a provision in the employment agreements of all of the church’s employees, the church will (1) make sure that all employees are informed up front that they are subject to dismissal for engaging in behavior in violation of the church’s moral teachings, (2) obtain the employees acknowledgment that they understand that they are employees of a church and therefore subject to higher standards, and (3) help to protect itself from lawsuits brought by employees dismissed for moral failings.

It is our experience that the employees of churches are generally upstanding, good-hearted individuals who operate with the best of intentions and in accordance with the teachings of the Bible. But we all know the old saying that “the road to Hell is paved with good intentions,” and moral failures do happen. Just make sure that your church is prepared to deal with such failures when or if they occur.

David Middlebrook is a partner and Wendi L. Hodges is an attorney of Anthony and Middlebrook, The Church Law Group, Grapevine, TX. www.churchlawgroup.com

By David Middlebrook and Robert W. Rucker

The federal Genetic Information Nondiscrimination Act  (GINA) which took effect on March 21, 2009, is intended to protect the privacy of Americans. It relates to genetic information and to prevent “genetic discrimination” in health insurance and employment situations.

For years there have been growing fears that with advanced testing capabilities, insurance companies would not grant insurance to and employers would not hire people who had greater possibilities of developing disabling diseases based upon their genetic makeup or family history.

For instance, with genetic testing it is now possible to predict, or at least assess the probability, if an employee is likely to contract diabetes, heart disease, cancer or Alzheimer’s disease. In passing the new law, Congress said it was worried that these advances in genetic testing give rise to the potential misuse of the genetic information.

Misuse of information

It described a time in the early 20th Century when some states passed sterilization laws to prevent certain persons with genetic diseases from reproducing, that such laws deprived many people of their constitutional freedoms and were ultimately repealed. Congress also cited the more recent example of the Lawrence-Berkeley Lab case from 1998 where employees were given pre-employment blood and urine tests to determine, among other things, their probability for having sickle cell anemia.

Based upon these historical examples, the need to protect genetic information was found to be a matter of public interest. More importantly, Congress was concerned that if people were worried that having genetic testing might lead to being denied employment or insurance, they might be less likely to take advantage of the significant advances in testing and treatment. Having people afraid to get tested for genetic diseases and thus miss out on treatment opportunities are not in our best national interests.

The law says that it is an unlawful employment practice for an employer to request, require, or purchase genetic information from any employee, job applicant, or from a family member. “Genetic information” is obtained by genetic testing that includes an analysis of human DNA, RNA, chromosomes, proteins, or metabolites that detect genotypes, mutations, or chromosomal changes.

Routine testing that obtains such things as complete blood counts, cholesterol tests and liver-function tests are not considered to constitute genetic testing. Also, analysis of genetic information directly related to a disease that has already manifested itself may not be covered by the law.

Family members also protected

Under GINA, it is unlawful for an employer to discriminate in the hiring, firing, or terms, conditions, or privileges of employment based upon the genetic information of an employee, applicant, or one of their family members (“family member” means dependents and up to and including 4th degree relatives). However, GINA does not apply to employers with fewer than 15 employees.

There are also certain exceptions that may apply. The ones that are probably of most interest to a church employer include inadvertent requests or disclosures, requests related to leave sought under the Family Medical Leave Act (FMLA), and information obtained in public documents commercially and publicly available including newspapers, magazines, periodicals and books. But even in these exceptions, while it may have been lawful to obtain the information, it still cannot be used to discriminate.

Employers are now required to treat genetic information as part of confidential medical records and are supposed to keep such medical information under separate forms and files from other personnel records. Employers may disclose this information if asked by employee in writing, to certain health researchers under certain regulations, in response to a court order, to governmental agencies investigating GINA compliance, in association with certifying employee compliance with the FMLA or similar state laws, or to public health officials if the information concerns a contagious disease and notification is provided.

Violations of the law can be enforced by various governmental agencies and individuals who claim to be victims of genetic discrimination can also bring private lawsuits. Many churches may not have a lot of dealings with the genetic information of their employees and job applicants. The most likely way they would encounter it would be through health insurance documentation and related to disability and leave claims.

Maintain confidentiality

However, regardless of how the information is obtained, the church employer is responsible to maintain its confidentiality and not make use of it in a discriminatory way.

Churches should update employee manuals and personnel forms to make sure that it is clear that the church does not discriminate on the basis of genetic information and make sure there is a clear understanding of how employees or applicants can report suspicions of genetic discrimination.

Leaders should create procedures where if the church receives genetic information it is segregated from other more routine employee or applicant paperwork and kept in a secure location. It’s also important that there is a clear policy and understanding as to when such information can be released (such as pursuant to court order).

It’s necessary to make sure that the church is not asking for information that could be viewed as genetic information on job applications or in any other format. Leaders should not ask for genetic information when accessing leave requests and have some kind of standard request to medical professionals not to include genetic information when documenting medical conditions.

Church leaders also need to make sure that any employer-provided health or wellness plans comply with GINA.

Whether the church deals with these issues rarely or a lot, it still makes sense to be aware of the issue and have some policies and procedures in place.

David Middlebrook is a partner and Robert W. Rucker is an attorney of Anthony and Middlebrook, The Church Law Group, Grapevine, TX. www.churchlawgroup.com

Churches often maintain benevolence funds to assist needy individuals in times of financial crisis. However, these churches may not have enough structure in place to provide essential direction and documentation.

It is important to follow a written policy and maintain records of assistance provided to protect the tax exempt status of the church, the deductibility of donations designated to the fund, and the persons receiving assistance from mistaken taxation. A well designed process also provides direction and accountability to those responsible for making disbursements from the fund.

Benevolence program don’ts:

1. Distribute funds to people without supporting documentation.

2. Disburse funds out of a bookstore cash register or out of uncounted offerings.

3. Disburse funds without a written record of the transaction.

4. Allow members to donate to a specific family 
or individual and receipt these donations as tax deductible.

5. Give one individual control over benevolence distributions, without oversight or accountability measures in place.

Benevolence program do’s:

1. Adopt and adhere to a written policy.

2. Make distributions from a general fund or benevolence fund.

3. Pay assistance directly to service providers (rent, mortgage, utilities, etc.).

4. Allow contributions only to the fund, not to any specific individual or family.

5. Develop adequate criteria to determine individual need.

6. Document the need including external verification for larger amounts.

7. Assign personnel or a committee to approve requests.

8. Include reasonable limits of support per person during a specified time period.

9. Determine the kinds of needs that will receive support, keeping in mind typically assistance is allowed for basic needs: food, shelter, clothing and medical.

Why is a written policy so important? A written policy helps prevent misunderstandings about the purpose of your program and its parameters. Having written criteria helps decision-makers affect consistent evaluations and holds them accountable to these pre-determined guidelines. If your program or disbursements are challenged in an audit, a written policy provides evidence that the church has established a benevolence program in keeping with your exempt purpose.

What’s wrong with taking cash out of the offering plate to help someone in need? (1) Using cash from the offering plate does not provide a record of the assistance. (2) The opportunity for abuse is high. Even a trusted employee under enough pressure (others may not even know about the pressure), given the opportunity, can rationalize an inappropriate disbursement. Limiting opportunity for misuse of funds protects the church, its employees, and volunteers.

What information should be gathered for an assessment of need? The extent of your data gathering depends on the type of request. For short term assistance during a disaster it could be sufficient to view the disaster and confirm the individuals live in that area. In the case of longer term or a greater amount of assistance we recommend a financial assessment through completion of an application.

Items to consider requesting in the application include but are not limited to: employment status, dependents, church involvement, references inside and/or outside of the church, a list of present income and expenses, and/or a list of assets owned. A sample application is available online at www.ecfa.org.

What is the minimum required record that must be kept when a church provides benevolence aid? 
A church (or other organization) which provides benevolence assistance should maintain adequate records and case histories to show:

• The name and address of each recipient of aid
• The amount distributed to each
• The purpose for which the aid was given
• The manner in which the recipient was selected
• The relationship, if any, between the recipient and other members, officers, or  trustees/directors of the organization

What is external verification? Verifying the information provided by the applicant with another source. This could be individuals listed as references on the application, an employer or another church member.

Does the church need to issue a 1099-Misc when assistance over $600 is provided to a needy person? No. Benevolence is not a payment for services, but a gift.

Can we assist an employee with benevolence and not show it as taxable income on their W-2? This may be accomplished by having a formal hardship assistance plan in place in advance of the assistance being given. IRS Publication 3833 describes the requirements of an employee hardship assistance plan.

Is it ever okay for the church to receive amounts from members which are designated to a specific individual or family? In some cases churches agree to collect specifically designated funds but should only do so with a clear communication to donors that their payment will not be credited as a tax deductible contribution. In other instances a church member might recommend a needy individual to the benevolence committee. The committee will determine what if any amount to grant any individual.

Christine Abrams is tax manager and John Butler is tax counsel for Capin Crouse LLP, Greenwood, IN. [www.capincrouse.com]