The issue of establishing definitions for a church has big implications. Institutions considered churches are granted tax-exempt status under Section 501(c)(3) of the Tax Code. Common definitions of the word “church” refer to the religious entity or organization, not just the building itself. The definition becomes more complicated when considering each religious group’s own definition of what constitutes a church. To clarify the federal government’s definitions of a church and other religious institutions, the Internal Revenue Service uses clearly-defined guidelines.
To define churches and other religious entities, some of the IRS guidelines consider whether or not an institution has:
• a distinct legal existence and religious history,
• a recognized creed and form of worship,
• established places of worship
• a regular congregation and regular religious services, and
• an organization of ordained ministers
Most mainstream religions such as Catholicism, Judaism, and common Protestant sects fit easily within the IRS guidelines. However, less traditional churches sometimes face difficulty in meeting the federal government’s definition. Some of the confusion over churches arises when the IRS differentiates between religious institutions like churches and religious organizations. The IRS offers the following concerning religious organizations, “Religious organizations that are not churches typically include nondenominational ministries, interdenominational and ecumenical organizations, and other entities whose principal purpose is the study or advancement of religion.” However, in some cases, a religious organization may qualify as a church even if it does not appear to be a church in the traditional sense. IRS has created specific guidelines on churches and other religious entities to determine their tax status. However, it is not a requirement that a church meets all the criteria. Instead, the IRS offers flexibility, allowing various religious institutions to qualify for the highly coveted tax-exempt status.
Religious discrimination refers to a type of employment discrimination, which occurs when an employee is treated less favorably than similar employees due to certain characteristics. These certain characteristics are typically known as protected classes. The Civil Rights Act of 1964 in one anti-discrimination law stipulating that a person may not be discriminated against based on the following characteristics:
• Age;
• Race;
• National origin;
• Religious beliefs;
• Gender;
• Disability;
• Pregnancy; and
• Veteran status.
Employment discrimination may also occur when one group of employees are treated better than another group of employees, although employees from both groups meet the same work standards and employment criteria. An example of this would be one group of workers clearly receiving benefits that are denied to others on the basis of their sex. Religious belief discrimination specifically occurs when an employee is treated differently or less favorably based on their religious preferences. Title VII of the Civil Rights Act of 1964 specifically addresses religious discrimination, and applies to employers in the private sector as well as local, state, and federal government.
Counts as Religious Discrimination
In very simple terms, the following are considered to be religious discrimination:
• Treating certain employees either more or less favorably based on their religion;
• Forcing employees to engage in practices that go against their religious beliefs; and
• Allowing employees to be harassed by either other employees or management/supervision based on the employee’s religious beliefs.
Religious discrimination also includes neutral rules which have an adverse affect on those who hold certain religious beliefs. Thus, although the rule might not directly discriminate against a certain religion, those who practice that religion will be negatively affected and therefore discriminated against because of their religion. Harassment based on religious beliefs may include creating or maintaining a hostile work environment against specific or all religious beliefs. The Bona Fide Occupational Qualification defense, or “BFOQ,” allows employers to fill certain jobs with people of a certain religion in a way that is not considered discriminatory. The best example of this would be a church, as they have the right to prefer Christians to fill their ministry positions. Another example is a Catholic school having the right to only hire Catholic teachers. If you are facing discrimination in your workplace due to your belief system, there are several legal protections and options available to you. It is in your best interest to consult with a skilled and knowledgeable discrimination lawyers. An experienced law attorney can inform you of your legal rights and options. Additionally, an attorney can file a lawsuit on your behalf against your employer and guide you in any settlement negotiations. Finally, an attorney can represent you in court as necessary. Although churches and other religious ministries share many similar issues as other nonprofits, they also have many unique needs given their protected First Amendment status. Failing to take the proper precautions, follow government regulations, or establish transparent procedures can result in potential lawsuits against your church or even the loss of your church’s tax-exempt status. Though disputes within churches can be often resolved internally, other matters may require you to consult with an attorney. When such matters arise, it’s best to consult with attorneys who are people of faith and are sensitive to the special needs and moral concerns of churches and church groups. We want to help you protect the church you worked so hard to build.
Church Governance And Property Disputes
Property and governance issues are often at the forefront in a church dispute:
• Governance issues: These often occur when there are struggles for control within a congregation or a church body. In nonhierarchical church bodies, disputes often arise between different factions who rival for control of the church.
• Control of church property: Disputes over property are usually a key issue when a church body splits. When a local church congregation breaks off from a larger church structure that is hierarchical in nature, disputes often arise over which body has rights in the church property.
All of these situations must be handled with the utmost care and sensitivity. Governance issues may result in religious employment litigation. When a church splits from a denomination, it is more than a matter of conflicting belief systems or leadership squabbles. Ownership of church buildings must be settled between a denomination and a congregation that is leaving that denomination. Possession and management of endowment funds may also be in question. It is often in the best interests of both sides to resolve the property or governance question without resorting to costly litigation. However, a desire to settle church building ownership or other questions of congregational control may not be enough to avoid a major lawsuit. It is critical to find a well-qualified attorney with experience handling church disputes, both to contain legal fees and to move forward with confidence toward a satisfactory resolution.
Why does a church need a lawyer?
• Every new church planter should talk to a lawyer familiar with churches, and ask about forming a corporation or similar entity. The legal risks are too high and the solution is relatively easy.
• If you are updating a corporate charter, constitution, bylaws, or similar governing document, talk to an attorney.
• If you haven’t updated your main governing documents in awhile, the church should touch base with an attorney. Hopefully, you have a relationship with a trusted legal advisor that you meet with every year. But if it’s been more than five years, please set aside an hour or two for a review.
• If you are updating your policy manual, it’s wise to have them reviewed by an attorney. If you don’t yet have a policy manual, you should’ve talked to a lawyer a long time ago.
• If the church is granting housing allowance to ministers, an experienced lawyer will help your decisions be supportable and defensible.
• If you’re making a major change in compensation or benefits to key staff, a quick review by a lawyer may save headaches down the road.
• If you are purchasing real estate, the church should use an attorney to make sure the deal doesn’t result in surprises (environmental contamination, zoning issues, etc.)
• If your church is going to terminate the employment of anyone, it is a good time to talk to an attorney. Non-ministerial employees are often subject to the same laws and regulations affecting other businesses. And while the Constitution gives churches broad leeway over “ministerial” employees, those decisions also have legal and political implications.
• New ministry areas often raise new legal concerns that can be handled efficiently by an attorney– if they’re reviewed early enough.
• A new or unusual fundraising method should be run by a lawyer who understands the charitable solicitation laws in the relevant areas. An improperly designed used-car donation program, eBay ministry, or commission-based solicitor can risk the church’s tax exemption.
• Any significant investment agreement should be reviewed by an attorney. Is the church issuing bonds? Engaging in creative financing? Offering interest? Expecting to receive a return on an investment? Developing real estate? Engage legal counsel.
• If the church is contacted by the IRS or the State or local equivalents, you should talk to an attorney, and have them respond.
• If your church receives communication about a zoning issue, it will be helpful to talk to an attorney familiar with RLUIPA before you make any response.
• If the church is contacted by an attorney representing someone else, you should respond through an attorney.
• If your church is engaged in church discipline, or removing members, talk to an attorney about your process. If you are contacted by an attorney representing a member, please have a church attorney respond.
• If your church becomes aware of allegations of sexual misconduct by any employee, contractor, volunteer or associate, contact an attorney immediately.
• If the sexual misconduct includes any person under 18 or over 65, contact an attorney immediately. In many states, ministers and other authorities are required to take very specific steps in a short timeframe.
• If any staff, contractor, or volunteer is alleged to have taken unfair advantage of an elderly, infirm, or disabled person, talk to an attorney immediately. Some states have implemented “elder abuse” laws similar to child abuse laws, with similar reporting requirements.
• If there is a potential conflict of interest transaction, it is helpful to involve an attorney before it is proposed and approved. Does it benefit staff, insiders, or key members in an unusual way? An attorney can make sure the discussion and record support the decision of the church.
• Does your church still have Trustees? It’s past time to talk to an attorney.
Your Rights Against Religious Discrimination
Federal law (Title VII of the Civil Rights Act) and the laws of most states prohibit employers from engaging in religious discrimination: making job decisions based on an employee’s or applicant’s religion or lack of religious beliefs. Title VII also prohibits workplace harassment on the basis of religion and requires employers to accommodate an employee’s religious beliefs or practices, as long as it doesn’t create an undue hardship. Title VII applies to all government employers, whether federal, state, or local. It also covers private employers with at least 15 employees. Private and public employment agencies, labor organizations, and joint labor/management committees are all subject to Title VII, as well. If you work or apply to work for a covered employer, Title VII protects your right to work free of discrimination based on religion. Many states have their own laws prohibiting religious discrimination at work, which may apply to smaller employers. To find out whether your state is among them, select it from the list on our Workplace Discrimination and Harassment page.
When Does A Church Need An Attorney?
When someone is starting or joining leadership in a religious institution, legal considerations are often towards the bottom of the priority list. However, religious institutions of all faiths need to be aware of areas where they may need advice from a licensed attorney in order to best serve their membership and carry out their faith. Here are some of the most common areas where a church or other religious organization should consult an attorney.
1. Governing Documents: The majority of religious organizations operate under the direction of one or more governing documents. It is absolutely vital that these documents be kept up to date and reviewed on a regular basis. An attorney will be able to provide valuable advice and suggestions about what to include in these documents to give the maximum protection to the organization.
2. Real Estate and Land Use: If your religious institution needs to move locations or expand its current location, an attorney will often be necessary. In this case, an attorney can help with reviewing your real estate transaction documents, determining whether your land use is permitted in the proposed location, or securing a variance or special use permit from the municipality if necessary.
3. Employment: When hiring and firing lay employees, religious institutions must consider state and federal employment law. Discussing particular employment situations with an attorney before acting can save an organization thousands of dollars and an immeasurable amount of negative public perception. Further, an attorney can help prevent difficult situations in the first place by providing your organization with a clear and comprehensive employee handbook.
4. Litigation: This is the obvious scenario where an attorney is needed. If a religious institution is presented with a lawsuit, it should immediately seek out an attorney with experience representing religious institutions, as the unique culture and issues in these types of lawsuits often call for a specialist. An attorney specializing in representing religious institutions will be able to better understand issues that are important to the organization, and will be familiar with the special challenges and opportunities presented.
5. Denominational Relations: In today’s changing culture, many of the traditional denominations in America are changing also. It is inevitable that some congregations will feel called away from their past denominational affiliations for one or more reasons. When separation is being considered, it is vital to consult an attorney who is familiar with the process of leaving a denomination. Various legal issues will need to be considered before undertaking a separation and an understanding and knowledgeable counselor will ease the transition for all involved.
6. Organizational Discipline. Many faiths have unique practices for disciplining individual members when necessary. However, there can be potential for some inter-organizational discipline practices to create legal issues. Having an attorney review organizational policy and provide advice on a particular issue can prevent unintended legal consequences.
7. Advice on Current Legal Issues. As the culture changes rapidly, new legal issues arise frequently. Religious organizations must be prepared to operate in the light of these new realities. In these cases, an attorney will be an invaluable resource as a counselor who understands both the law and the client, and will be able to shed light on an otherwise confusing situation.
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It’s not a matter of if, it’s a matter of when. Legal problems come to everyone. Whether it’s your son who gets in a car wreck, your uncle who loses his job and needs to file for bankruptcy, your sister’s brother who’s getting divorced, or a grandparent that passes away without a will -all of us have legal issues and questions that arise. So when you have a law question, call Ascent Law for your free consultation (801) 676-5506. We want to help you!
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