An Article by WILLIAM A. TAYLOR (The Business Lawyer)

America has entered a period of the ascendancy of religion and religious concerns in its daily affairs.

Standard religious institutions resemble small businesses. They have issues which, during any 50 to 100 years of the life of a church, can bubble up to threaten its existence. These religious institutions also have cash flow, sometimes significant cash flow and they often are title holding corporations; they own real property which, in the Bay Area, probably has increased in value – sometimes up to hundreds of thousands of dollars in equity. In these respects, religious institutions resemble small businesses, admittedly with admirable purposes as their organizing principles. Nevertheless, these religious institutions are operating as small businesses in a financially threatening environment.

This article will highlight various business and other “threats” that are unique to churches and which can be expected to arise during the life of a church. To add some spice, this article will end by concentrating its light upon issues of pastor misconduct.

Schisms Churches are groupings of like-minded individuals. The existence of a large number of denominations speaks to disagreements among such like-minded individuals. Many lawyers make auto payments on the fees earned during schisms within churches of “like-minded” individuals. Such power struggles last for years, both in and out of the courts.

Confessions Catholics, in particular, have an interest in the issue of the confidentiality of confessions. The police (and since 9-11, the federal Justice Department) have an interest in the information contained in confessions, especially when the same confession is made twice. If, in the first confession, a person is absolved of a sin, does the second confessional disclosure merit the status of being confidential? Is only the initial confidential session a confession (privileged from disclosure) with the second more properly characterized as a request for a pastoral counseling (not privileged)? A priest who provided an ear to the confession of some community-disturbing crime might take the information to the police and embroil the church in controversy.

Employment Laws Do the state employment laws apply to a minister? Can a minister sue the church as an aggrieved employee – or is s/he not contemplated in employment laws? In the total circumstance of a church (both the spiritual and the business part of it) a determination will either be made that the minister as an employee of the church (causing the church to be subject to federal and state employment laws) or that the minister is classified as a spiritual leader (causing the church to fall within the

“Ministerial Exception” that is followed by federal and California courts). The Ministerial Exception calls for freedom of churches from state interference when such churches are exercising powers of discipline within their own organizations. Can other, non-ministerial, church workers (the secretary, the custodian) legally be salaried instead of being hourly wage earners? Churches are increasingly finding themselves branded as employer-violators of employment laws in regards to employees on issues of overtime, workers comp, independent contractors. The state labor commissioner can consider church employee matters that are up to three years old.

Real Estate Investments Finally, before considering pastor misconduct, religious institutions now actively enter equity-sharing relationships with their ministers to help defray the cost of bay area house-buying. In equity-sharing, the church will make a down payment in escrow and both the church and the pastor will own percentages of the parsonage. Those percentages might shift as one party or the other contributes more to major property renovations.

Pastor Misconduct A rather silent area of church vulnerability exists in the area of pastor misconduct – the shepherd becoming too familiar with members of the flock: dating congregants/parishioners, improper and unwanted sexual advances or sexual relationships or life relationships that are considered in violation of the group’s moral tenants.

Resultant Litigation In a money culture, where the dollar is the bottom line, even churches are not exempt from large money demands to compensate someone for wrongs that are alleged to be caused, in this case caused by the pastor. Two factors interplay: a) increased and increasing real property values amounting to hundreds of thousands of dollars of equity or even millions; and b) the “human condition” – the reality that hormones are strong primal forces which will cause a fair percentage of any group of people to find soul-mates within that group – especially, whenever the group meets, when everyone is clean and dressed-up looking their best.

The issue of pastoral misconduct is a very hot topic these days, illustrated by the Catholic Pope’s recent (November 2001) request for forgiveness for sexual and other misconduct of priests over the years. For a church to protect its congregation from unnecessary turmoil and to protect its assets, each church needs to develop and publish a policy regarding pastoral misconduct.

Following the Money The rise in real estate values has created conditions where churches are increasingly sitting on very valuable land. Aggrieved members of congregations, who team-up with knowledgeable attorneys, have been bringing lawsuits against churches to tap into churches’ equity and their increasingly large insurance polices. Pastor misconduct, like other sexual crimes that are often a matter of power, is a threat to the assets of a church. Many times there is an actual harm that was suffered by someone who fell under the spell of an articulate person in whom the group (the church) vested considerable power. By the time the spell is broken, personal harm has been recorded by the plaintiff, harm that is rectified in our system by the payment of money.

Touchy Issues Raised The issue of pastoral misconduct always raises a number of issues, many of which are quite embarrassing and touchy within individual congregations. The initial issue is always the government’s constitutional separation of church and state: can a court interfere in the internal administration of power and justice within a church? Another issue is the right to privacy in the midst of a public lawsuit. Often the plaintiff wants to maintain some large degree of privacy – as much as the accused pastor.

Written Policies and Procedures Policies regarding consensual dating within the congregation (or lack of such policies) loom large in lawsuits regarding pastor misconduct. A written policy is strongly advised. In churches where there is a lack of enforceable hierarchy (such as is found in Baptist, C.O.G.I.C. and other congregational denominations where the ultimate power to discipline rests within the local congregation) there tends to be no written policy. In other denominations, which have well-defined hierarchies of bishops who have actual power to discipline and move or remove church representatives, the issue of pastor misconduct is more likely to have been made policy.

ABOUT THE AUTHOR: William A. Taylor, attorney at law, does business as “THE BUSINESS LAWYERS.” He can be reached at (510) 893-9465

February 19, 2015

Churches and the Law

CHURCHES AND THE LAW An Article by WILLIAM A. TAYLOR (The Business Lawyer) America has entered a period of the ascendancy of religion and religious concerns […]