All nonprofits should obtain sufficient insurance coverage for their organization’s activities, property, and other needs. The following article addresses liability coverage aspects for risk management purposes, such as warranted for children’s programs and other activities involving participants on the premises. It is published by permission from Brotherhood Mutual Insurance Company.
“The First Amendment ministerial exception protects a religious organization's employment relationship with its ministers, from hiring to firing and the supervising in between.”
This summer, with the foregoing declaration, the en banc Seventh Circuit Court of Appeals (covering Illinois, Indiana, and Wisconsin) dismissed a minister’s hostile work environment claim against his church employer and significantly clarified and strengthened religious institutions’ rights pertaining to their employment of ministers. The Court’s decision in Demkovich v. St. Andrew the Apostle Parish, Calumet City, overturned a smaller panel of the Circuit Court holding that the “ministerial exception” was not applicable and therefore that ministerial employees could pursue hostile work environment claims.
As a result of this decision, churches and other worshipping bodies within the Seventh Circuit’s jurisdiction (and perhaps beyond), should enjoy legal protection from a wider range of ministerial employment-related claims as a result of the decision. Such worshipping bodies may continue to lean into their sincerely held religious beliefs as a strong basis for their important employment-related decisions. But this decision intensifies a split among the federal courts of appeals, which may lead to a U.S. Supreme Court ruling with further clarification. The following paragraphs provide some background to the decision, analyze the court’s reasoning, and discuss implications for religious employers and further court proceedings.
Earlier this summer, the IRS issued a now-well-publicized rejection letter against Christians Engaged (CE) for being too political to qualify for Section 501(c)(3) tax-exempt status. But, as explained in its IRS Form 1023 application, Christians Engaged operates for religious purposes, encourages people to pray for our country’s leaders, educates on moral issues with public policy, and carries out other activities with political overlays. An uproar ensued in opposition to this denial among tax practitioners, religious organizations, and politicians – with the welcome result that the IRS reversed course and summarily recognized the organization’s tax-exempt status. Was the IRS initially right or wrong? What could Christians Engaged have done better? And what can other Section 501(c)(3) organizations learn from the IRS’s bizarre handling?