Dynamic Cash-Flow Forecasting is Key to Managing Rapid Change

Budgeting during a time of rapid change is a matter of ditching the annual budget and doing some dynamic cash-flow forecasting and planning.

Q: Our church has always tried so hard to stick to our budget. What do we do about budgeting in times of rapid change and uncertainty? What are some strategies for preserving cash, if that’s one of the things we should be doing?


Here’s some fairly radical advice as it relates to budgeting—radical in the sense that this is not conventional church financial management wisdom: Stop focusing on your regular annual budget. For churches experiencing rapid changes in their giving levels, the annual budget developed months ago is largely irrelevant.


Looking for help with other critical church finance topics? Pick up the second edition of Batts’

Church Finance: The Church Leader’s Guide to Financial Operations


I realize that as a matter of church governance and policy, you might have to have a budget. But what you planned when you developed that budget is no longer reality. Your spending levels and spending categories most likely have changed. Your revenue levels may be very different. So, what do you do?

Stop focusing on what you’re calling the budget and start doing what I call dynamic cash-flow forecasting and planning. That may sound like a fancy term. Dynamic just means it’s changing. It’s moving. And cash-flow forecasting and planning means estimating what’s going to happen, as best you can, and continuously updating your estimate based on new developments as they unfold.

Forecast this way each week over the next few months. Estimate as best you can, and adjust the forecast frequently based on new developments.

What dynamic cash-flow forecasts look like

Weekly cash-flow forecasts could start with a spreadsheet in which you start with your beginning cash and then project your expected cash inflow and your expected cash outflow. Put simply: cash inflow, which might include borrowing, is cash that’s coming into your church. And then cash outflow, including debt service—is whatever cash is going out for whatever purpose. And then, of course, the difference between your expected inflow and your expected outflow is your expected net cash flow. Add your beginning cash to your expected net cash flow; this would be your expected ending cash.

Forecasting also includes modeling different scenarios with different assumptions. If giving for your church so far is relatively flat, you should model one scenario that shows your giving level staying flat. You might also want to model a scenario of your giving level going down by 10 percent or 15 percent, or whatever makes sense to you depending on your current circumstances and trending. You might want to run various scenarios and update them each time as you have better information about what seems to be happening.

Weekly cash-flow forecasts should be developed for a reasonable and appropriate period of time in the future. I would suggest at least eight to ten weeks out. A forecast much shorter than that has little value for cash-flow planning and strategic decision-making. And in a highly dynamic environment, a forecast much longer than that is likely to have less reliability.

Rolling budgets

Rolling budgets are an alternative to annual budgets suitable for some churches to use as their regular approach to budgeting. Maintaining weekly cash-flow forecasts is an accelerated version of maintaining rolling budgets. Maintaining rolling budgets is not a “do it once a year” approach to budgeting. (I discuss this process on pages 18 and 19 of Church Finance: The Church Leader’s Guide to Financial Operations.)

Churches that are experiencing rapid growth are good candidates for rolling budgets, since their revenue and expense levels change more rapidly than a full-year budget is typically designed to address. Normally, for churches that utilize rolling budgets, I would recommend updating the rolling budget approximately quarterly. But these are not normal times. For this reason, I recommend updating it weekly—or every time you learn or observe something new and different. Doing this allows you to better manage cash and financial activities during a dynamic or very challenging, rapidly changing season.

Editor’s note. For additional details on dynamic cash-flow forecasting and planning—along with a helpful PowerPoints on the topic—see the free video of Mike Batts’s webinar with Church Law & Tax.

Protecting and preserving cash

Now, regarding protecting and preserving cash. While this is not conventional financial management, I suggest churches consider drawing on a line of credit—if you have a line of credit available. Borrowing money to pay operating expenses is a very high-risk proposition, and I am not saying you want to spend the borrowed funds on operations. Only do so if it’s deemed absolutely essential—and only if you have a viable plan to pay off the borrowed funds.

The main reason I suggest this is the risk that the bank may curtail your line of credit if it is not used. Banks curtailed lines of credit significantly during the Great Recession and it can easily happen again. Borrowing the funds can prevent a scenario where you go to borrow the funds later. . . only to be told by the bank that it has frozen your line of credit due to financial concerns. (Don’t forget to consider FDIC insurance levels with respect to your bank deposits. If you have significant bank account balances, you may wish to diversify the funds among multiple banks—banks also have economic risks in the current environment.)

For churches that do not have a line of credit—and if you, again, want to preserve cash—you may want to consider carrying a balance on a credit card account. Again, I stress that this is not traditional advice. It will be important to review your modeling—looking at the future. Maybe you have a loan that has been approved but not yet funded. This means, though, that those funds should be coming in. In the meantime, you could cautiously use the credit card in order to stay afloat until you have the needed funds from, say, the PPP money. When you are more financially stable, you would pay off the credit card. Keep in mind, though, that this is very short-term strategy.

Michael (Mike) E. Batts is a CPA and the managing partner of Batts Morrison Wales & Lee, P.A., an accounting firm dedicated exclusively to serving nonprofit organizations across the United States.

Downloadable checklist: Are We Protecting Our Youth Ministry?

This 12 question checklist can help your church assess the safeguards it has in place.

Last Reviewed: February 12, 2025

Use the following checklist to gauge how your church is doing at protecting youth in its ministry.

Download a PDF version of this checklist.

As a young, newly married couple, my husband and I worked with a small group of teens through our church. Barely older than the kids we worked with, I remember our struggle to maintain boundaries. I particularly remember one girl who came from an unchurched family. She made no secret of the crush she developed on my husband.

Looking back, I recognize the risk we naively assumed. The only instruction we had from church leadership was to befriend the teens, and provide spiritual instruction and some form of entertainment. No one thought about written policies and procedures to safeguard the ministry and those involved. We were on our own. That was more than thirty years ago.

Times have changed and today’s youth worker needs to be more aware than ever of the risks involved in ministry.

Can We Respond to Gun Violence at Church? A Checklist for Churches.

Discover if you’re protecting your congregation.

Use the following checklist to see if your church is well-equipped to respond if the unthinkable should happen.

Download a PDF version of this checklist.

Not so long ago, believers were able to seek a quiet, solitary moment of worship in their church sanctuaries. No locked door, or armed guard, there was no prohibited entry. In many places, those opportunities to meet God in his house (without first being cleared for admittance) are gone.

The shooting of 14 people attending a youth rally at Wegdwood Baptist Church, in Fort Worth, Texas—the bomb that exploded at First Assembly of God in Danville, Illinois, injuring 35 people—the killing of a wife, son, and fellow-member by a congregant of New St. John Fellowship Baptist Church in Gonzales, Louisiana: these are only a few examples of the violence that has shattered the peace of sanctuaries across our nation.

Does this mean we should barricade the doors, shrinking back in fear of what could happen at our church? No! This is a time not only to exercise our trust in the Lord, but to fully equip ourselves with the right tools to protect our congregation.

Is Your Data Security Up to Speed? A Checklist for Churches

Keep your church records and data safe with the right precautions and software.

Use the following checklist to gauge how your church is doing at protecting data.

Computers are absolutely vital to help keep a church running, but they are also vulnerable. Keep your church records and data safe with the right precautions and software. We’ve compiled the following simple tips to help you secure your valuable information.

Download a PDF version of this checklist.

Strategic Plans

  • One database is enough. If you’re using multiple databases to store information, the more you’ll need to protect. Try to consolidate your data so you can better secure it.
  • Guessable passwords. Are your passwords guessable? Avoid using words, names, or numbers that could be easily guessed by an outsider. Also, never share passwords with your coworkers.
  • Perform regular backups. Backing up your computers daily, even hourly will save you time in the future if there’s a power surge. Taking your vital records and data to an off-site location also gives you a safety if a natural disaster occurs.

Software Prevention

  • Suspicious activity. Has your Internet service been acting strangely? If new homepages, toolbars, or unwanted ads are continually appearing on your browser, update your security software immediately.
  • Don’t be fooled. Adware and spyware are softwares want to trick you into installing their software onto your computer. Never agree to install software before you know what it is.
  • Update security patches. Continually update security patches on your Windows, Internet server, and email. Sometimes these programs provide safety features to keep malicious software off of your computer.
  • The antivirus. If your church does not already own antivirus software, purchase it. If you own an older version of this software, you may need to update it since older versions do not protect against adware and spyware.

Event Planner Checklist: Is Your Church Prepared to Host a Large Event?

Use this event planner checklist to host a well-organized church event with confidence.

Last Reviewed: February 11, 2025

Use this event planner checklist to ensure your church is fully prepared to host a successful event.

Download a PDF version of this checklist.

Perhaps God has blessed your ministry with the vision and space to practice hospitality and put on a big event. Whether it’s a national conference or a smaller-scale event like a carnival night for your local community, opening your church’s doors to non-members presents many logistical challenges.

Why an Event Planner Checklist is Essential

Planning a large event requires foresight and meticulous attention to detail. Even the most well-organized events can face unforeseen challenges. Unfortunately, the more people you bring together in one place, the higher the probability of unexpected situations occurring. You might encounter uninvited guests, weather-related disruptions, or even emergency situations that require immediate action.

But take heart—through proactive risk management and thorough preparation, your church can ensure a smooth event experience. By using an event planner checklist, you’ll be equipped to handle any scenario with confidence.

Church Event Planner Checklist

Here’s a comprehensive checklist to guide your event planning process:

1. Define the Event’s Purpose and Goals

  • Clarify the purpose of the event and expected outcomes.
  • Identify the target audience and estimated attendance.

2. Secure Necessary Permits and Approvals

  • Verify zoning and occupancy restrictions.
  • Obtain permits for food service, amplified sound, or special activities.
  • Confirm fire safety compliance with your local fire department.

3. Plan the Venue and Logistics

  • Reserve and inspect the event space.
  • Confirm seating arrangements, parking availability, and accessibility features.
  • Set up a clear signage system to direct attendees.

4. Budget and Fundraising

  • Create a budget covering rentals, permits, catering, and other costs.
  • Consider sponsorships or fundraising to offset expenses.

5. Safety and Emergency Preparedness

  • Develop an emergency action plan with clear evacuation routes.
  • Ensure first aid kits and medical personnel are available.
  • Coordinate with local law enforcement for crowd control, if necessary.

6. Staffing and Volunteer Coordination

  • Recruit and train volunteers for registration, security, and hospitality.
  • Assign roles and responsibilities in advance.

7. Marketing and Promotion

  • Utilize social media, email newsletters, and flyers to spread the word.
  • Encourage RSVPs to gauge attendance numbers.

8. Technical and Audio-Visual Setup

  • Test microphones, projectors, and other AV equipment.
  • Have backup power sources in case of outages.

9. Catering and Hospitality

  • Plan food and beverage offerings based on dietary restrictions.
  • Ensure proper food storage and safety measures.

10. Post-Event Follow-Up

  • Send thank-you emails to attendees and volunteers.
  • Gather feedback through surveys for future improvements.

Frequently Asked Questions (FAQs)

What should be included in an event planner checklist?

An event planner checklist should cover logistics, budgeting, safety measures, volunteer coordination, marketing, and post-event follow-up.

How can churches improve event security?

Churches can improve security by coordinating with local law enforcement, training volunteers for emergency response, and having clear crowd management protocols.

What are the most common challenges in church event planning?

Common challenges include unexpected attendance surges, technical issues, security concerns, and last-minute venue restrictions.

How far in advance should a church plan a large event?

Churches should begin planning large events at least 6–12 months in advance to secure venues, permits, and key logistics.

Downloadable Checklist: Crime Prevention at Church

A checklist to help you evaluate your building’s security.

Use the following checklist to gauge how your church is doing at preventing crime.

Download a PDF version of this checklist.

What Makes a Church Vulnerable?

The days of unlocking a church in the morning and leaving it open all day have gone the way of the one-room, wooden chapel. Churches today house thousands of dollars’ worth of sound equipment, musical instruments, and computers, not to mention sizable contributions. If criminals sense easy access to potential cash, it’s only a matter of time before your church becomes a target. By understanding your vulnerabilities, you can strengthen your resistance to property crimes.

Step 1: Do a Risk Assessment

The first step in knowing how to prevent burglaries, theft, and vandalism is to assess your risks. If you’re unsure how to do this, ask a security consultant or a local law enforcement agency to help you. The assessment section of this download can help you get started, but you’re also encouraged to examine the type and frequency of crimes in your area and determine if any of your policies and procedures are leaving you susceptible, such as leaving a door open all of the time or having one person be responsible for all financial records within the church office.

Step 2: Create a Security Plan

Once you know your vulnerabilities, you can create a plan for solving them. Your security plan should include:

  • An objective: What are you trying to achieve? In what time frame?
  • An analysis: How can the problems be solved? What problems take first priority?
  • A training component: Is staff trained in security awareness? What role should staff members and volunteers play in an emergency situation?
  • Implementation: What steps will we take to improve security in the next one to five years?

Step 3: Take Action

Knowing what makes your church vulnerable and what you can do about it gives you a road map to follow. Even if your church has improved security in the past, it makes sense to review your systems and procedures regularly, to make sure you haven’t missed anything or that new susceptibilities haven’t crept in.

Choosing Church Insurance: Tips From a Professional (+ Free Download)

16 questions to help select and retain your church’s insurance.

Use the following check list to gauge how your church is selecting insurance.

Download a PDF version of this checklist.

Why Learn about Insurance

True story: A pastor arrived at his church property only to witness the entire building burning in flames. It was a total loss. The following morning, as he wondered where the church would meet, and whether they had enough coverage to rebuild, he found out the church was underinsured. It would cost well over $1 million to rebuild what they had lost. But with only $700,000 in coverage, what were their options?

True story: After carefully performing reference and background checks, a church hired a part-time youth pastor. One year later, when he admitted to engaging in inappropriate behavior with students, he was arrested and charged. It was determined that there was prior knowledge of an incident, but no action had been taken. When the church was sued by parents, the church—without separate sexual misconduct coverage—quickly reached its general liability limit and was forced to find money from reserves, donations, and loans to pay the judgments.

Regardless of good intentions, inadequate church insurance can lead to significant and permanent losses. Some churches never recover. Though nearly every church has insurance coverage, many church leaders lack confidence in their understanding of their policies and the terminology associated with them.

So let me encourage you: You are not alone. Guidance is available, and you’re already taking important steps in receiving it. As you gain a better understanding of church insurance, as well as your church’s specific needs, you are making progress toward better safeguarding your ministry.

When it comes to church insurance, you must be informed. Get to know your insurance agent. And purchase only from a company that offers not only good prices, but good service, claims coverage, and specific knowledge of church insurance issues.

Advantage Member Exclusive

Video: Politics in the Church—What to Know for Election Season

Politics in the church is a complex topic. In this video, Richard R. Hammar offers helpful insights and tips in navigating the issues.

Politics in the church is a complex and passionate topic. But there are realities to face.

In order to maintain their exemption from federal income taxes, churches must comply with several requirements specified in section 501(c)(3) of the tax code. Two of these requirements involve political activities: Churches may not participate or intervene in any political campaign on behalf of (or in opposition to) any candidate for public office. And, churches may not engage in substantial efforts to influence legislation.

So, what do these requirements exactly mean? How should church leaders navigate them as election season heats up? And what happens if they violate them?

In this webinar offered exclusively for Church Law & Tax Advantage Members, renowned church attorney and CPA Richard R. Hammar—author of Pastor, Church & Law, Fifth Edition and the annual Church & Clergy Tax Guide—explores the requirements and discusses how leaders should approach this sensitive, and often volatile, issue.

Want more information on this topic? Check out the “Churches and Political Activities” Recommended Reading page.

Editor’s Note. This video is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

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Supreme Court Rules that Title VII’s Ban on “Sex” Discrimination Includes Sexual Orientation

Why the Supreme Court’s Title VII decision changes the definition of “sex” discrimination–and how it affects churches.

In a 6–3 decision, the United States Supreme Court on June 15, 2020, ruled that an employer who fires an individual for being homosexual or transgender engages in “sex” discrimination in violation of Title VII of the Civil Rights Act of 1964.

This article will review the facts of the case, summarize the Court’s decision, and assess its significance to churches and other religious organizations.

The facts

The case involved three plaintiffs.

One plaintiff worked for a Georgia county as a child welfare advocate. Under his leadership, the county won national awards for its work. After a decade with the county, he began participating in a gay recreational softball league. Not long after that, influential members of the community allegedly made disparaging comments about his sexual orientation and participation in the league. Soon, he was fired for conduct “unbecoming” a county employee.

The second plaintiff worked as a skydiving instructor in New York. After several seasons with the company, he mentioned that he was gay and, days later, was fired.

The third plaintiff worked for a funeral home. When she got the job, she presented as a male. But two years into her service with the company, she began treatment for despair and loneliness. Ultimately, clinicians diagnosed her with gender dysphoria and recommended that she begin living as a woman. In her sixth year with the company, she wrote a letter to her employer explaining that she planned to “live and work fulltime as a woman” after she returned from an upcoming vacation. The funeral home fired her before she left, telling her “this is not going to work out.”

Each plaintiff brought suit under Title VII, which prohibits employers with at least 15 employees from discriminating in any employment decision on the basis of race, color, national origin, sex, or religion. A federal appeals court dismissed the first plaintiff’s case on the ground that Title VII’s ban on “sex” discrimination did not extend to sexual orientation. But another federal appeals court ruled that the second plaintiff could pursue his discrimination claim since Title VII’s ban on sex discrimination in employment did encompass sexual orientation. And a third federal appeals court allowed the third plaintiff’s discrimination claim to proceed for the same reason. All three cases were appealed to the United States Supreme Court.

The Court’s ruling

The Supreme Court sided with the two appeals courts that interpreted Title VII’s ban on sex discrimination to include sexual orientation and gender identity. Title VII states that it is “unlawful . . . for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.”

The Court concluded that an employer that fires an employee merely for being gay or transgender violates Title VII’s ban on sex discrimination.

Application to churches and religious schools

What is the relevance of the Court’s ruling to churches and other religious organizations, including schools? Consider the following points.

1. Title VII exemption for religious organizations

Title VII section 702 contains the following exemption for religious organizations:

This title shall not apply to . . . a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.

This provision permits religious corporations and educational institutions to discriminate on the basis of religion in the employment of any person for any position.

As originally enacted, section 702 permitted religious employers to discriminate on the basis of religion only in employment decisions pertaining to their “religious activities.” Congress amended section 702 in 1972 to enable religious organizations to discriminate on the basis of religion in all employment decisions. In the years following the 1972 amendment, a number of federal courts suggested that the amendment violated the First Amendment’s nonestablishment of religion clause. But in 1987, the United States Supreme Court resolved the controversy by ruling unanimously that section 702 did not violate the First Amendment’s nonestablishment of religion clause. Corporation of the Presiding Bishop of the Church of Jesus Christ of Latter-Day Saints v. Amos, 483 U.S. 327 (1987).

Note that religious organizations are exempt only from the ban on religious discrimination in employment. They remain subject to Title VII’s ban on employment discrimination based on race, color, national origin, or sex—except with respect to employment decisions involving clergy.

Churches that take an adverse action against an employee or applicant for employment based on religious considerations should describe their action appropriately. Refer to the religious or doctrinal principle at issue, and avoid generic labels like “sex” or other gender- or sexuality-based labels.

2. Covered employers

Title VII only applies to employers engaged in interstate commerce and having 15 or more employees. The courts have defined “commerce” very broadly, and so most churches will be deemed to be engaged in commerce. Note that most states have also enacted their own employment discrimination laws that eliminate the commerce requirement and generally apply to employers with fewer than 15 employees.

3. Ministers

In 2012, a unanimous United States Supreme Court affirmed the so-called “ministerial exception” which bars the civil courts from resolving employment discrimination disputes between churches and ministers. The Court concluded:

We agree that there is such a ministerial exception. The members of a religious group put their faith in the hands of their ministers. Requiring a church to accept or retain an unwanted minister, or punishing a church for failing to do so, intrudes upon more than a mere employment decision. Such action interferes with the internal governance of the church, depriving the church of control over the selection of those who will personify its beliefs. By imposing an unwanted minister, the state infringes the Free Exercise Clause, which protects a religious group’s right to shape its own faith and mission through its appointments. According the state the power to determine which individuals will minister to the faithful also violates the Establishment Clause, which prohibits government involvement in such ecclesiastical decisions. Hosanna-Tabor Evangelical Lutheran Church and School v. E.E.O.C., 132 S.Ct. 694 (2012).

This means that all discrimination disputes involving clergy are off limits to the civil courts, not just those involving religious discrimination, including those alleging discrimination based on sexual orientation or transgender status.

4. Religious schools

Title VII contains three religious exemptions for religious schools. The first, quoted above, is section 702. In addition, Title VII, Section 703(e)(2), of the Civil Rights Act of 1964 specifies:

[I]t shall not be an unlawful employment practice for a school, college, university, or other educational institution or institution of learning to hire and employ employees of a particular religion if:

  • such school, college, university, or other educational institution or institution of learning is, in whole or in substantial part, owned, supported, controlled, or managed by a particular religion or by a particular religious corporation, association, or society, or
  • if the curriculum of such school, college, university, or other educational institution or institution of learning is directed toward the propagation of a particular religion.

A federal appeals court interpreted this language as follows in a case involving a discrimination lawsuit brought against Samford University by a theology professor:

Samford says that, even if its refusal to allow Plaintiff to teach at the divinity school were not covered by the religious educational institution exemption, it is entitled to an exemption as an educational institution substantially “owned, supported, controlled or managed by a particular religion or religious corporation, association, or society.” Samford argues for a flexible interpretation of Section 703 and points to Samford’s historical ties with the [Southern Baptist] Convention, the fact that the Convention is the single largest contributor to the university, and that its Board of Trustees requires it to report to the Convention on all budgetary and operational matters. Plaintiff, on the other hand, says Samford is not “owned, supported, controlled, or managed” by a religious association because (1) the Convention no longer appoints trustees and (2) only seven percent of its budget comes from the Convention. Neither side cites precedents interpreting Section 703, and we are aware of no precedent that speaks to the issue of what it means to be “owned, supported, controlled, or managed” by a religious association.

The court quoted from another federal court ruling construing section 703(e)(2), Pime v. Loyola University of Chicago, 803 F.2d 351, 357 (7th Cir.1986):

Is the combination of a Jesuit president and nine Jesuit directors out of 22 enough to constitute substantial control or management by the Jesuit order? There is no case law pertinent to this question; the statute itself does not answer it; corporate-control and state-action analogies are too remote to be illuminating; and the legislative history, though tantalizing, is inconclusive.

The court concluded that Samford is “in substantial part” “supported” by the Convention:

“Substantial” is not defined by the statute. But the word substantial ordinarily has this meaning: “Of real worth and importance; of considerable value; valuable. Belonging to substance; actually existing; real; not seeming or imaginary; not illusive; solid; true; veritable. Something worthwhile as distinguished from something without value or merely nominal. Synonymous with material.” Black’s Law Dictionary, 1428 (6th ed. 1990). Continuing support annually totaling over four million dollars (even in the abstract, no small sum), accounting for seven percent of a university’s budget, and constituting a university’s largest single source of funding is of real worth and importance. This kind of support is neither illusory nor nominal. So, the Convention’s support is substantial. We hold—as an alternative to our Section 702 holding—that Samford qualifies as an educational institution which is in “substantial part” supported by a religious association and that the exemption protects Samford in this case.

A federal appeals court concluded that Title VII’s exemption of “religious institutions” from the ban on religious discrimination in employment applied to the school. It based this conclusion on the following considerations: (1) the university was established as a “theological” institution. (2) The university’s trustees are all Baptists. (3) Nearly 7 percent ($4 million) of the university’s budget comes from the Alabama Baptist Convention (the “Convention”)—representing the university’s largest single course of funding. (4) The university submits financial reports to the Convention, and its audited financial statements are made available to all Baptist churches in Alabama. (5) All university professors who teach religious courses must subscribe to the Baptist “statement of faith,” and this requirement is clearly set forth in the faculty handbook and in faculty contracts. (6) The university’s charter states that its chief purpose is “the promotion of the Christian religion.” (7) The university is exempt from federal income taxes as a “religious educational institution.”

5. Concerns about sweeping effects of the Court’s decision

Responding to concerns the Court’s June 15, 2020, decision “will sweep beyond Title VII to other federal or state laws that prohibit sex discrimination. And, under Title VII itself, they say sex-segregated bathrooms, locker rooms, and dress codes will prove unsustainable after our decision today.” The Court responded:

But none of these other laws are before us; we have not had the benefit of adversarial testing about the meaning of their terms, and we do not prejudge any such question today. Under Title VII, too, we do not purport to address bathrooms, locker rooms, or anything else of the kind. The only question before us is whether an employer who fires someone simply for being homosexual or transgender has discharged or otherwise discriminated against that individual “because of such individual’s sex.” . . . Whether other policies and practices might or might not qualify as unlawful discrimination or find justifications under other provisions of Title VII are questions for future cases, not these.

The employers also expressed concern that the Court’s decision may require some employers to violate their religious convictions. The Court responded:

We are also deeply concerned with preserving the promise of the free exercise of religion enshrined in our Constitution; that guarantee lies at the heart of our pluralistic society. But worries about how Title VII may intersect with religious liberties are nothing new; they even predate the statute’s passage. As a result of its deliberations in adopting the law, Congress included an express statutory exception for religious organizations. This Court has also recognized that the First Amendment can bar the application of employment discrimination laws “to claims concerning the employment relationship between a religious institution and its ministers.” Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U. S. 171 (2012). And Congress has gone a step further yet in the Religious Freedom Restoration Act of 1993 (RFRA). That statute prohibits the federal government from substantially burdening a person’s exercise of religion unless it demonstrates that doing so both furthers a compelling governmental interest and represents the least restrictive means of furthering that interest. Because RFRA operates as a kind of super statute, displacing the normal operation of other federal laws, it might supersede Title VII’s commands in appropriate cases.

But how these doctrines protecting religious liberty interact with Title VII are questions for future cases too. [The defendant funeral home] did unsuccessfully pursue a RFRA-based defense in the proceedings below. In its certiorari petition, however, the company declined to seek review of that adverse decision, and no other religious liberty claim is now before us. So while other employers in other cases may raise free exercise arguments that merit careful consideration, none of the employers before us today represent in this Court that compliance with Title VII will infringe their own religious liberties in any way.

6. Justice Alito’s dissent

Justice Alito issued a dissenting opinion in which he noted, in part:

Briefs filed by a wide range of religious groups—Christian, Jewish, and Muslim—express deep concern that the position now adopted by the Court “will trigger open conflict with faith-based employment practices of numerous churches, synagogues, mosques, and other religious institutions.” They argue that “[r]eligious organizations need employees who actually live the faith,” and that compelling a religious organization to employ individuals whose conduct flouts the tenets of the organization’s faith forces the group to communicate an objectionable message.

This problem is perhaps most acute when it comes to the employment of teachers. A school’s standards for its faculty “communicate a particular way of life to its students,” and a “violation by the faculty of those precepts” may undermine the school’s “moral teaching.” Thus, if a religious school teaches that sex outside marriage and sex reassignment procedures are immoral, the message may be lost if the school employs a teacher who is in a same-sex relationship or has undergone or is undergoing sex reassignment. Yet today’s decision may lead to Title VII claims by such teachers and applicants for employment.

At least some teachers and applicants for teaching positions may be blocked from recovering on such claims by the “ministerial exception” recognized in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U. S. 171 (2012). Two cases now pending before the Court present the question whether teachers who provide religious instruction can be considered to be “ministers.” But even if teachers with those responsibilities qualify, what about other very visible school employees who may not qualify for the ministerial exception? Provisions of Title VII provide exemptions for certain religious organizations and schools “with respect to the employment of individuals of a particular religion to perform work connected with the carrying on” of the “activities” of the organization or school, 42 U. S. C. §2000e–1(a); see also §2000e–2(e)(2), but the scope of these provisions is disputed, and as interpreted by some lower courts, they provide only narrow protection.

The November 2019 Church Law & Tax Advantage Member article previewed the cases before the United States Supreme Court and included five steps that churches and religious organizations holding traditionally orthodox views of human sexuality could take if the Court decided to expand the definition of “sex” under Title VII.

Richard R. Hammar is an attorney, CPA and author specializing in legal and tax issues for churches and clergy.

What Churches Should Know About State-Mandated Sexual Harassment Training Laws

Some states now require employers to train annually on harassment, and don’t exempt churches. More states may follow suit.

Since 2018, the majority of states have enacted legislation either mandating or recommending that employers train employees on sexual harassment avoidance. This happened at great speed. It can often take decades for legal changes at the state level to become a national trend.

The speed of this development can be traced to the great cultural shift arising from the #MeToo movement, which became a high-profile cultural marker following heavily publicized Hollywood sexual harassment scandals in 2017. With sexual harassment in the workplace as a major focal point, a program to reduce the incidence of harassment at work through education became a significant objective of the #MeToo movement. Legislation to mandate such workplace training ensued.

Varying requirements by state

Most states have enacted laws that address workplace sexual harassment in some fashion. Nearly all of these have been enacted within the last two years, and many took effect just in 2020.

One impact of this rapidly evolving development has been in the widely varied approaches from state to state. No two states have statutes that follow any type of uniform approach.

Mandatory education for adults as a condition for employment was one dramatic shift in the law, but most states that have legislated in this area have done so cautiously. A number of states require only that public employees obtain some training in avoiding sexual harassment, and other states recommend training. At least seven states, however, mandate some form of training requiring private employers to provide training for their employees on creating a work environment that is informed about how to identify and avoid sexual harassment (see “How Seven States Mandate Employers to Train on Sexual Harassment” for more details).

Because the enactment of these state laws has not led to a significant public backlash, it can be expected that more states will pass these types of laws, and those that merely encourage training may follow the lead of those who have mandated such training.

How churches are affected

While #ChurchToo, a church-focused variation of #MeToo, began in 2018, mandatory harassment training in church offices has not been a visible part of that movement. Churches nonetheless may fall under these emerging state laws, since the laws are aimed directly at the employer-employee relationship, and none of the state laws carve out exceptions for churches.

While the claim of a religious liberty exception to any government-mandated training program may someday prove to have merit, these laws have not yet been challenged in court. Churches should be prepared for federal courts to take the position that workplace protection statutes are laws of general application that are not subject to a free exercise of religion exemption.

Inevitably, a church’s response to these government-mandated training programs will impact the defense of a sexual harassment claim within the church. Any church without a training program in place may be at a disadvantage in defending such a case because the church may appear to have been insensitive to the risks faced by the alleged victim. Considering this rapidly emerging trend, churches may reduce the risk of sexual harassment if they stay ahead of this issue by providing helpful training to employees to foster a healthy workplace environment.

Training requirements states have set

State laws that mandate training possess some common traits. Among them:

  • There are generally minimum thresholds in the size of the workplace before the training obligation is triggered (ranging from any employer of any size to employers with 50 or more employees);
  • Specific time periods are mandated within which the training must take place for new hires;
  • Training for supervisors is more comprehensive than for other employees;
  • In most instances, the training must be regularly repeated (such as annually); and
  • Most of the statutes are vague about what specific content the training should contain, although California and New York give substantial detail. Some states provide model training materials, although none are specifically required.

The states that do provide guidance on the content follow a general pattern that includes the following points:

  • Sexual harassment should be defined with reference to state and federal law, and include examples of harassment;
  • Employees should receive an explanation regarding their rights on how to make a harassment claim against their employer and remedies they may seek from their employer;
  • Employees should receive a description of state and federal remedies also available to victims; and
  • Employees should receive an explanation regarding how employers are legally prohibited from retaliating against employees who raise a harassment claim.

Shaping useful training for church offices

Several human resources education vendors offer products meeting the requirements of all states, including those few that give specific details regarding the content of the instruction. However, these generalized programs are provided for a wide range of businesses, not specifically religious organizations.

As a result, some of these materials might strike a tone that church leaders and other religious employers find unsuitable, even if the principles taught in these programs are generally agreeable. For example, a church that wants scripturally based instruction may find the secular foundation of the commercial materials to be out of touch with the church’s moral positions.

The best approach for many churches may be to take the general content outline suggested by their state’s law (or another state’s, if their respective state offers none) and then develop a program that can be rooted in the church’s general approach to ministry. To satisfy the emerging pattern of legal requirements for workplace training, the training should be comprehensive and run at least two hours. It should cover:

  • The broad definition of sexual harassment, including how the church’s home state defines it, as well as how it is defined as a form of sex discrimination under federal law (both “quid pro quo” harassment and “hostile environment” harassment);
  • Examples of what constitutes sexual harassment (not just reliance upon simple definitions); and
  • A description of remedies and how to obtain them.

One good model for a church’s training is the “State of Illinois Sexual Harassment Prevention Training” program prepared by the state’s Department of Human Rights. These materials need to be adapted to the law of the church’s home state. But the general outline laid out in this 35-slide PowerPoint presentation is comprehensive and offers a good template for the scope and depth of adequate training. Notably, it provides a lengthy list of behaviors that constitute sexual harassment, including gestures, the use of nicknames, and the making of certain sounds.

Caution. Every church preparing its training program will need to consider how it will approach gender identity and sexual orientation issues. While states may differ in their treatments of these issues, several states consider these issues to be subject to the same approaches used in addressing any other harassment. Since these statutes are very new, the full implications of these laws to churches have not been developed by courts. Christian churches with orthodox views of human sexuality and marriage should consult further with qualified local legal counsel regarding how they handle these specific topics.

Make preparations now

While some churches may bristle at the idea of government-mandated messages of instruction within churches, the liability exposure to churches that are unprepared for sexual harassment training is significant. Even in those states that do not expressly mandate training, the absence of a training program may be used as evidence of negligence by a church. Ascertaining the church’s best approach to risk assessment will increasingly include a full discussion of the best way to reduce the incidence of sexual harassment, which unfortunately remains an issue in churches.

Myron Steeves is founder and senior attorney at the Church Law Center of California, and dean emeritus of Trinity Law School. He is an active member of the nonprofit committees of both the California Bar Association and the American Bar Association (ABA), and chairs the ABA's Religious Organizations Subcommittee.

How Seven States Mandate Employers to Train on Sexual Harassment

The similarities—and distinctives—of these training laws that churches in each state should understand.


Editor’s note: The original version of this article, published in June of 2020, reached an initial conclusion for California and its statute’s applicability to religious organizations. However, based upon new developments and additional time to interpret the statute, this article was revised in July of 2020 to reflect a new conclusion.

Further, on July 1, 2020, Illinios changed its minimum threshold for training to one employee. This change is reflected below.

The seven states mandating employers to provide sexual harassment training require several common topics to be covered, but also vary in several significant ways.

Courts will likely apply these statutes to claims against church employers, unless the courts recognize a religious exception.

Here, then, are key highlights for each state’s statutes.

California

Beginning in 2021, all California employers with five or more employees must provide two hours of training regarding sexual harassment to all supervisorial employees, and one hour of training to other employees. California exempts nonprofit religious corporations from its fair employment laws generally. However, to the extent that religious organizations employ five or more people in taxable unrelated business, the exemption from this regulation does not apply. Thus, most churches do not need to conduct mandatory sexual harassment prevention training.

For those churches and other religious organizations that employ five or more individuals in taxable unrelated business activities, and thus must provide training, the training must take place at least once every two years. The training must be provided within six months of hire, or promotion to a supervisorial position. For those who are to be employed less than six months, the training must take place within 30 days or 100 hours of work. In determining whether the employer has five employees, all persons under the direction and control of the employer are counted, including out-of-state employees, volunteers, and unpaid interns, even though the actual training is only provided to California-based paid employees. Notably, sexual harassment training must include training that includes harassment based on gender identity, gender expression, and sexual orientation as part of the training. Cal. Gov. Code §§12950-12950.1.

Connecticut

All employers in Connecticut with three or more employees must post a notice regarding the illegality of sexual harassment, as well as remedies, in a prominent location in the workplace, and provide written materials on the subject within three months of hiring. Two hours of training are required within six months of hire. The training must be supplemented every three years. Connecticut’s law requires that employers of fewer than three employees provide the same training within six months to employees who take on supervisorial roles. Conn. Gen.Stat. Ann. §46a-54.

Delaware

Employers with 50 or more employees must provide training in sexual harassment prevention within one year of hiring, and every two years thereafter. The statute provides specific topics that must be covered in the training. Additional training is required for supervisors. However, the statute does not provide a specific length of time for the training. Del. Code Ann. title 19§711A(g).

Hawaii

All employers are subject to the state’s statute, which borders on a recommendation for training, but nonetheless reads as a requirement. The law states:

Employers should affirmatively raise the subject [of sexual harassment], express strong disapproval, develop appropriate sanctions, inform employees of their right to raise and how to raise the issue of sexual harassment, and take any other steps necessary to prevent sexual harassment from occurring. Haw. Code R. §12-46-109(g).

Illinois

Employers of one or more employees are required to provide annual training that equals or exceeds information provided by the Department of Human Rights in a model sexual discrimination prevention training program. 775 ILCS 5/2-109.

Maine

All employers of 15 or more employees are required to provide training within one year of hiring any employee, including supervisors. While the statute addressing the form of training is not specific about the duration or method of training, it provides a lengthy description of what must be covered, including a description of sexual harassment with examples, the complaint process, and prohibitions on retaliation. Me. Rev. Stat. Ann. title 26 § 807.

New York

Every employer must adopt a sexual harassment prevention policy. It must be a policy that prohibits sexual harassment, gives examples of harassment, discusses remedies, provides a complaint form, features a procedure for investigation of complaints, informs employees of their rights of redress, clearly states that sexual harassment is a form of misconduct and that supervisors who knowingly allow such behaviors to continue are subject to sanction, and prohibits retaliation.

The training must be given annually. Notably, under New York’s model policy—which must be met or exceeded by the employer through a separately drafted policy—states that sexual harassment includes harassment based on sexual orientation, self-identified or perceived gender, gender identity, and transgender status. Gender stereotyping, which is prohibited under the model policy, occurs when personality traits “are considered inappropriate because they do not conform to other people’s ideas.” N.Y. Labor Law § 201-g.

Myron Steeves is founder and senior attorney at the Church Law Center of California, and dean emeritus of Trinity Law School. He is an active member of the nonprofit committees of both the California Bar Association and the American Bar Association (ABA), and chairs the ABA's Religious Organizations Subcommittee.

Advantage Member Exclusive

A 50-State Survey on Religious Freedom Laws

A 50-state survey on key federal and state laws and court decisions affecting churches and religious freedom.

Last Reviewed: January 27, 2025

This article was adapted exclusively for Church Law & Tax Advantage Members from the 50-State Religious Freedom Laws Report, a downloadable resource available on ChurchLawAndTaxStore.com. Advantage Members who log in to the store receive 20-percent off of their purchase.

The First Amendment to the United States Constitution says, “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof.” This language has been foundational to the religious liberty that millions of people have enjoyed in this country for nearly 250 years.

In those nearly 250 years, though, two key developments have unfolded through numerous decisions made in our nation’s courts.

First, the protection of religious belief is considered absolute. The government cannot make an individual or church believe—or not believe—something, nor can it create or enforce a law attempting to do so.

But second, the protection of religious exercise has limitations. Individuals and churches are free to believe whatever they wish, but when actions associated with those beliefs begin to clash with the rights and interests of others, courts say the government has more power to regulate.

This latter point—the limitations on religious exercise—has been a source of much debate and disagreement in American society, especially throughout the second half of the 20th century and the early part of the 21st century. For many, religious belief and religious exercise are inseparable, and the ability for the government to regulate religious exercise constitutes an attack on their constitutionally protected beliefs. For others, religious exercise left unchecked represents threats to the rights of others who do not share those same beliefs.

This clash has led to a maze of laws and court decisions across the country that raise a number of questions regarding how far religious freedoms extend. Understanding these developments—and their ramifications—is the purpose of this article, adapted from the 50-State Religious Freedom Laws Report.

Evolving standards

When a government law or action intentionally targets religious exercise, courts apply a high standard of judicial review known as “strict scrutiny.” This means when a party’s free exercise rights have been burdened by such intentional targeting, the government bears the burden of showing the law or action is both necessary to advance a compelling government interest and was crafted in the least-restrictive manner possible. This high standard makes it challenging for the law or action to be upheld, making it a significantly valuable protection to the free exercise rights of individuals, churches, and organizations.

For years, this high standard also was used by courts to evaluate neutral laws of general applicability when they happened to burden religious exercise. In other words, when a neutral law incidentally (not intentionally) interfered with an individual or party’s free exercise rights, the government still had to meet the burden of showing the law possessed a compelling government interest and was advanced in the least-restrictive way. Again, this same high standard offered significant protection to the free exercise rights of individuals, churches, and organizations.

However, in 1990, the US Supreme Court issued a controversial decision in a case called Employment Division v. Smith, 494 U.S. 872 (1990). Through this decision, the Court’s majority held that neutral laws—and the application of these laws—did not need to be justified by a compelling government interest and in the least-restrictive way possible whenever religious exercise was burdened. This conclusion made it more likely that a neutral law (or an action related to that law) could remain constitutionally valid, even when it burdened a party’s religious exercise.

The ensuing controversy from this decision prompted federal legislators to act. In 1993, a near-unanimous Congress responded to Smith by passing the Religious Freedom Restoration Act (RFRA), which aimed to restore the compelling government interest/least-restrictive means standard for evaluating neutral laws, and their application, when their effects on religious exercise came into question.

The passage of RFRA, hailed as a victory by religious liberty advocates, stabilized the situation—but only temporarily. Confusion and concern returned in 1997 when the Supreme Court decided a case called City of Boerne v. Flores, 521 U.S. 507 (1997). The Court’s majority concluded Congress overstepped its legislative powers with RFRA when it attempted to apply it both at the federal level and to the local and state levels. The Constitution, the Court’s majority noted, only gives Congress the power to make laws addressing federal laws and activities.

As a result, City of Boerne rendered the federal RFRA moot when it comes to laws and actions at the local and state levels.

Following this decision, some states—but not all—began adopting their own versions of RFRA, each designed to establish a compelling government interest/least-restrictive means standard for evaluating substantial burdens incidentally placed on religious exercise by neutral laws or actions. In some states where a RFRA has not been adopted, a high-level court has issued a decision mirroring the federal RFRA’s standards. In other states, though, a high-level court has decided the standard announced through the 1990 Smith decision should be used. And in about a dozen other states, no law or court decision announces a specific standard to follow, making it difficult to predict whether a church, organization, or individual can prevail in a religious exercise claim against a local or state government.

Further examining “neutral laws”

Also in 1993, a separate Supreme Court decision in a different case—Church of the Lukumi Babalu Aye v. City of Hialeah, 508 U.S. 520 (1993)—further defined the standards with which all courts should evaluate attempts by the government to regulate religious exercise. The Court’s decision acknowledged there still can be times when a law or regulation appears on the surface to be neutral, but in actuality still intentionally targets religious activity—and thus still deserves “strict scrutiny.”

In Lukumi, the Court determined the city’s ordinance, though described on the surface to be a neutral law of general applicability, was really designed to halt the animal sacrifice practices of a local church. The Court reached this conclusion by noting the city ordinance exempted other, similar types of conduct carried on by secular entities (e.g., butchers), and by noting the notes and transcripts recorded during the adoption of the ordinance showed city councilmembers intended to specifically address the church’s activities.

Because the ordinance was not truly neutral, and targeted religious activity, the Court said the strict scrutiny standard of review applied. It then deemed the ordinance unconstitutional, finding the ordinance did not advance a compelling government interest in the least-restrictive manner possible.

Where that leaves us—and why all of this matters

For churches, the First Amendment—or their state’s constitutional equivalent—should be the first line of defense when government laws or actions intersect with their activities.

But the presence of the federal RFRA, a state RFRA, or a judicially created RFRA-like protection is important to note. When a RFRA or RFRA-like protection exists, it may offer a church additional protections if it faces a claim arguing it falls under a neutral law of general applicability at the local, state, or federal level and violated it—and the applicability of the First Amendment or state constitution is unclear.

CAUTION. Note that a RFRA defense only emerges when a government agency, commission, or other entity initiates or pursues a claim against a church. A RFRA or judicially created RFRA-like protection is less likely, if at all, to apply to a civil lawsuit filed by a private party.

Church leaders always should consult with qualified local counsel in the event it potentially faces any local, state, or federal actions, or a civil lawsuit by a private party.

A state-by-state look

The 50-State Religious Freedom Laws Report is designed to help individuals and churches understand the protections available to them based upon where they live and operate. Below is a chart, based on information from the resource, detailing which states have a RFRA or a high-level court decision addressing religious exercise. The remainder of the resource provides individual state reports containing additional insights. This additional information is useful for churches and church leaders as they seek to understand how legal protections for their religious exercise operate based upon where they are located.

Of note:

  • With the passage of RFRAs in Iowa, Utah, and Nebraska in 2024, 28 states, plus the federal government, now have RFRAs;
  • Numerous jurisdictions have high-level state court decisions (either at the state supreme court level or a state appellate court level) addressing religious exercise claims. Of those, five (5) used the compelling government interest/least restrictive means standard, while seven (7) appeared to use a standard similar to the US Supreme Court’s Smith decision. One (1)—the District of Columbia—announced a standard in 1987 that leaves uncertainty in light of Smith; and,
  • Ten (10) states offer no RFRA or RFRA-like protections for free exercise claims made in response to state or local government actions incidentally burdening religious exercise.

Matthew Branaugh is an attorney, and the business owner for Church Law & Tax.
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Downloadable Checklist: Understand the Effects of Your Church’s Political Activity

Use this checklist to understand the potential effects of your church’s political activity.

When it comes to political activity, churches need to understand their constitutional protections, as well as the Internal Revenue Code’s restrictions for 501(c)(3) tax-exempt organizations. Take the following quiz to test your knowledge. The answer key is at the end of the article.

Download a PDF version of this assessment.

There are two distinct limitations in the tax code. First, churches may not engage in substantial efforts to influence legislation. Second, churches may not participate or intervene in any political campaign, even to an insubstantial degree. The first limitation is referred to as the “lobbying” limitation. The second limitation is referred to as the “campaign” limitation.

The income tax regulations interpreting the limitation on political campaign intervention provide that neither a church nor any other organization can be exempt from federal income taxation if its charter empowers it “directly or indirectly to participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of or in opposition to any candidate for public office.” The regulations further provide that:

The term “candidate for public office” means an individual who offers himself/herself, or is proposed by others, as a contestant for an elective public office, whether national, state, or local. Activities that constitute participation or intervention include, but are not limited to, the publication or distribution of written or printed statements or the making of oral statements on behalf of or in opposition to such a candidate.

Consequences of Church Political Activity

None of the political activities described above are “illegal.” The primary legal consequence of church political activity is that the church’s exemption from federal income taxation may be jeopardized.

Loss of a church’s federal income tax exemption would have several potential penalties, including the following: (1) the church’s net income would be subject to federal income taxation; (2) the church’s net income would be subject to state income taxation (except in those few states not having an income tax); (3) donors no longer could deduct charitable contributions they make to the church; (4) the church would be ineligible to establish or maintain “403(b)” tax-sheltered annuities; (5) possible loss of property tax exemption under state law; (6) possible loss of sales tax exemption under state law; (7) possible loss of exemption from unemployment tax under state and federal law; (8) loss of preferential mailing rates; (9) a minister’s housing allowance might be affected; (10) the significant protections available to a church under the Church Audit Procedures Act may no longer apply; and (11) the exemption of the church from the ban on religious discrimination under various federal and state civil rights laws may be affected.

These consequences should be considered when deciding whether or not to engage in political activities that may jeopardize the church’s tax-exempt status.

Answer Key: (1) F (2) F (3) F (4) F (5) T (6) T

The editorial team of Church Law & Tax is made up of Matthew Branaugh, attorney-at-law, and Rick Spruill, digital content manager.

Can Churches Dismiss an Employee Without Cause?

Understanding the limitations of “employment at will,” and the idea that an employee can leave a job without cause, too.

While “employment at will” is a phrase most church leaders have heard, not everyone knows what it truly means.

In a nutshell, the employment at-will rule establishes a default rule that an employment relationship is indefinite, not for a certain duration of time, and can be ended at the will of either the employer or employee.

The rule is a presumption courts use that employment may be ended without notice, without giving any reason, and without consequences—unless the employer and employee have agreed to a different type of arrangement.

We often think of the rule from the perspective of the employer’s right to discharge a worker at will. It may be helpful to understand it from the employee’s perspective. That is, a worker may, at his or her will, walk away from a job at any time, for any reason or no reason. Perhaps, at one time or another, most of us have felt like doing just that. If so, we had no reason to worry whether our employer would try to sue us for quitting.

So, is everyone employed “at will”? Again, the law presumes so, but the parties can voluntarily change that. The simplest way to do that is in a contract. In addition, federal and state laws that protect employee rights undercut the strength of the at-will rule, as discussed below.

Explicit contract limitations

A job seeker might be willing to accept a job offer only if the employer guarantees that the employment would last for at least a certain duration, say two years. If the employer agrees and makes that promise, the parties will have negated the at-will presumption. Consequently, if the employer breaks the contract and lets the employee go after only six months, the employee may then bring a claim for damages.

Other types of contract provisions also limit the at-will arrangement.

Contracts with high-ranking employees (in the ministry context, say, a senior pastor) often contain provisions that permit the employee’s discharge only if there is “just cause” to do so. Sometimes just cause is undefined; other times the contract delineates specific types of misconduct or other events that constitute just cause. In the context of contracts, a just cause provision mainly functions as a way to determine if severance benefits are owed. Thus, if an employee is discharged for a violation of a significant workplace policy (i.e., with just cause), he or she might not be entitled to severance benefits that would have been owed if the termination was for something other than cause (say, a staff reduction).

As another example, a deferred compensation agreement between a church and pastor might include a provision under which compensation is forfeited if the pastor engages in specified misconduct. Ultimately, the parties’ obligations depend on the language of the contract they negotiate.

As a caution, it is important that contract provisions regarding “cause” for termination are carefully drafted to avoid unnecessary conflict that might arise from ambiguities. For such provisions, employers should seek guidance from an attorney with expertise in labor and employment law.

Implied contract limitations

Contracts that abrogate the at-will presumption might not always look like formal, written agreements bearing official signatures. Though many might not realize it, employment policies and handbooks can create contracts between an employer and its workers. If so, the employer must abide by the agreement.

Policies that describe an employer’s procedures in unambiguous, mandatory language (e.g., “shall” or “will”) may be deemed binding, and deviation from the promise can be a breach of contract. For that reason, policies and handbooks should explicitly disclaim that they constitute a promise of employment for any certain period of time or restrict the bases for discharge. They should also state—up front and in bold language—that employment is at will and that the policy/handbook does not alter that relationship.

Legal limitations

Federal and state laws have significantly eroded the force, if not the letter, of the at-will rule. Countless statutes prohibit the discharge of an employee (at will or not) if the employer acted for an illegal reason.

For example, while a church employer may discharge a 65 year-old worker at the employer’s will (assuming it did not enter a contract with the worker), it usually may not do so if the reason is the worker’s age. (Small employers, however, may not be covered by age discrimination laws.)

The same is true for other protected characteristics (e.g., race, gender, disability) or protected conduct (e.g., blowing the whistle on fraud, filing a claim for workers’ comp, refusing to engage in illegal conduct, or opposing discrimination). Those protections differ from one state to the next. Church leaders should check their state’s law in these matters.

Keep in mind that religious groups may have a defense to statutory and other employment claims by virtue of the ministerial exception.

Practicalities

Assume that a recently discharged at-will worker sues over the termination. Logically, the employer should be able to argue that it does not need to give any reason for discharging the worker because he or she was employed at will. But here is where the at-will rule is sometimes misunderstood.

At-will employment does not mean that the employee is barred from pursuing a lawsuit against the employer. It only means that the employer and employee haven’t agreed between themselves to limit either party’s right to end the job relationship.

Indeed, in practical terms, employers must always be prepared to articulate a legitimate reason for discharging a worker. In a sense, that is not an undue burden: there always will be a reason for the employer’s decision—say, the employee isn’t performing well or the employer didn’t need or couldn’t afford to keep the worker.

On the other hand, because there are so many employee protections under federal and state laws, nearly any employee who believes he or she was unfairly discharged has a basis for filing a complaint. The moral of the story here is that at-will workers have every right to contest their discharge in court.

Note that some states liberally allow employees to file lawsuits challenging disciplinary actions less severe than a discharge, such as a demotion. Again, church leaders should check their state’s law in these matters.

All in all, an employee’s at-will status provides limited protection for employers. Accordingly, employers should not expect the at-will rule, although a highly touted staple of American employment law, to offer a reliable defense if an employment claim arises.

Adapted from an article that first appeared in the Employment Law for Ministries newsletter from Conner & Winters. Used with permission.

Donn Meindertsma is a partner in the Washington, D.C., office of Conner & Winters, LLP, and specializes in employment law.

Downloadable Checklist: Do We Follow Sound Employment Practices?

A 12-question checklist to find out.

Use the following checklist to gauge how your church is doing at following good employment practices.

Download a PDF version of this checklist.

The federal government oversees a complex array of laws designed to protect employees from being taken advantage of by employers. These regulations affect about 10 million employers, including many churches.

Whether your ministry employs one person or one hundred, it may need to comply with many of the federal, state, or common law provisions that apply to employers.

Here are just some of the areas that labor laws regulate:

  • Wages and hours
  • Wage garnishment
  • Workplace safety and health
  • Workers’ compensation
  • Employee benefits
  • Family and medical leave
  • Veterans’ employment rights
  • Discrimination (age, race, gender, genetic information, disability, national origin, religion)
  • Sexual Harassment
  • Accommodation for employees with disabilities
  • Wrongful termination
  • Invasion of privacy

That is why it’s important for you to be aware of current labor laws and create policies and procedures that help your ministry to abide by them.

Are We Prepared for Disaster? A Checklist for Churches.

A 10-question checklist to determine steps to take.

Use the following checklist to gauge how your church is doing at preparing for a disaster.

Download a PDF version of this checklist.

When churches plan for disasters, it’s always with the hope that the plans will be unnecessary. But if a disaster—be it a hurricane, a tornado, a fire, flooding, or something else—does strike your church, you’ll be glad you’ve taken the following things into account.

Take inventory. Having a record of the church’s possessions is extremely helpful in the event of a disaster. But this needs to be done prior to the disaster. A post-disaster inventory undoubtedly will be incomplete—and it will lack the photos (or video) that can streamline the post-disaster process.

Think “when” not “if.” When discussing the potential for disasters, it’s easy to focus on the unlikelihood of each scenario. Focusing on what to do when it happens, however, forces church leaders to take the risks seriously—no matter how slim the chances are. And if the unlikely becomes a reality, your church community will be grateful that its leaders took the planning process seriously.

Creating a crisis response team. A crisis response team should be well-trained and authorized to act when necessary. Most importantly, this team needs to be familiar with the necessary procedures in the event of a variety of different disasters—because the immediate needs will vary depending on the type of emergency.

A crisis response team should also be prepared to see the church through the crisis—not just immediately, but also following up on any needs that emerge after the initial phase of the crisis.

Focus on the people—not just the problem. When a disaster strikes, people are going to be impacted. The more traumatic the disaster is, the more people will need spiritual and emotional support. Focusing on physical needs (such as rebuilding, cleaning up, replacing destroyed or damaged property, etc.) often is easier than ministering to those who might be reeling—emotionally and physically.

As you help with the practical needs that surface in the wake of a disaster, be constantly looking for people who need a word of encouragement or someone willing to process things with them. Plan to ask the questions, “How are you doing?” and “Do you want to talk about it?” And be sure to listen—to really listen—to their responses.

Stay disciplined. In the aftermath of a disaster, people are often eager to lend a hand—willing to do anything necessary. But in these times, one’s spiritual disciplines are often put on hold. Ignoring spiritual disciplines is a recipe for another type of disaster. When things are difficult, relief workers need to make their spiritual lives a priority—even when it seems like there are more pressing needs.

A 12-Point Checklist for Setting Church Fundraising Guidelines

This downloadable 12-point checklist is created for those wondering how to establish church fundraising guidelines.

Last Reviewed: November 1, 2023

Download a PDF version of the 12-point checklist below, and use it to gauge how your church is doing at setting church fundraising guidelines.

Before you launch your next fundraising effort, be sure to consider some aspects that may be putting your church and your members at risk. Use the simple tips below help ensure that your next fundraiser is safe.

Physical Safety

Outside Vendors. Most vendors are reputable. However, some may be inexperienced or unprofessional. Be sure to select vendors who have references. Utilize a written contract outlining their duties and get proof that they have adequate insurance.

Equipment. All equipment, whether owned by the church, rented, or brought in by a vendor should be safe. The only way to insure this is to have it inspected by a certified inspector. Further, all equipment should be run by a trained, responsible person who has safety in mind.

Food Sales. Anytime you are selling food, extra care should be provided. Adults should make sure the food is kept at the proper temperatures and safe to sell.

Financial Safety

Cash. Every effort should be made to secure the funds as soon as possible, even as it accumulates during the event. A responsible security team (of two or more) should take cash to a secure room, and lock it up until it can be counted. Once the money is secured, it should be handled in the same way as the church collection. Use two or more people to count the money, document it, and ensure its safe deposit. Never allow cash to be taken home or counted by just one person.

Tax-Deductible Donations. Some churches raise funds by asking people to donate items to the church. The church then sells or uses these donations, and the donor can receive a tax deduction. Take care to follow proper IRS guidelines for accepting donations and reporting them. Churches should consult a competent tax person who knows the law regarding nonprofits.

Downloadable Copyright Law Checklist for Churches

Take this quiz to make sure you’re staying within the guidelines.

Worship music and websites are two places were churches may infringe on copyright law if they’re not careful. Use this checklist to gauge how your church is doing at following good guidelines.

Download a PDF version of this checklist.

There are two primary areas churches may need to consider when it comes to intellectual property and copyright issues.

Music

The first and most common relates to music usage. Many churches like to record their worship services, project words on an overhead, or create their own songbook. Without the proper license, all of these activities are illegal.

Most of us have heard of or are members of CCLI, Christian Copyright Licensing International. As a member, you have permission to use over 150,000 songs in the context of ministry. A license will allow you to:

  • Record worship services
  • Project words on a projector or overhead
  • Print words in the bulletin or on a handout
  • Create a songbook
  • Create a database of songs on a computer
  • Audio or videotape a wedding or special service

Therefore, without the license, participating in any the above is a copyright violation.

The bottom line is ownership. Those who write and own the songs have a right to benefit from their use. The cost of license is based on the size of the church. For more information, go to us.ccli.com.

Videos

The second primary area involves video use. In essence, the FBI warning at the beginning of a rented video states that it is for home use. Showing a complete video outside of the home is considered a violation of the law.

Some have challenged this law citing the “Fair Use Clause” allowing nonprofits to use the video for educational purposes. However, it is smart to look into purchasing an annual license from Christian Video Licensing International (CVLI) and following their guidelines for usage (cvli.org).

A Downloadable Checklist for Church Board Members

Nine questions to help you understand your role and responsibilities.

Your role as a church board member is incredibly important for the church. There are also liabilities and responsibilities that you should know about that come with this role. Use this assessment to determine how prepared you are to serve in this way.

Stay Informed to Prevent Church Lawsuits

Years ago church leaders didn’t have to worry about litigation. Churches simply were not likely to be sued. Times have changed. With today’s churches facing huge verdicts on high-profile lawsuits, board members cannot afford to be uninformed about the legal liabilities facing the church. Consider these litigation trends among churches:

Lawsuits involving churches cover almost every area of church life. The most common lawsuits stem from personal injury cases. Other common areas include employee disputes, membership disputes, employment problems with clergy, lawsuits over title to property, litigation with zoning boards, tax and IRS disputes, and violations of securities law. In recent years, church board members have also been named as defendants in cases. For example, church board members have been called on in cases relating to the negligent selection of church workers who later molested a child.

Lawsuits involving children require particular attention. Past studies have shown that nearly 1 church in 100 reported responding to an allegation of child molestation in a church-sponsored program. Research indicates that when child molestation occurs, 10 to 20 percent of the time, there are multiple victims. Churches are at great risk of a lawsuit when an allegation of child sexual abuse is made.

Embezzlement is on the rise. Past studies have shown that as many as 15 percent of churches reported having had problems with theft among volunteers and paid staff members. This percentage is rapidly increasing.

Unfortunately, in many churches nothing is being done to reduce these major legal liabilities. Research has shown that:

  • Approximately 75 percent of churches do nothing to assess liability risks.
  • Most churches use no formal employment application and less than one-fourth screen staff members who work with children.
  • Almost 90 percent of churches surveyed had no sexual harassment policy.
  • Less than 1 in 3 churches had an employee handbook, and of those that did, only 10 percent had been reviewed by an attorney. The vast majority of church leaders don’t even know of an attorney that can help them with respect to the unique legal needs of churches.

As a board member, make it your mission to stay informed. Your vigilance will become your church’s greatest protection from legal entanglements.

Download a PDF version of this checklist.

Advantage Member Exclusive

Do Your Church’s Governing Documents Allow Virtual Business Meetings?

Answering this crucial question can help legally validate decisions made during the coronavirus outbreak—and beyond.

Editor’s Note. This article is part of the Advantage Membership. Learn more on how to become an Advantage Member or upgrade your membership.

The law governing business meetings for churches is state-specific, meaning that whether your church can hold a virtual business meeting through a video conference or other technological means is ultimately governed by the law of the state where your church is incorporated. Once you have gained an understanding of what applicable state laws say about virtual business meetings for your board or membership, you then need to check your bylaws and any other organization-specific rules applicable to business meetings.

Step one: Find bylaw language relevant to board and membership meetings

First, look at the section in your bylaws that discusses the church board and its meetings. Find language that discusses when and how the church leaders or officers may meet.

Next, look for language in your bylaws that discusses membership meetings. That language might be in the section titled “Members,” or it could be in a section titled “Meetings” or “Annual Meeting.”

As you look at the bylaws language regarding board meetings and member meetings, you are looking for language that indicates “yes, you may have a virtual meeting”—wording that addresses whether the board or membership may meet other than when the members are physically present in the same room.

If the bylaws allow virtual meetings, the language describing this permission could take various forms:

  • An explicit provision allowing participation via communication equipment that allows for simultaneous participation; or,
  • Language that states a quorum is present either through the physical presence of a specific number of members, or presence through remote communication technology.

Alternatively, the bylaws may not address virtual or remote meetings at all. They might simply say something general, such as, “Meetings may be held at a place determined by the board.”

Step two: Evaluate how the relevant bylaw language relates to applicable state law

Once you have identified the bylaw language that is relevant to how your board and membership may meet, you need to fit that language together with the applicable state law.

Understanding how the law and your governing documents fit together on the issue of virtual meetings is one of the most important parts of my virtual church meetings toolkit. The section below explains three possible—and common—scenarios. The toolkit also contains a useful decision tree that can provide you with a visual guide. If you are unsure of how to proceed, consider contacting qualified legal counsel for help.

Three common scenarios

These are the three most common scenarios churches encounter when interpreting state law and bylaws to determine whether they can validly conduct business or membership meetings through virtual technology:

  • If applicable state law expressly allows virtual business meetings but only if your bylaws also allow virtual business meetings, your board or membership cannot meet virtually unless your bylaws include language that expressly allows virtual business meetings.
  • If applicable state law expressly allows virtual business meetings unless your bylaws expressly disallow them, your board or membership can meet virtually unless your bylaws expressly disallow virtual business meetings.
  • If applicable state law is silent about virtual business meetings, your board or membership cannot meet virtually unless your bylaws include language that expressly allows virtual business meetings.

Excerpted from Your Complete Guide to Virtual Church Meetings: A toolkit for legal and compliant business meetings, by Sarah Merkle. Used with permission.

The downloadable, step-by-step toolkit helps churches determine whether virtual business meetings are permitted, make decisions when virtual business meetings are not an option, and prepare to hold a legal and compliant virtual business meeting. It also offers easy-to-reference resources, such as a guide to state laws addressing virtual meetings and a detailed list of the special rules necessary for holding a compliant virtual meeting. Get your copy today at ChurchLawAndTaxStore.com.

Sarah E. Merkle is a professional parliamentarian and presiding officer. One of five lawyers worldwide to have earned the credentials Certified Professional Parliamentarian-Teacher (CPP-T) and Professional Registered Parliamentarian (PRP), she helps boards, associations, corporations, and public bodies navigate rules applicable to governance and business meetings.
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