A Pretty Broad Exemption: New DOL Guidance Suggests Ministerial Exception Applies to FLSA

A recent opinion letter from the U.S. Department of Labor’s Wage and Hour Division suggests a broadening application of the so-called “ministerial exception” of the First Amendment. Issued on January 8, 2021, the new letter advises a private religious daycare and preschool that the First Amendment exempts the school’s teachers from the wage and hour requirements of the Fair Labor Standards Act (FLSA), insofar as those teachers are “ministers.” While this opinion letter may have little authoritative weight in the wake of a new administration, it nevertheless highlights an important issue for churches and ministries: Can the government require religious organizations to pay ministers minimum wage and overtime pay?

The Ministerial Exception

The First Amendment to the U.S. Constitution gives churches and religious organizations a constitutional exemption from the application of employment laws to “ministers.”¹ This exemption does not extend to employees who are not “ministers.” If an employee is a minister, the ministerial exception applies, and it generally bars that employee from asserting employment claims against their employer.

Exemption in Two Dimensions—Who vs. What

One can understand the ministerial exception as having a bi-dimensional scope. The exception has a “who” axis and a “what” axis. The “who” axis is the scope of which employees are covered by the exception. The “what” axis is the scope of what claims are covered by the exception.

As discussed in another post, the U.S. Supreme Court recently clarified the criteria for determining when an employee is a “minister” in the case of Our Lady of Guadalupe School v. Morrisey-Berru. The Court in Our Lady emphasized that when it comes to deciding whether an employee is a minister, what matters at bottom is what an employee does, and not the person’s job title, education, or other formalities. Religious functions are what define a minister.

However, while the Our Lady decision clarified the standard by which courts should determine whether an employee was a minister, the Court left unanswered the issue of what claims an employee is barred from asserting against their employer when he or she is a minister. The Our Lady decision clarified the scope of the “who” dimension, but it did not speak to the “what” dimension.

While it has been long established that the exception applies to hiring and firing claims such as anti-discrimination laws and wrongful termination, state courts and lower federal courts have been split on the issue of whether the exception applies to wage and hour regulations such as the FLSA.

New Guidance from the U.S. Department of Labor

From time to time, the Wage and Hour Division issues opinion letters in response to formal inquiries from employers. These opinion letters serve as formal interpretive guidance on the laws the Division enforces, including the FLSA.  The Division’s opinion letter dated January 8, 2021 was issued in response to a church-affiliated daycare and preschool inquiring whether it could lawfully pay its teachers on a salary basis that did not comply with FLSA requirements. According to the letter, “all of the school’s teachers furnish some religious teaching to the students.”

The Division concluded that since the school was a religious institution, its ministerial employees were exempt from wage and hour requirements. In making this conclusion, the Division stated unequivocally that “ministers are exempt from the FLSA’s wage and hour requirements.” Without acknowledging the split of authority on this point, the Division cited several federal court decisions to support this proposition.

The Division then went on state that employees of religious schools can qualify for the ministerial exception to FLSA, depending on their duties. Quoting the Supreme Court’s Our Lady decision, the Division explained that “educating young people in their faith, inculcating its teachings, and training them to live their faith are responsibilities that lie at the very core of the mission of a private religious school.”

While the Division did not make a conclusion as to whether the school’s teachers were “ministers,” it did offer guidance to the school on determining which teachers qualify as ministers. Relying again on the Our Lady decision, the Division elaborated as follows:

Whether the employees here actually qualify as ministers depends on their duties as employees, not upon the employer’s designation. There is no checklist one can use to determine whether the ministerial exception applies. Instead, a variety of factors may be important based on their relationship to an employee’s role in conveying the Church’s message and carrying out its mission. The question must be answered on a case-by-case basis and requires considering all relevant circumstances surrounding each employee to determine whether each particular position implicates the fundamental purpose of the exception. Ultimately, ministerial status depends on the employee’s role in carrying out the employer’s mission and conveying the employer’s message.

Implication for Religious Employers

While opinion letters provide employers with guidance as to how the Wage and Hour Division itself interprets FLSA, the Division’s interpretations may be rejected by courts, which have the ultimate interpretive authority of laws. Moreover, the Division may rescind, withdraw, or change its interpretation, especially after a change in administrations.

The opinion letter discussed here was issued on January 8, 2021. Days later, the Republican administration under which the letter was issued was replaced by a Democratic administration. In this transition the Trump Labor Department was replaced by the Biden Labor Department, replacing not only personnel, but regulatory and constitutional philosophy. The opinion letter shows us that under the Trump administration, the Division regarded the FLSA as inapplicable to ministerial employees. Under the Biden administration, the Division may withdraw the letter and adopt a narrower view of the ministerial exception in its enforcement of FLSA.

In any event, while the issue is not settled and there is still a split among courts, the Division’s opinion letter follows the majority of courts that have addressed the issue of whether the ministerial exception applies to wage and hour laws. While the new administration may rescind the agency interpretation, the federal courts are the final arbiters of both FLSA and the First Amendment.

Nevertheless, religious employers should not presume that they can generally neglect FLSA compliance with impunity. As the Division noted in its opinion letter, the First Amendment exemption applies only to ministerial employees. Ministries should consult qualified legal counsel to ensure that any employees they are treating as exempt are indeed ministers for purposes of the ministerial exception.

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¹ See Hosanna-Tabor Evangelical Lutheran Church & Sch. v. E.E.O.C., 565 U.S. 171 (2012).

Featured Image by Rebecca Sidebotham.