Supreme Court Clarified the Applicability of Federal Anti-Discrimination Laws to Religious Schools 

The Supreme Court recently issued a major victory to religious schools in a series of decisions aimed at promoting religious liberty. The Court ruled that religious schools are not subject to federal civil rights laws barring discrimination when making decisions related to employment and administration of their teachers.

The Supreme Court heard two cases brought by elementary school teachers in California who claimed that they were illegally discriminated against. In Our Lady of Guadalupe School v. Morrissey-Berru, Agnes Morrissey-Berru claimed discrimination on the basis of age discrimination after her contract was not renewed. The school claimed that the contract was not renewed due to her poor performance.

In St. James School v. Biel, Kristen Biel claimed that she was discriminated against for her disability under the Americans with Disabilities Act after her contract was not renewed due to her diagnosis of breast cancer and the request for time off to complete needed surgery and treatment. The school similarly claimed the teacher’s poor performance led to the non-renewal of her contract.

Ministerial Exception

The Court, in a prior case of Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, held that religious institutions have a First Amendment Right to freedom from state interference in matters involving church government, faith, and religious doctrine. The Court was barred from interfering in the schools’ decisions not to renew the employment contracts based on the ministerial exception.

Writing for the majority, Justice Samuel Alito stated that when a school with a religious mission entrusts a teacher with the responsibility of educating and forming students in the faith, judicial intervention into disputes between the school and teacher threatens the school’s independence in a way that the First Amendment does not allow. The teachers did not have formal religious titles or training but were required to teach Catholic doctrine and other subjects.

The Supreme Court applied the ministerial exception standard and argued that teachers were expected to help the students carry out their religious mission and educate students in the Catholic faith, which was ministerial in nature. Because the teachers carried out the school’s mission of inculcating Catholic religious teachings, even though they did not have official ministerial titles, they were subjected to the ministerial exception.

The Dissent

Justice Sonia Sotomayor and Justice Ruth Bader Ginsburg argued that the Court unfairly expanded the ruling of Hosanna-Tabor beyond its narrow application in the past. The Justices warned that the majority holding essentially permits religious entities freedom to make employment decisions without fear of litigation based on discrimination, despite acting in such a manner. Religious schools facing discrimination-based lawsuits have more flexibility in hiring and termination decisions based on the First Amendment interpretations these recent Supreme Court decisions have provided.

The legal team at MacMain Leinhauser has successfully defended schools in Title VII claims alleging discrimination. For an immediate consultation with a member of our legal team, please contact us online or call us at 484-318-7106. Our offices are located in West Chester, Pennsylvania, and we provide legal services throughout Philadelphia, Chester County, and New Jersey.

What Should Employers Know About Furloughs During COVID-19?

The economic uncertainty due to the COVID-19 pandemic is forcing many employers to furlough employees in order to save costs. However, employers risk litigation if they do not comply with labor laws. Employers should ensure that they are in compliance with local and national labor laws when furloughing employees. Those who do not follow regulations properly can face penalties and lawsuits. To begin, it is important to be cognizant of the distinction between a furlough, leave of absence, and lay-off of an employee:

Furlough. A furlough is usually a temporary unpaid leave from work. The understanding is that after a certain time period, the employee will return to work. During the pandemic, employers may ask employees to be on furlough until the state lifts the stay-at-home order for non-essential employees. Usually an employer will furlough an entire department because of lack of work or because the business has been forced to close for a certain amount of time.

Leave of Absence. A leave of absence is also a leave from work, which is usually unpaid unless the employee is using their paid vacation time. However, a leave of absence can also occur when an employee requests leave for personal reasons. During the pandemic, an employee who is uncomfortable coming to work when the employer has decided to stay open may request a leave of absence if the employer has a Collective Bargaining Agreement or policy that the covers the leave circumstance requested.  Employers should review their leave policies and Collective Bargaining Agreements so they are familiar with these provisions.  employee is obligated to notify their employer of their request for a leave of absence.

Lay-Off. Employers lay off employees to permanently reduce their workforce. In this instance, the employee has no expectation of returning to work. Employers need to provide notice and comply with requirements that trigger COBRA coverage for health insurance benefits.

Legal Considerations When Issuing Furloughs During COVID-19

Employers should be aware that furloughs may affect employees’ benefit plans. Employers should check with their health insurance providers to ascertain whether the type of furlough designed affects an employee’s ability to maintain their benefits. Also, employers should check with retirement plan administrators regarding the management of monthly contributions. In the event that the employee may risk losing their health insurance, employers should ensure that their obligations under COBRA are met.

Labor Laws

Employers should also be aware of regulations under the Fair Labor Standards Act (FLSA) and the Worker Adjustment and Retraining Notification (WARN) Act. Under the FLSA, employers are not obligated to pay non-exempt employees while they are furloughed. Employers are only obligated to pay for work performed by the non-exempt employee. Exempt employees do not need to be paid if they have not performed work for the full work week. If, however, the employee provided any amount of work, the employer is obligated to pay for the entire work week. Employers may be able to reduce pay and schedules of exempt employees.

Under the federal WARN Act, there is a 60-day notice requirement for furloughs. The WARN Act does not apply if the employer notified the employee that their furlough was temporary, and that they could return to work in six months. If the employer needs to lay-off the employees after the six-month period, the employer will be obligated to pay 60 days of pay and benefits for each employee. Typically, small business employers with less than 100 full-time employees are not subject to WARN Act requirements and not all employees may be included in the count of employees depending on when they were hired and in what capacity.

The WARN Act also provides an exception for unforeseeable business circumstances, but it is unclear if it will cover the COVID-19 pandemic. Therefore, employers should carefully evaluate the application of state and national laws to the specific policies, benefit plans, and needs of their business before taking action.

The legal team at MacMain Leinhauser offers experienced counsel to businesses as to how the state and federal labor laws affect your work force reduction plans during this pandemic. Contact us online or call us at 484-318-7106 for an initial consultation today. Located in West Chester, Pennsylvania, we serve clients throughout Philadelphia, Chester County, and New Jersey.

When Should Small Businesses Engage an Attorney?

Small business owners often have limited financial resources. Start-up costs can be overwhelming, and owners must weigh competing priorities in which they invest their limited resources. It may be tempting for owners to forego seeking legal advice or retaining an attorney. However, legal counsel can provide critical advice on many key aspects, including business formation, trademark registration, securing patents, contract negotiations, employment contracts, business immigration, and employment law issues.

Considerations for Small Businesses

Small business owners should evaluate the nature of their businesses to determine whether legal counsel is necessary. For example, if the business is a sole proprietorship, an attorney may not be necessary for all matters, but it is vital to determine the issues that need legal attention. For the formation of an LLC or a partnership, the Secretary of State will have the necessary forms available to form the business organization desired. If one needs to determine which business formation is best suited for the business and its goals, it is advisable to consult an attorney to determine the type of entity that should be created. The formation of a corporation is more complicated and requires additional steps to maintain legal status in which legal counsel is advisable.

Small business owners must also determine how to comply with government regulations, wage and hour requirements, and to monetize their know-how.  Consulting with counsel prior to making decisions can avoid larger legal bills for the company down the line and provide piece of mind for business owners.  There are many legal considerations for small business owners to navigate in order to run a successful business. Many of the following legal issues may require an attorney:

Business Formation: When a business requires investments from several investors or has multiple partners, the business structure and formation will be more complicated than a straightforward sole proprietorship or partnership. An attorney can draft and negotiate investor and partnership agreements. Additionally, an attorney can evaluate the needs of the owners against the pros and cons of each type of corporate structure.

There are advantages and disadvantages to each, as one type of formation does not suit all business needs; some may offer more protection from liability. In exchange for protection from liability, corporations require adherence to formalities. If a business fails to fulfill the required formalities, the corporate veil that protects it from liability can be pierced causing legal exposure to the owners. An attorney can help business owners navigate the corporate formalities to avoid the risk of exposure.

Contract Negotiations: In order to conduct business, owners need to engage in relationships with investors, partners, clients, customers, employees, and third parties, such as vendors and suppliers. All relationships need to be governed by contracts. An attorney can draft and negotiate various contracts a business owner needs.

Contracts must be written with clarity, outline expected conduct from each party, and lay out terms of the contract so that each party is certain of what is required. Often, contracts may not lay out the specific issues a business will face. An attorney can evaluate the unique needs and challenges of the business to ensure that the contract terms adequately meet those needs.

Employment: Business owners need to be cognizant of laws protecting the fair treatment of their employees. There are laws dictating fair pay for overtime work, equal treatment, occupational safety, and payment of employment-related taxes. Employees need to be properly classified; an owner may not misclassify an employee as an independent contractor. An employer should also consult with an attorney when terminating an employee to ensure that they have appropriate policy statements and employment contracts that cover issues related to protecting business confidentiality, competition, and ownership rights.

Owners may also need to hire foreign employees with special expertise. An attorney experienced in business immigration and employer sponsorship of foreign workers can provide counsel regarding the work visas required and help with filing applications on behalf of the owners.

Securing Intellectual Property Rights: A company has intellectual property rights that can be trademarked. A business may be developing a product that may be entitled to a patent. Often, a business may be developing a product that may already be patented by a competitor. Knowing that another company already has rights to the product or technology before investing time and money in development can save costs. A business can instead try to license the right to manufacture or develop the product.

There are also copyright laws in all expressions, literature, and other material that a business produces. There may be trade secrets in recipes or other methods. An attorney can advise the owners by helping them identify all the sources of intellectual property the business has to leverage and protect them. Also, an attorney can help a business identify whether it is violating another company’s intellectual property rights so that the owners can limit or eliminate exposure.

Litigation: When faced with a lawsuit, it is important to consult an attorney immediately. When served with a complaint, there are limited time periods in which to respond. Failure to respond on time can severely affect one’s rights. If owners already have an attorney that has been handling their daily business operations or working with them, that attorney will be better prepared to handle the litigation.

Cultivate Relationships with the Legal Community

Small business owners should not underestimate the serviceability of loyal and dependable counsel to enhance their business. Your legal counsel should understand your business, work to enhance its operations, and guide you to avoid pitfalls as your business grows.  Along with accountants, insurance providers, and tax consultants, businesses should retain and cultivate relationships with legal professionals.  An attorney that works with the business from the start has a greater understanding and institutional knowledge that can be invaluable when it comes to negotiating on its behalf, as well as identifying risks and opportunities.

The small business attorneys at MacMain Leinhauser provide well-rounded representation. Our experienced attorneys understand the special needs of small business owners and will take the time to listen and offer practical advice in a cost-effective manner. For an initial consultation, contact us online or call us at 484-318-7106. Located in West Chester, Pennsylvania, we provide legal services throughout Philadelphia, Chester County, and New Jersey.