U.S. Supreme Court Affirms Religious Freedom in Government Benefits and Employment Decisions

In three cases this term, the U.S. Supreme Court has affirmed the freedom of religious institutions to access government benefits and to make employment decisions.

This alert provides takeaways from these holdings, which might be helpful for religious educational institutions, and suggestions for how a religious education institution can ensure that its employment decisions are covered by the Court’s ministerial exception.

What you should know:

In three separate opinions—Espinoza v. Montana Department of Revenue, Our Lady of Guadalupe v. Morrissey, and Little Sisters of Poor Saints Peter and Paul Home v. Pennsylvania—the U.S. Supreme Court recently affirmed and extended freedoms of religious institutions available under the U.S. Constitution and federal law.  Broadly, these decisions can guide a religious educational institution’s practices and operations in three ways:

• First, a religious educational institution may not be denied any government benefit simply by virtue of its religious status.  Religious organizations should continue to apply for government programs to which they might otherwise be entitled, recognizing that some public funding may require certifications that could potentially conflict with religious beliefs. 
• Second, teachers at religious educational institutions are exempt from employment discrimination laws under the ministerial exemption.  Religious education institutions have freedom to make employment decisions not available to other employers. 
• Third, religious educational institutions, which have a sincerely held objection to contraception, need not provide contraceptive coverage to their employees or students.   

What you can do:

To increase the likelihood that the ministerial exemption will apply to employees of a religious organization, organizations can:

• Ensure job descriptions emphasize relevant religious functions of the position.  For example, this may include an employee’s responsibility to lead prayer, oversee religious gatherings, or merely participate in the organization’s purpose of conveying the faith to students/third parties and/or modeling a faith-based lifestyle.
• Communicate an expectation that even an employee’s traditionally “secular” duties are expected to be carried out with a religious overview. 
• Include affirmations of faith in applicable employee agreements. 
• Clarify the incorporation of religious beliefs and/or a religious worldview into policies, course materials, and class syllabi.

Case summaries:

• In Espinoza v. Montana Department of Revenue, the Court considered whether a Montana tax credit could be extended to individuals who donated to scholarships for private religious schools.  There, Montana had created and funded a tax credit available to anyone who donated to a scholarship program for individuals to attend a private school.  Concerned that availability of the credit for religious institutions would impermissibly support a religious institution, in violation of the Montana Constitution, the Montana Department of Revenue prohibited the application of the tax credit towards donations to religious schools—and the Montana Supreme Court invalidated the credit.  The Department of Revenue’s rule and the Montana Supreme Court holding, the Court held, violated the U.S. Constitution’s Free Exercise Clause, which protects “religious observers against unequal treatment” and against “laws that impose special disabilities.”  A religious organization or observer, otherwise eligible for a neutral government program, could not be disqualified “solely because of their religious character.”  Accordingly, the Court reinstated the tax credit and its application to religious schooling.
• In Our Lady of Guadalupe v. Morrissey, the Court clarified the scope of the “ministerial exemption” to employment discrimination law.  Under this exemption, the Court has recognized religious employers’ freedom to make employment decisions, and it has restricted the rights of certain employees to file employment discrimination suits.  In this case, the Court considered whether elementary school teachers at a religious primary school are covered within this exemption—despite a lack of a title as “minister,” despite a lack of significant formal religious education, and despite the fact that the school did not require these teachers to observe any particular faith.  The Court held that, in determining whether an employee falls under the exemption, “What matters, at bottom, is what an employee does.”  It noted that “[r]eligious education is vital to many faiths practiced in the United States” and rejected a “rigid formula” in applying the ministerial exemption.  Accordingly, it held that “[w]hen a school with a religious mission entrusts a teacher with responsibility of education and forming students in the faith, judicial intervention into disputes between the school and the teacher threatens the school’s independence in a way that the First Amendment does not allow.”  The ministerial exemption, it held, prohibits teachers at religious schools from filing suits for employment discrimination. 
• Finally, in Little Sisters of Poor Saints Peter and Paul Home v. Pennsylvania, the Court issued another opinion in longstanding litigation over the contraceptive mandate of the Affordable Care Act (“Act”), a regulation requiring employers to offer health insurance coverage for contraception.  In this case, the Court considered the validity of regulatory action that exempts employers who have religious and conscientious objections from this mandate.  The Court concluded that, under the Act, federal agencies—the Departments of Labor, Health and Human Services, and Treasury—had authority to issue exemptions to the contraceptive mandate and followed proper procedures in doing so.  It then dissolved a lower court’s nationwide injunction against the exemption.  The Court did not reach the issue, however, of whether the agencies had acted in an arbitrary and capricious manner.  Accordingly, while the exemption is now effective, and religious employers and educational institutions need not offer contraceptive coverage, there may be more litigation to determine the ultimate reach of the contraceptive mandate.

For questions regarding these holdings, please reach out to Jacob Goldberg, Dexter Pearce or Andrea Thompson.  Learn more about Stoel Rives’ education practice at industries/education.