Fair Labor Standards Act and Religion

Religious institutions usually are subject to laws of general applicability. A particularly contentious situation involves the interplay between one such generally applicable law, the federal Fair Labor Standards Act, providing minimum wage and overtime premium pay to employees, and religiously affiliated institutions operating as employers of largely secular enterprises. The government and/or the employees contend that the employees are entitled to the FLSA rights and protections. Meanwhile, the religiously affiliated employer contends that the workers are volunteers, or, because the enterprise is related to the social justice ministry of the religion, its employment practices are exempt from the FLSA by First Amendment separation of church and state and free exercise principles.

The landmark United States Supreme Court decision governing these disputes is Tony and Susan Alamo Found. v. Secretary of Labor.

In Tony and Susan Alamo Found, the Supreme Court unanimously affirmed the decision of the Eighth Circuit that the Fair Labor Standards Act, the federal minimum wage law, protected persons used in the commercial enterprises of religious foundations. This particular application of federal wage law did not violate the free exercise rights of the employees and did not constitute excessive entanglements of the government with the religious foundation. Because the Foundation had thoroughly involved itself in operating business commercial enterprises, it had effectively deprived itself of the mantle of religious exemption and immunity from compliance as an employer with the federal minimum wage law.

The Alamo Foundation was a nonprofit religious organization. Its proclaimed mission was Christian evangelism and active corporal works of mercy to disadvantaged persons. The Foundation derived its income from operating a variety of commercial businesses, including service stations, retail clothing and grocery outlets, hog farms, roofing and electrical construction companies, a record-keeping company, a motel, and companies engaged in the production and distribution of candy. These businesses were staffed largely by the Foundation’s unpaid associates. They received clothing, room, and board but no cash wages in return for their services.

Other than its peculiar nonwage practices, for all practical purposes the Foundation was substantially equivalent, in its day-to-day operations, with other secular employers. The fact that the workers of the religious foundation considered themselves charitable volunteers serving their religion, and not employees within the meaning of the FLSA, was not determinative.

The Court deemphasized the free exercise elements of the case and, instead, highlighted the federal wage law issues because of the pervasive commercial nature of the Foundation’s various business enterprises.

The free exercise clause of the First Amendment does not require an exemption from a governmental program unless, at a minimum, inclusion in the program actually burdens the freedom to exercise religious rights. Application of the FLSA to the foundation workers who were engaged in commercial ventures did not violate the workers’ free exercise rights under the First Amendment, because they remained free to donate their FLSA-mandated wages back to the Alamo Foundation.

Religious organizations do not have carte blanche to exploit persons employed in their commercial ventures. Free exercise claims by those persons, disavowing their labor law and employment rights, are properly unavailing. The Court implicitly recognized the potential coercive influence of religious institutions on their employees, pressuring the workers to assert positions contrary to their legal rights.

Since the Court’s Alamo decision in 1985, several federal circuit courts of appeals have issued decisions in full accord with the Alamo precedent.

In Reich v. Shiloh True Light Church of Christ, the court determined that children younger than the age of sixteen employed in the commercial enterprises of a religious institution as part of their religious belief that they should receive vocational training are covered employees under the FLSA. Church youth participated in the Shiloh Vocational Training Program, through which they performed various construction projects. In turn, customers paid the Church for the services performed. Children younger than the age of sixteen did not receive wages for their work. Instead, they received lump sum payments that the Church characterized as gifts. In these situations where free labor is for the supposed benefit of the worker, the general test applied by the courts is whether the employer or the employee is the primary beneficiary of the free labor. Because the Church was the primary beneficiary of the labor, the children were in fact employees and thus entitled to the protections of the FLSA.

Applicability of the FLSA often arises in religiously affiliated schools. Dole v. Shenandoah Baptist Church involved application of the FLSA to lay faculty at the Roanoke Valley Christian Schools operated by the Shenandoah Baptist Church. The Church asserted that application of the FLSA would violate both the free exercise and Establishment Clauses of the First Amendment. The court disagreed, holding that the FLSA applies to church run schools that are enterprises within the meaning of the FLSA. Any minimal free exercise burden was justified by the compelling government interest in enforcing the minimum wage and equal pay provisions of the FLSA. Likewise, in DeArment v. Harvey, a church-operated a private religious school was subject to the FLSA. The school used a unique learning technique composed of a self-study program for the students. A supervisor and class monitor assisted the students in their studies. The students themselves were responsible for independent learning, whereas the supervisors graded papers, answered students’ questions, conducted prayer services, and counseled students. Both the supervisor and the class monitors were required to be born again Christians, and these employees considered their work an integral component of their personal ministry. However, despite the contention that their employment was part of their religious ideology, the Court applied Shenandoah, holding that the FLSA applied to both the class monitors and supervisors. The ministerial exemption of the FLSA is narrowly limited in its application. Clearly, this exception includes ordained clergy, as well as employees essential to carry out particular religious rituals.

In light of the narrow applicability of the ministerial exception, religious organizations engaged in commercial enterprises will usually be deemed employers of employees subject to the FLSA.

DAVID L. GREGORY

References and Further Reading

• Gregory, David L., The First Amendment Religion Clauses and Labor and Employment Law in the Supreme Court, 1984 Term, New York Law School Law Review 31 (1986): 1.
• Miller, Scott D., Revitalizing the FLSA, Hofstra Labor and Employment Law Journal 19 (2001): 1.
• Rowan, Regan C., Solving the Bluish Collar Problem: An Analysis of the DOL’s Modernization of the Exemptions to the Fair Labor Standards Act, U. Pennsylvania Journal of Labor and Employment Law 7 (2004): 119.

Cases and Statutes Cited

• DeArment v. Harvey, 932 F.2d 721 (8th Cir. 1991)
• Dole v. Shenandoah Baptist Church, 899 F.2d 1389 (4th Cir.) cert denied, 498 U.S. 846 (1990)
• Fair Labor Standards Act, 29 USC 201 et. seq.
• The First Amendment of the United States Constitution
• Reich v. Shiloh True Light Church of Christ, 85 F.2d 6161 (4th Cir. 1996)
• Tony and Susan Alamo Foundation v. Secretary of Labor, 105 S. Ct. 1953 (1985)

See also Exemptions for Religion Contained in Regulatory Statutes; Tony and Susan Alamo Foundation v. Secretary of Labor, 471 U.S. 290 (1985)