In a Landmark Decision, the Supreme Court
Exempts "Churches" From Most Employment Discrimination Statutes Affecting
by Gregory W. McClune
The First Amendment of the United States Constitution (U.S.
Const. amend. I) provides, in part, that "Congress shall make no law
respecting an establishment of religion, or prohibiting the free exercise
thereof." This short sentence containing what is known as the Establishment
Clause and the Free Exercise Clause, has been the source of a large body of law
and scholarly commentary.
In Hosanna-Tabor Evang. Luth. Church v. EEOC, 2012
U.S. LEXIS 578 (No. 10-553) (2012), [an enhanced version of this opinion is available to lexis.com subscribers
/ unenhanced version available from lexisONE Free Case Law],
which has been described as the most significant religious liberty decision of
the last two decades, the U.S. Supreme Court last week handed down a decision
surprising in both the breadth of its sweep and the unanimity of its conclusions.
The Court's opinion, written by Chief Justice Roberts, concluded that "both
Religion Clauses bar the government from interfering with the decision of a
religious group to fire one of its ministers." Although this so-called
"ministerial exception" had been endorsed by most of the federal courts of
appeal, the Supreme Court was addressing the issue for the first time.
Cheryl Perich had been a teacher at the school in
Redford, Michigan, that was operated by a Lutheran synod. She claimed that she had
been fired from her position as a teacher at the school because she had
threatened an employment discrimination claim based on a disability, namely,
with Disabilities Act of 1990 (ADA), 104 Stat. 327, 42 U.S.C. §12101 et seq.).
Ms. Perich argued that she was employed as a teacher and taught mostly secular
subjects, although she occasionally also taught religious classes and attended
chapel with her class.
The Court noted courts of appeal that have addressed the
issue have uniformly recognized the existence of the "ministerial exception"
have applied the First Amendment to preclude application of employment
discrimination legislation to claims concerning the employment relationship
between a religious institution and its ministers. The Court commenced its
opinion stating that it agreed there was such an exception. By imposing an
"unwanted minister on a church, the state was interfering with the group's
right to shape its own faith and mission through its appointments." Moreover,
the Court concluded that granting the state the power to intervene in such decisions
would violate the Establishment Clause which prohibits government involvement
in such ecclesiastical decisions.
Endorsement of a "ministerial exception" by the Supreme
Court seemed very probable. The question in the minds of court watchers was how
broadly would the Court would apply this exception? The answer is quite
broadly. Rejecting arguments by the EEOC (Brief for the Fed. Resp't in Opp'n, Hosanna-Tabor Evang.
Luth. Church v. EEOC) and the Obama administration, the Court concluded
that it will look at a number of broad factors in determining whether an
employee is a "minister," and will not be guided by a "stop watch." Justice
Alito, in a concurring opinion, wrote that the "exception" should apply to any
"employee" who leads a religious organization, conducts worship services or
important religious ceremonies or rituals, or "serves as a messenger or teacher
of its faith."
Although characterized as the "ministerial exception" in
the opinions of the federal courts, and now the Supreme Court, the exception
clearly extends to a much broader category of employees than what would
commonly be regarded as "ministers" of religion. In the words of the Chief
Justice, Ms. Perich's job duties, although predominantly secular, nonetheless
"reflected a role in conveying the church's message and carrying out its
mission." If an employee falls into this broad category, state, federal, and
other employment discrimination statutes and regulations are probably
inapplicable to employment decisions affecting such employees. Moreover, once
an employee has been classified as a "minister," the amount of time devoted to
pure religious activities seems to be of little concern.
Given the broad scope of this decision, and its
unanimity, we can expect religious organizations will now be claiming exemption
from employment discrimination laws in more instances than has happened in the
past and with greater success.
How Employers Faced With Potential False
Claims Act Liability May Avoid Liability for Whistleblower Retaliation
by Michael B. McCollum
Under the False Claims Act, a private whistleblower can bring suit on
behalf of the federal government to recover funds fraudulently obtained from
the government. See 31 U.S.C. § 3730. It is not uncommon for the
whistleblower, who can keep up to 30 percent of the government's total
recovery, to be an employee of the defendant. Often, depending on how far along
an investigation or lawsuit is, because lawsuits brought under the False Claims
Act are initially filed under seal, the company may not even know the identity
of the whistleblower for some time. Recently, a wide spectrum of companies -
from manufacturing and construction to health care and banking have found
themselves grappling with these issues, as they are confronted for the first
time with False Claims Act investigations or lawsuits, in many instances
instigated by their own employees.
Because the False Claims Act also prohibits retaliation
against whistleblowers, a company faced with this situation needs to understand
how to appropriately respond. The stakes can be even higher if the company not
only faces treble damages and additional penalties for the False Claims Act
liability, but also liability for retaliation against the whistleblower, which
can include reinstatement, twice the amount of back pay plus interest,
compensation for special damages, and the whistleblower's attorneys' fees. 31 U.S.C.
§ 3730(h)(2). Such retaliation claims carry a three-year statute of
limitations. 31 U.S.C. § 3730(h)(3).
A recent district court case on a False Claims Act
whistleblower retaliation claim sheds valuable light on some of the key issues
that need to be considered. Clinkscales v. Walgreen Co.).
First, it is important to note that the Act is broadly
drafted as to who it protects. It protects from retaliation not just actual
employees, but also contractors or agents of the company. 31 U.S.C. §
3730(h)(1). It also protects such people from retaliation not just for their
own conduct, but for conduct of others "associated" with them. This could
conceivably include, for example, conduct by close friends or co-workers or
Second, the conduct must be protected under the False
Claims Act. At the outset, the Act specifies that the conduct must be "lawful
conduct." Conceivably, therefore, one can imagine situations where the employee
might claim that his or her conduct was protected conduct when in fact it was independently
unlawful conduct. Stealing confidential information or trade secrets might be
one such example. See U.S. ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc.).
The Act also specifies that for conduct to be protected,
it must be either "in furtherance of an action" brought under the Act, or more
broadly "other efforts to stop 1 or more violations" of the Act. As one could
imagine, the question of what might constitute an effort to stop a violation of
the Act can sometimes be murky; but in Clinkscales, the court
articulated some important rules. The employee must actually believe in good
faith, or it must be that a reasonable employee in the same or similar
circumstances might believe, that the employer is committing fraud against the
government. The court thus distinguished between conduct that "amounts to
merely asking how [the employee] could correctly perform a job function" (which
is not protected) versus "reporting or attempting to stop misconduct under the
[Act]" (which could be protected). Specifically, the court found no protected
conduct where the employee never stated he believed the conduct of the
defendant was illegal, did not express concerns about that conduct actually
creating the potential for fraudulent billing, and did not refuse to complete
the task about which he was inquiring. One could imagine that were an employee
to make such statements without any good faith belief or reason to make them,
no protected conduct would be found.
Third, the employer must have known that the employee had
engaged in the protected conduct. In Clinkscales, the court found that
there was no employer knowledge where the employee had merely asked the
employer how to correctly perform the job duty at issue. Rather, to adequately
give notice, the employee must have actually "voiced a concern about fraud on
the federal government or referenced a qui tam FCA action to the
Fourth, the employer must have then taken an adverse
employment action against the person because of the protected activity. In Clinkscales,
the court applied (and noted that several circuits, including the First, Third,
Sixth, and Eighth also have applied) the same burden-shifting analysis used
under Title VII discrimination claims.
sum, when confronted with the specter of possible False Claims Act liability, a
company needs to carefully take steps to try to minimize its potential exposure
to a related retaliation claim. Different courses of conduct are warranted
depending on where the company stands, such as if it is conducting its own
internal investigation without any government investigation or lawsuit having
been initiated, or responding to an investigation or under seal complaint, or
litigating in open court a complaint brought by a known whistleblower. The
company should first carefully analyze who within the company might have
information relating to the potential false claims issues, what precisely that
person has communicated regarding these issues, to whom they have communicating
this information within the company, and for what purpose those communications
were made. The answers to these questions will help shed light on whether any
employee has engaged in protected conduct and, if so, how much the company
might be deemed to know of this protected conduct. Of course, in making
decisions about the employment status of someone who has potentially engaged in
protected conduct, the company then should make sure that it does not make any
adverse employment decisions regarding that person because of that protected