Fired! Do Church Employees Get Unemployment Benefits?

By Gallagher, Tom | National Catholic Reporter, June 12, 2009 | Go to article overview
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Fired! Do Church Employees Get Unemployment Benefits?


Gallagher, Tom, National Catholic Reporter


Unemployment is difficult. For many, it's downright tragic. But at least when the hammer falls there's the guarantee of a half year's worth of benefits through the government's unemployment compensation system.

Unless you work for the church. Churches and religious organizations are exempt from paying unemployment taxes, which fund the system.

During another brutal economic environment--the Great Depression--Congress enacted the Federal Unemployment Tax Act in 1935. The act called for a cooperative federal-state program of benefits to unemployed workers. It is financed by a federal excise tax on wages paid by employers in "covered employment," explains attorney and certified public accountant Richard Hammar, in an article titled "The Church as Employer: Unemployment Taxes" (Church Law & Tax Report).

The federal act was amended in 1970 "to exempt service performed in the employ of a church ... or an organization which is operated primarily for religious purposes and which is operated, supervised, controlled or principally supported by a church," says Hammar.

All 50 states have employment laws implementing the federal mandatory minimum standards of coverage. States are free to expand their coverage beyond the federal minimum. Nearly every state unemployment tax law exempts churches by excluding "services performed in the employ of a church" from the definition of employment, according to Hammar.

Unless a church voluntarily establishes its own policy to pay unemployment taxes, former employees can be terminated and receive no unemployment benefits.

With the shuttering of Catholic parishes and schools and dioceses downsizing in many parts of the country, church employees need to know whether or not they have unemployment benefits.

Mary Jo Moran, executive director of the Cincinnati-based National Association of Church Personnel Administrators, undertook in March a survey of diocesan human resource professionals on the question of unemployment benefits. Forty-five responded as follows:

* 13 dioceses participate in state unemployment programs;

* 12 dioceses participate in state programs on a reimbursement basis;

* 20 do not participate in any state unemployment program.

"A few dioceses offer severance packages to former employees in lieu of unemployment benefits," said Moran. She estimates that only about 100 of the 195 dioceses in the U.S. have a full-time human resource professional.

"The church's own standard is for every 100 employees, there should be one full-time human resource professional," says Moran.

"Since churches are exempt, the issue does not come up very often. It's up to the bishop's policy," said Les Maiman, a former chancellor and finance officer and now executive director of the Texas-based Diocesan Fiscal Management Conference.

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