Employees laid off or terminated from a position with a religious congregation may be in for an additional unpleasant surprise – they may be legally precluded from collecting unemployment benefits. While the purpose of unemployment insurance is to provide a safety net for employees who have lost their jobs and have not found other work, these benefits do not extend to all religious employees in most states. Indeed, because religious congregations are typically exempt from paying into state unemployment insurance programs, their employees may not collect unemployment benefits following a separation in service. This fact is frequently unnoticed by employees and congregations alike when negotiating employment contracts or separation agreements.
The Federal Unemployment Tax Act exempts religious congregations from participating in unemployment insurance programs, although individual states may choose to expand coverage. A review of state unemployment laws reveals differences in eligibility for religious employees. Section 4(l)(8) of the Pennsylvania Unemployment Compensation Law and Section 60.2-213 of the Virginia Code are broad in scope, generally excluding “service performed in the employ of” religious congregations. Thus, clergy, teachers, and even administrative assistants of churches, synagogues, and other places of worship may be unable to collect unemployment benefits. Section 563(2) of the New York State Unemployment Insurance Law, however, is more narrowly tailored. New York specifically excludes the following employees of religious organizations from collecting unemployment benefits: “a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry,” “a lay member elected or appointed to an office within the discipline of a bona fide church and engaged in religious functions,” and “a person employed at a place of religious worship as a caretaker or for the performance of duties of a religious nature.” Thus, while ministers, rabbis, and other clergy are ineligible for unemployment benefits in New York, administrative assistants and other “non-religious employees” may be able to collect such benefits. Although states generally permit religious congregations to pay into the state unemployment insurance fund, this is not a widespread practice among congregations.
If you work for a religious congregation, find out whether you are entitled to unemployment benefits under state law or if your congregation has paid into the state unemployment insurance fund. If not, consider this fact when negotiating your next employment contract or separation agreement. It could make all the difference if you lose your job and find yourself among the ranks of the unemployed.