Appeals from the Order of the Bureau of Employment Security in the case of In Re: Christian School Association of Greater Harrisburg, Account No. 22-19991; In Re: Christian School of Grace Baptist Church, Account No. 21-10783; In Re: Northumberland Christian School, Account No. 49-9289; Frankford Friends School, Account No. 71-94840; and In Re: Germantown Friends School, Account No. 71-94847.
Marcus A. McKnight, III, Irwin, Irwin & Irwin, for petitioners, The Christian School Association of Greater Harrisburg, The Christian School of Grace Baptist Church, and Northumberland Christian School.
Henry S. Hilles, Jr., with him Robert H. Young, Jr., Drinker, Biddle & Reath, for petitioners, Frankford Friends School and Germantown Friends School.
Mary Ellen Krober, Deputy Attorney General, with her Robert E. Chernicoff, Assistant Attorney General, Allen C. Warshaw, Deputy Attorney General, and Edward G. Biester, Jr., Attorney General, for respondent.
President Judge Crumlish and Judges Wilkinson, Jr., Mencer, Rogers, Blatt, Craig and MacPhail. Judge Williams, Jr. did not participate. Opinion by Judge Blatt. Dissenting Opinion by Judge Wilkinson, Jr.
[ 55 Pa. Commw. Page 558]
These consolidated appeals are brought by five private religious schools from separate decisions of the Pennsylvania Department of Labor and Industry (Department) which determined that each school was subject to the provisions of the Unemployment Compensation Law (Pennsylvania Law)*fn1 and that each school should therefore be assessed unemployment contributions pursuant to Section 304 of the Pennsylvania Law, 43 P.S. § 784. The schools contend that they fall within the language of an exemption in the Pennsylvania Law for certain religious organizations.
The five schools in question are: the Frankford Friends School which has an enrollment of 140 children in the grades of kindergarten through sixth grade and which is operated on grounds owned by the Frankford Meeting of Friends; the Germantown Friends School which has an enrollment of 850 children in grades kindergarten through twelfth grade and which is operated on grounds owned by the Germantown Monthly Meeting of Friends; the Northumberland School which has an enrollment of 60 children in grades kindergarten through the twelfth grade and which is operated on grounds owned by the First Regular Baptist Church of Northumberland;
[ 55 Pa. Commw. Page 559]
the Christian School of Grace Baptist Church which has an enrollment of 117 children in grades kindergarten through sixth grade and which is operated on grounds owned by the Grace Baptist Church of Carlisle; and a school operated by the Christian School Association of Harrisburg which has an enrollment of 260 children in grades kindergarten through ninth grade and which is independent of and unaffiliated with any specific church.
A brief review of the relevant statutory history is helpful to an understanding of this controversy. Prior to 1977, the Pennsylvania Law and the Federal Unemployment Tax Act, 26 U.S.C. § 3301 et seq., contained a blanket exemption for all primary and secondary schools, both public and private. In 1976, however, Congress amended the Federal Unemployment Tax Act and eliminated the exemption from the federal law. In 1977, Pennsylvania also eliminated*fn2 its blanket exemption for primary and secondary schools. Act of July 6, 1977, P.L. 41. Like the federal law, however, the Pennsylvania Law retained the following relevant exemption for certain organizations:
Service performed in the employ of (i) a church or convention or association of churches or (ii) an organization which is operated primarily for religious purposes and which is operated, supervised, controlled or principally supported by a church or convention or association of churches. . . . (Emphasis added.)
[ 55 Pa. Commw. Page 560]
Section 4(1)(4)(8)(a) of the Pennsylvania Law, 43 P.S. § 753(1)(4)(8)(a); See 26 U.S.C. § 3309(b)(1).
In 1977 and 1978, the Pennsylvania Office of Employment Security notified the five schools who are the petitioners here that, because of the aforementioned statutory changes, they were covered by the Pennsylvania Law. The schools contested their tax assessments at reassessment hearings, arguing that they fell under the exemption for religious organizations, but ...