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Imani Christian Academy v. Unemployment Compensation Board

IN THE COMMONWEALTH COURT OF PENNSYLVANIA


March 21, 2012

IMANI CHRISTIAN ACADEMY, PETITIONER
v.
UNEMPLOYMENT COMPENSATION BOARD : OF REVIEW,
RESPONDENT :

The opinion of the court was delivered by: P. Kevin Brobson, Judge

Argued: November 15, 2011

BEFORE: HONORABLE DAN PELLEGRINI, Judge*fn1 HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge

OPINION BY JUDGE BROBSON

Petitioner Imani Christian Academy (Employer) petitions for review of an order of the Unemployment Compensation Board of Review (Board), which affirmed a Referee's determination and found Claimant eligible for unemployment compensation benefits. For the reasons that follow, we affirm.

The underlying dispute involves former employee, Orienta Nevels (Claimant), and the termination of her employment as assistant to Employer's head master on June 15, 2010. Claimant's salary was $38,500.00. Upon Claimant's termination, she applied for unemployment compensation benefits with the Duquesne UC Service Center (Service Center). The Service Center determined that Claimant was ineligible for benefits, because she did not have sufficient wages in her base year. In calculating her wages, the Service Center excluded wages from her employment with Employer based on the Service Center's conclusion that Claimant's employment did not constitute covered employment under Section 4(l)(4)(8)(a) of the Unemployment Compensation Law (Law).*fn2 The Service Center, thus, only took into account Claimant's wages from a previous job with Northside Urban Pathways, excluding Claimant's wages from Employer. Claimant's highest wages from Northside Urban Pathways, which occurred in the second quarter of 2009, totaled $5,124.00 when rounded to the nearest dollar. Based upon the highest quarter of wages Claimant earned within the total base year, the Service Center determined that Claimant's wages were insufficient to qualify for benefits. Claimant appealed that determination.

At the hearing before a Referee, Employer presented the testimony of Ray Sisak, Employer's financial manager. Mr. Sisak stated that Employer is a Christian school that "operates for educational purposes with strong religious influence" from Petra International Ministries (Petra), a church. (Reproduced Record (R.R.) at Item No. 3, p. 8.) Employer is a nonprofit organization separate and apart from Petra. (Id. at p. 7.) Further, Mr. Sisak testified that many Petra elders serve on Employer's board of directors and many of Employer's employees are both members of the church and elders of the church. (Id. at p. 8.) While the school and Petra, at one time, shared a building in which there was a rental agreement, Employer currently operates in a separate space. Moreover, Employer pays its own bills and receives zero funding from Petra. (Id.)

Following the hearing, the Referee concluded that Claimant had sufficient wages and was eligible for unemployment compensation benefits based on the fact that Employer is a separate entity operating independently from Petra and, therefore, did not fall under the exemption provided by Section 4(l)(4)(8)(a) of the Law. Employer appealed to the Board, which affirmed the Referee's determination and granted Claimant unemployment compensation benefits. On appeal, the Board adopted the Referee's findings of fact, which included, in part, the following findings relevant to Employer's status under Section 4(l)(4)(8)(a) of the Law:

1. For the purposes of this appeal, the claimant was employed with Imani Christian Academy for approximately one year as a full-time Assistant to the Head Master earning $38,500.00 per a [sic] year. The claimant's last day of work was June 15, 2010.

2. Imani Christian Academy is a non-profit organization operated primarily for educational purposes with a strong religious influence.

3. Imani Christian Academy was initially founded by

Petra International Ministries.

4. Imani Christian Academy is legally separate from

Petra International Ministries.

5. Imani Christian Academy currently receives no funding from Petra International Ministries.

6. Prior to January 6, 2010, Imani Christian Academy rented a facility from Petra International Ministries.

7. Effective January 6, 2010, the Imani Christian

Academy purchased its own school facility.

8. Prior to the claimant's employment with Imani

Christian Academy, the claimant was employed with Northside Urban Pathways.

(R.R. at Item No. 4, p. 1-2.)

The Board also adopted the Referee's conclusions of law. In so doing, the Board determined that Employer was a nonprofit organization legally separate from its founder, Petra, and operated primarily for educational purposes. (Id. at p. 2.) The Board also found that Employer received no funding from Petra, and, even though Employer rented a facility from Petra when Claimant began employment, Employer subsequently purchased its own facility in January 2010. (Id.) The Board concluded that, based on these circumstances, Employer does not constitute a church or convention or association of churches or an organization that is operated primarily for religious purposes and that is operated, supervised, controlled or primarily supported by a church, or convention or association of churches. (Id.) Therefore, services performed by Claimant constituted covered employment, and wages earned through Employer were to be considered in determining financial eligibility. (Id.)

On appeal,*fn3 Employer argues that the Board erred as a matter of law in determining that Claimant was eligible to receive benefits because Claimant's employment should be exempt under Section 4(l)(4)(8)(a) of the Law.*fn4 Employer also argues that its right to free exercise of religion under the First Amendment to the United States Constitution will be infringed upon if Claimant is found eligible for unemployment compensation benefits.

Under the Section (4)(l)(1) of the Law, 43 P.S. § 753(4)(l)(1), the term "employment" is defined as "all personal service performed for remuneration by an individual under any contract of hire, express or implied, written or oral, including service in interstate commerce, and service as an officer of a corporation." As noted above, Section (4)(l)(4)(8)(a) excludes from the definition of "employment" "[s]ervice 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." At the outset, we must note, however, that courts do not employ the second prong of Section (4)(l)(4)(8)(a)(ii), requiring the organization to be "operated, supervised, controlled or principally supported by a church or convention or association of churches," to disqualify from the exemption organizations operated primarily for a religious purpose that would otherwise be entitled to the exemption. The Christian Association of Greater Harrisburg v. Department of Labor and Industry, 423 A.2d 1340 (Pa. Cmwlth. 1980). To do so would impermissibly differentiate between organizations operated primarily for religious purpose that are "operated, supervised, controlled or principally supported by a church or convention or association of churches" and those that are not.*fn5

With that framework in mind, we first address Employer's argument that the religious exemption found in Section (4)(l)(4)(8)(a) of the Law should apply to exempt Claimant's employment from covered employment under the Law. To begin, we note that Section 4(l)(4)(8)(a)(i) of the Law is clearly inapplicable, as the parties do not argue that Employer itself is a "church or convention of churches or organizations." As such, we must then consider whether Employer is "an organization which is operated primarily for religious purposes" under the operative provisions of Section 4(l)(4)(8)(a)(ii) of the Law. In Pittsburgh Leadership Foundation v. Unemployment Compensation Board of Review, 654 A.2d 224 (Pa. Cmwlth.), appeal denied, 541 Pa. 646, 663 A.2d 697 (1995), this Court had an opportunity to review a case similar to the one at hand. There, the Court determined that a claimant, terminated from a Christian counseling group, was eligible for benefits under the Law because the provisions of Section 4(l)(4)(8)(a) of the Law were inapplicable. Pittsburgh Leadership Foundation, 654 A.2d at 226. The claimant was an administrative assistant for a "Christian-based organization" that was "not a church" and was a nonprofit organization having a board of directors that included two clergymen. Id. at 225. Further, the organization received funds from a charitable trust and contributions from individuals and private endowments. Id. at 225-26. Recognizing that "it is not this Court's function to usurp the Board's role as fact finder when the Board's determination is supported by substantial evidence," the Court concluded that, based on the Board's findings, the exemption of Section 4(l)(4)(8)(a) of the Law did not apply to the claimant because the organization is not operated primarily for religious purposes. Id. at 226.

Employer's reliance on The Christian Association of Greater Harrisburg in support of its argument that Claimant's employment is exempt under the Law is misplaced. In The Christian Association of Greater Harrisburg, this Court essentially concluded that employment with a nonprofit school that is not supported by a "church or association or convention of churches" may be exempt if it is established that the school operates primarily for a religious purpose. The Christian Association of Greater Harrisburg, 423 A.2d at 1345. That case involved a much more developed record on the interwoven nature of the secular curriculum in the school and the organization's religious underpinnings. Here, the record before the Referee includes little evidence of the extent to which the religious underpinnings pervade the curriculum. Instead, it appears that the Board's factual finding number 2--that Employer is "operated primarily for educational purposes with a strong religious influence"--is almost a verbatim quote from Employer's witness. Unfortunately, the employer's witness provided nothing further of substance. Accordingly, this case comes down to the Board's fact finding, and Pittsburgh Leadership Foundation is controlling. We give primacy to the Board's finding that Employer "operated primarily for educational purposes." Therefore, we conclude that the Board did not err in determining that Claimant's employment is not exempt from coverage under Section 4(l)(4)(8)(a)(ii) of the Law because Employer does not operate primarily for religious purposes based on the Board's findings.*fn6

Accordingly, we affirm.

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Imani Christian Academy, : Petitioner : : v. : : Unemployment Compensation Board : of Review, : Respondent :

No. 52 C.D. 2011

ORDER

AND NOW, this 21st day of March, 2012, the Order of the Unemployment Compensation Board of Review is hereby AFFIRMED.

P. KEVIN BROBSON, Judge

IN THE COMMONWEALTH COURT OF PENNSYLVANIA

Imani Christian Academy, : Petitioner : : v. : Unemployment Compensation : Board of Review, : Respondent :

No. 52 C.D. 2011 : Argued: November 15, 2011

BEFORE: HONORABLE DAN PELLEGRINI, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE PATRICIA A. McCULLOUGH, Judge

DISSENTING OPINION

BY JUDGE McCULLOUGH FILED: March 21, 2012

Respectfully, I dissent.

Section (4)(l)(4)(8)(a)(ii) of the Unemployment Compensation Law

(Law)*fn1 excludes from "employment" the "[s]ervice performed in the employ of ... 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." Thus, the foregoing exemption may apply when a religious school: offers actual religious instruction and prayer; emphasizes the religious principles in the presentation of secular subjects; and is controlled by school committees elected by monthly meetings of the affiliated congregation, by a principal appointed by a board of deacons of the affiliated church, or by a principal appointed by the board of elders of the affiliated church. Christian School Association of Greater Harrisburg v. Department of Labor and Industry, 423 A.2d 1340, 1345-46 (Pa. Cmwlth. 1980).

In this case, the agency representative, Lindsay Gay, testified in relevant part that he spoke with Imani Christian Academy's assistant school administrator while conducting a wage investigation. (N.T. 10/18/10*fn2 at 5.) Gay was told that the school is "basically supported by" the Petra International Ministries. (Id.) Gay stated that the exemption applies under the Law when a business is owned and operated by a church and primarily supported by that church for religious purposes and that the exemption applied to Claimant's employment with the school. (Id.)

Imani Christian Academy's financial manager, Ray Sisak, testified in relevant part that Petra International Ministries founded the school, has several members on the school's board of directors, and that many of the school's employees are both members of Petra and elders of the church. (N.T. 10/18/10 at 8.) Sisak acknowledged that the school and the church were separate non-profit entities and that the school receives no funding from the church. (Id.) Although the school rented space from the church, Sisak indicated that it had purchased its own facility. (Id.) However, Sisak also stated that the school "[o]perates for education[al] purposes with a strong religious influence." (Id.)

In disposing of the instant appeal, the Board's findings acknowledged Sisak's testimony regarding the school's educational purpose and strong religious influence. (Referee Decision at 1.) The Board's findings also addressed Sisak's testimony regarding the organizational and financial separation between Imani Christian Academy and Petra International Ministries. (Id. at 1, 2.) However, the fact that the school and the church are separate entities, or that the church does not financially support the school, does not preclude the application of the exemption under section (4)(l)(4)(8)(a)(ii) of the Law. See, e.g., Nampa Christian Schools Foundation, Inc. v. Department of Employment, 110 Idaho 918, 923-24, 719 P.2d 1178, 1183-1184 (1986) (holding that a school was exempt under the relevant statute where an association of several churches were united by their relationship to the school, the school had a religious mission and purpose, and the churches provided moral support even though a small fraction of the school's revenue came from the churches and the school was not operated, supervised or controlled by the churches).*fn3

PAM - 2

Moreover, the Board's findings utterly failed to address Sisak's testimony regarding the control of the church over school operations due to the presence of church elders and members on the school's board of directors and as school employees, and they do not address the agency representative's testimony regarding the exemption at all. As a result, the matter should be remanded to the Board to make adequate findings of fact regarding the relevant factors to be considered in applying the exemption of section (4)(l)(4)(8)(a)(ii) of the Law.

Osborne Associates, Inc. v. Unemployment Compensation Board of Review, 3 A.3d 722, 733 (Pa. Cmwlth. 2010).

Accordingly, I would vacate the Board's order and remand for further findings of fact.

PATRICIA A. McCULLOUGH, Judge

PAM - 3


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