Elizabeth Dole, Secretary, United States Department of Labor Equal Employment Opportunity Commission v. Shenandoah Baptist Church Carol C. Anderson Lola D. Clifton Loretta B. Dillon Dorothy M. Dixon Alma S. Greene Delilah F. Gross Margaret Harvey Mary Ann Herndon Jeffrey P. Kessler John T. Kessler Shirley I. Kessler Joyce T. Martin Eva T. Murdock Sherry R. Padgett Antoinette L. Parsons Barbara C. Shelor Donna Shelor Mary Beth Shelor Ann T. Shelton Ruth Wesselink Donna M. Womack, Elizabeth Dole, Secretary, United States Department of Labor Equal Employment Opportunity Commission v. Shenandoah Baptist Church Carol C. Anderson Lola D. Clifton Loretta B. Dillon Dorothy M. Dixon Alma S. Greene Delilah F. Gross Margaret Harvey Mary Ann Herndon Jeffrey P. Kessler John T. Kessler Shirley I. Kessler Joyce T. Martin Eva T. Murdock Sherry R. Padgett Antoinette L. Parsons Barbara C. Shelor Donna Shelor Mary Beth Shelor Ann T. Shelton Ruth Wesselink Donna M. Womack

Citation: 899 F.2d 1389Docket: 89-2341

Court: Court of Appeals for the Fourth Circuit; April 5, 1990; Federal Appellate Court

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The case involves an appeal by Shenandoah Baptist Church and twenty-one employees against the federal government, specifically the Secretary of the Department of Labor and the Equal Employment Opportunity Commission (EEOC), regarding the application of the Fair Labor Standards Act (FLSA) to Roanoke Valley Christian Schools operated by the church. Shenandoah contends the FLSA does not apply to them, arguing that enforcing it would infringe upon their First Amendment rights (free exercise and establishment clauses) and the Fifth Amendment's equal protection guarantee. They also claim that even if the FLSA applies, the district court improperly calculated damages for back pay awarded to teachers and nonprofessional support staff due to equal pay and minimum wage violations.

The government cross-appeals, arguing that the district court erred by not awarding prejudgment interest and by denying injunctive relief. The court upheld the district court's decisions. The church, founded in 1971, emphasizes Christian education as part of its mission and opened Roanoke Valley in 1973, offering a curriculum that integrates biblical teachings with traditional academic subjects. By 1977, the school had expanded to serve grades K-12 with an increasing number of teachers.

In the 1976 school year, Roanoke Valley teachers received base salaries around $6,000, prompting Shenandoah to implement a head-of-household salary supplement based on biblical teachings regarding the male role in the family. This supplement, which varied from $200 to $1,600, was exclusively granted to married male teachers from 1976 to 1986, while married female teachers were not eligible, nor were certain women in specific circumstances such as having a disabled spouse or being separated. By 1985, base salaries had risen to approximately $12,500, leading to the discontinuation of the supplement. Additionally, between 1976 and 1982, 91 support personnel were paid below the minimum wage, which included various non-teaching staff.

In 1978, the government initiated legal action against Shenandoah for violating the Fair Labor Standards Act (FLSA) by underpaying support staff and providing unequal pay to female teachers compared to male counterparts in similar positions. Shenandoah admitted to these violations but contended that it was not subject to the FLSA as a religious institution. A district court ruling in 1983 established that the FLSA applied to church-run schools, affirming that Shenandoah’s support staff was covered by the Act. The court also found that enforcing minimum wage regulations did not infringe upon the church's First Amendment rights. In 1988, a trial confirmed the FLSA violations, with an advisory jury determining that female teachers were paid less than male teachers for equal work, and the court upheld these findings, rejecting Shenandoah's constitutional arguments.

In Department of Labor v. Shenandoah Baptist Church, 707 F. Supp. 1450 (W.D. Va. 1989), the trial court mandated Shenandoah to pay $16,818.46 in back pay to support staff and $177,680 to teachers due to violations of minimum wage and equal pay claims. Prejudgment interest was not awarded, nor was an injunction against future violations or solicitation for the return of back pay. Both parties appealed; Shenandoah contended that Roanoke Valley was not subject to the Fair Labor Standards Act (FLSA), arguing that its application violated the First and Fifth Amendments and that the damage calculations were flawed. The government countered that the court erred by refusing prejudgment interest and injunctive relief.

The court addressed the applicability of the FLSA, determining that Roanoke Valley qualifies as an 'enterprise' under the Act. The FLSA, as amended in 1966, includes nonprofit schools in its definition of an enterprise, explicitly covering activities related to preschool, elementary, and secondary schools regardless of their profit status. Shenandoah's assertion that the amendment lacked congressional intent to apply to church-operated schools was refuted by legislative history, which showed that Congress did intend for the Act to cover such institutions.

Nuns working in a parochial elementary school are not classified as employees under the Fair Labor Standards Act (FLSA) and thus are not entitled to minimum wage, according to Mr. Collier's clarification. Legislative intent explicitly excludes members of religious orders from this definition. The consensus among lawmakers was that while church-operated schools qualify as enterprises, nuns are not considered employees. This position is reinforced by subsequent legislative actions, including a 1977 FLSA amendment exempting certain religious or non-profit educational centers, indicating that church-operated educational facilities were not excluded from the definition of enterprise.

The interpretation aligns with the Supreme Court’s precedent that the FLSA should be applied broadly to encompass various entities. Historical context and case law further support the conclusion that church-operated schools are treated as enterprises under the Act. Various court decisions have upheld this principle, although some cases present conflicting views on specific applications of the FLSA regarding church-operated institutions. Shenandoah's argument against coverage, citing its close ties with the church, including shared facilities and administrative structures, does not negate the established legal interpretation that church-affiliated school employees may still be classified under FLSA protections.

Shenandoah argues that the Roanoke Valley school is an inseparable part of the church, citing Corporation of Presiding Bishop v. Amos and Forest Hills Early Learning Center to support its claim that the government must accept this characterization. However, these cases pertain to the permissibility, not the requirement, of exemptions for religious organizations under the First Amendment. The current case differs as it examines Congress's intent regarding the application of the Fair Labor Standards Act (FLSA) to church-operated schools, concluding that Congress intended for the Act to apply to such institutions.

Shenandoah further contends that Roanoke Valley teachers should be classified as ministers, thus falling under the ministerial exemption from the FLSA. This exemption, derived from congressional debates and Labor Department guidelines, applies to individuals serving religious obligations in church-operated schools. Shenandoah claims that the teachers view their roles as a personal ministry, teaching from a religious perspective, leading prayers, and adhering to a statement of faith.

However, the court distinguishes this case from Rayburn v. General Conference of Seventh-Day Adventists, noting that the teachers do not perform sacerdotal functions, serve as church governors, or belong to a defined religious order. The assertion that there is no significant difference between the teachers and nuns in church-affiliated schools is unsupported. While the court acknowledges the teachers' dedication, it emphasizes that exemptions from the FLSA are narrowly construed and declines to extend the ministerial exemption broadly, citing the need for a clear test of employment based on economic reality.

Roanoke Valley teachers are classified as employees under the Fair Labor Standards Act (FLSA), which Congress intended to apply to church-operated schools. Shenandoah Baptist raises constitutional challenges, claiming that the FLSA burdens their First Amendment right to freely exercise their religion. The court must evaluate the extent of this burden, the state's justification for it, and balance these against the implications of exempting Shenandoah from the FLSA. Shenandoah argues that the FLSA interferes with their governance and ability to compensate employees based on their religious beliefs. However, evidence shows that the financial requirements of the FLSA do not fundamentally obstruct Shenandoah’s religious practices, as the church does not mandate unequal pay based on gender and has complied with FLSA standards since the late 1980s. The pastor confirmed compliance with other state regulations, indicating no objection to adhering to safety and tax laws. The court also notes that intervenors can choose to volunteer their services or forfeit back pay if they wish. Ultimately, the court finds that the state has compelling reasons for enforcing the FLSA provisions regarding minimum wage and equal pay against Roanoke Valley, outweighing the limited burden on Shenandoah's religious exercise.

The Seventh Circuit characterizes the Fair Labor Standards Act (FLSA) as a remedial measure aimed at ensuring a minimum wage sufficient to maintain a basic standard of living for U.S. workers. The Supreme Court has noted that the Equal Pay Act was enacted to combat systemic employment discrimination, particularly the outdated belief that men should earn more than women for the same work. The state's interest in providing equal employment opportunities is considered paramount, which supports the application of the FLSA to Roanoke Valley. Exempting the school would lead to the potential exclusion of all sectarian schools, undermining the congressional intent to enforce minimum wage and equal pay across both private and public educational institutions. 

Furthermore, the FLSA's application does not infringe on the First Amendment's free exercise rights of Shenandoah or its associates. Regarding claims that the FLSA violates the Establishment Clause, the analysis follows the Lemon test, which evaluates whether a statute has a secular purpose, does not advance or inhibit religion, and avoids excessive government entanglement with religion. Shenandoah concedes the FLSA's secular purpose but argues that it improperly prefers the Roman Catholic Church by including clergy in a ministerial exemption while excluding lay staff. However, this exemption is deemed neutral as it applies to clergy across various faiths, not favoring one religion over another, and is based on the classification of clergy rather than a preference for a specific denomination.

Lay teachers and support staff at Catholic schools, including those at Roanoke Valley, are covered by the Fair Labor Standards Act (FLSA). The Supreme Court has previously determined that provisions accommodating free exercise rights do not violate the establishment clause. Shenandoah claims that applying the FLSA to Roanoke Valley leads to excessive government entanglement with religion, arguing that required inspections and reviews intrude upon church affairs. However, the Court, in Alamo, found that the FLSA's recordkeeping requirements are not significantly more intrusive than other regulatory measures. Therefore, applying the FLSA does not violate the First Amendment's establishment clause.

Shenandoah also contends that the FLSA's application violates the equal protection guarantee under the Fifth Amendment, claiming that the ministerial exemption creates a discriminatory classification against religions without formal orders. The Court has established that strict scrutiny is unnecessary if a statute meets the Lemon test, and the proper evaluation is whether Congress has established a rational classification for a legitimate purpose. Courts have upheld ministerial exemptions as rational means to maintain church-state separation, thus finding no Fifth Amendment violation in this case.

Regarding remedies, Shenandoah and the government both challenge the district court's decisions. Shenandoah disputes the calculation of back pay for equal pay and minimum wage claims, while the government argues against the denial of prejudgment interest and injunctive relief. The district court awarded $177,680 to the government for female teachers' equal pay claims. Shenandoah seeks to reduce this amount, asserting that damages for supplements not paid to single female teachers should not apply. The Supreme Court has clarified that once the government shows a gender pay disparity, the burden shifts to the employer to justify the difference. Shenandoah admitted to paying women less than men and needed to demonstrate that this was not due to gender discrimination, arguing instead that it was based on marital status.

Roanoke Valley's sole unmarried male teacher did not receive a head-of-household supplement, which Shenandoah claims was exclusively for married individuals. However, evidence indicated that marital status was not the only criterion for eligibility; three years into the case, Roanoke Valley began providing supplements to some single employees, specifically divorced mothers with dependents. This contradicted Shenandoah's claims of exclusivity to married individuals. The district court noted that Shenandoah discriminated against women by not offering the supplement on equal terms with men. The court found Shenandoah failed to demonstrate that the salary differences were based on anything other than sex.

Additionally, the district court awarded $16,818.46 in back pay to 91 support staff members for minimum wage violations, a figure the parties had already agreed upon. Shenandoah's argument regarding the lack of distinction between church and school labor was not supported by evidence, leading the court to uphold the back pay award without error.

The government cross-appealed for prejudgment interest, which the district court denied, stating such decisions are within the trial court's discretion. The court found no abuse of discretion in this case or in the refusal to grant injunctive relief, noting Roanoke Valley's compliance with the Fair Labor Standards Act since 1986. Ultimately, the court affirmed the application of the Act to church-operated schools, confirming the back pay awards and the denial of prejudgment interest and injunctive relief.

The claim was initiated by the Secretary of Labor, Elizabeth Dole, who is mentioned due to procedural requirements. In 1979, the administration of equal pay claims transitioned to the Equal Employment Opportunity Commission (EEOC), which became a co-plaintiff in the case. The Secretary of Labor and the EEOC are collectively referred to as "the government." While teachers and academic administrators are exempt from minimum wage provisions under the Fair Labor Standards Act (FLSA), they remain subject to its equal pay requirements. A 1987 government motion for partial summary judgment regarding the equal pay claim was denied. Currently, the government appeals only the decision not to enjoin Shenandoah from future violations of the Act, having withdrawn its request to stop the solicitation of employees for back wages.

The FLSA applies to the commercial activities of religious organizations, as established in case law. The Supreme Court's decisions in *Catholic Bishop* and *Alamo* present contrasting standards for determining congressional intent concerning the application of labor statutes to religious entities. However, the more stringent *Catholic Bishop* standard indicates that Congress intended for the FLSA to apply to institutions like Roanoke Valley. Historical cases rejecting the applicability of labor laws to church-operated schools often lacked explicit legislative support for such exclusions, unlike the FLSA, which favors its application.

Shenandoah referenced *St. Martin Evangelical Lutheran Church v. South Dakota*, which determined teachers in a church-operated school were church employees based on an unemployment compensation statute that distinguished between church employees and those of separately incorporated entities. The FLSA lacks a similar framework for such distinctions. Additionally, Shenandoah argued that nonprofessional support staff should be classified as ministers and exempt from the FLSA, but this claim remains unresolved.

The district court dismissed Shenandoah's argument regarding its statutory context on appeal, referencing Shenandoah I, 573 F.Supp. at 323. Shenandoah cited EEOC v. Southwestern Baptist Theological Seminary as a relevant Title VII case; however, this case involved faculty members who were primarily ordained clergy training future ministers. The court noted that while religious organizations can designate individuals as ministers, this designation does not dictate their legal status outside of religious contexts. Testimonies from Shenandoah witnesses, including a Roanoke Valley teacher and the executive director of the Association of Christian Schools International, were deemed insufficient by the district court due to ambiguity. The court affirmed this assessment.

Additionally, ministerial exemptions are not universally applicable to all members of a religious organization, as seen in cases like Dickinson v. United States and Olsen v. Commissioner. Shenandoah argued that the congressional exception for religious orders affected the application of the Fair Labor Standards Act (FLSA) but the court disagreed, stating that the ministerial exemption is narrowly defined and does not lessen the government's regulatory authority. Shenandoah's concerns about entanglement due to FLSA requirements were also rejected, emphasizing that even religious institutions are subject to some state regulations. A stipulation revealed data on the number of male and female teachers receiving salary supplements over several school years, indicating a disparity in treatment.