STATE OF WISCONSIN
LABOR AND INDUSTRY REVIEW COMMISSION
P O BOX 8126, MADISON, WI 53708-8126 (608/266-9850)

ROBYN K PEARSON, Claimant

HARBOR HOUSE CRISIS SHELTERS, Employer

UNEMPLOYMENT INSURANCE DECISION
Hearing No. 08201400EC


An administrative law judge (ALJ) for the Division of Unemployment Insurance of the Department of Workforce Development issued a decision in this matter. A timely petition for review was filed.

On December 29, 2008, the commission remanded the matter for the purpose of taking of additional evidence. Specifically, at the appeal tribunal hearing, the named employer was Harbor House Crisis Shelters yet a subsequent and separate Bureau of Tax and Accounting amended determination found the employer to be Faith United Methodist Church and that the claimant's services were excluded from employment. Limited evidence was taken at the appeal tribunal level as to the actual employing unit prior to the analysis of whether the claimant's services were in employment that was excluded under Wis. Stat. § 108.02(15)(h). The purpose of the remand was to properly notice the parties involved, the jurisdictional issues and to give the parties an opportunity to present evidence on these matters. The remand hearings were concluded on April 1, 2009 and the matter was returned to the commission.

The commission has considered the petition and the positions of the parties, and it has reviewed the evidence submitted to the ALJs at the original and remand hearings. Based on its review, the commission makes the following:

FINDINGS OF FACT AND CONCLUSIONS OF LAW

The claimant performed services for 21 months as a "house advocate," at Harbor House, a shelter for single women and families. The claimant's employment ended on February 19, 2008 (week 8). Departmental records reflect that she initiated a claim for unemployment insurance benefits on February 25, 2008 reporting a discharge. The claimant seeks to have the monies paid to her for her services to constitute base period wages upon which she can draw unemployment insurance benefits.

Harbor House is not incorporated; the property from which it operates is owned by Faith United Methodist Church (Faith United). The reverend of Faith United is the executive director of Harbor House. She testified that Harbor House is considered a "ministry" of the church.

Faith United is a tax exempt organization under § 501(c)(3) of the Internal Revenue Code. Faith United manages the financials of Harbor House and issues paychecks to the workers. Financial support for Harbor House comes from various sources through Faith United, including through grants obtained referencing the church's nonprofit status. Faith United submitted a "Nonprofit Organization Employer Report" for 2008 to the Unemployment Insurance Division Bureau of Tax and Accounting listing the Harbor House homeless shelter as part of its services; other services listed were worship, bible studies, free meals, food pantry and an afterschool program.

Wis. Stat. § 108.02(4m)(a) defines base period wages as, "earnings for wage-earning service which are paid to an employee during his or her base period as a result of employment for an employer."

Wis. Stat. § 108.02(15)(h) provides:

(h) "Employment" as applied to work for a nonprofit organization, except as such organization duly elects otherwise with the department's approval, does not include service:

1. In the employ of a church or convention or association of churches;

2. In the employ of an organization operated primarily for religious purposes and operated, supervised, controlled, or principally supported by a church or convention or association of churches; or

3. By a duly ordained, commissioned or licensed minister of a church in the exercise of his or her ministry or by a member of a religious order in the exercise of duties required by such order.

The issues to be decided are for what entity the claimant performed her services for at Harbor House, whether those services were performed in an "employment" and whether those monies constitute base period wages for purposes of unemployment insurance eligibility.

The claimant contended that her services were performed for Harbor House as a separate organization and that the shelter services were not operated primarily for religious purposes and, thus, her services should constitute employment. To support her claim that Harbor House was not operated primarily for religious purposes, she offered information indicating that some of the grants obtained could not be obtained if granted to a religious organization for religious purposes.

Yet the claimant's contention skips the analysis of what entity the services are performed for; inherent in the question of whether the claimant's services were performed in an "employment" is whether her employer was Harbor House or Faith United Methodist Church. If Harbor House is a separate organization from Faith United Methodist then the analysis would take place under Wis. Stat. § 108.02(15)(h)2, yet if the employer is Faith United Methodist the analysis is under Wis. Stat. § 108.02(15)(h)1.

In St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772 (1981), the United States Supreme Court concluded that under 26 U.S.C. § 3309(b)(1), services performed for schools that do not have a separate legal identity from a church or convention or association of churches are not required to be employment. (1)   Specifically, in St. Martin Evangelical Lutheran Church, the United States Supreme Court distinguished between church schools integrated into a church's structure and those separately incorporated, finding that the term "church" was not "synonymous solely with a physical building that is a house of worship" but

must be construed, instead, to refer to the congregation or the hierarchy itself, that is, the church authorities who conduct the business of hiring, discharging, and directing church employees.

St. Martin Evangelical Lutheran Church at 784.

In this case, the commission finds that the claimant performed services for the employer, the Faith United Methodist Church directly;   Harbor House does not exist as a separate legal entity. In addition, the claimant's paychecks were from the Faith United Methodist Church,  Faith United Methodist Church holds the identity for non-profit status and the church elder testified credibly that grants and monies are sought for and paid in reference to the church's nonprofit status which then manages disbursement of the monies.

The commission therefore finds that the services performed by the claimant are excluded from employment within the meaning of Wis. Stat. § 108.02(15)(h)1.

DECISION

The appeal tribunal decision is reversed. Accordingly, the claimant's services were not performed in an employment and she is ineligible for benefits based upon those services.

Dated and mailed April 30, 2009
pearsro . urr : 150 : 1  ET 483.10

/s/ James T. Flynn, Chairperson

/s/ Robert Glaser, Commissioner

/s/ Ann L. Crump, Commissioner

 

NOTE: The commission's reversal is based upon the additional evidence obtained at the remand hearings.

 

cc:
Attorney Nathan L. Moenck
Joyce Steger
Faith United Methodist Church



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Footnotes:

(1)( Back ) 26 U.S.C. § 3309(b)(1) is the federal counterpart to Wis. Stat. § 108.02(15)(h)1.  Unemployment Insurance Program Letter (UIPL) No. 02-82, issued on October 30, 1981, addresses the effect of this decision upon State law coverage and SESA action.  As explained in Murphy v. LIRC and Miron Construction Company, Inc., Case No. 06 CV 125 (Wis. Cir. Ct., Oconto Co., June 18, 2007), . . .

the Wisconsin Legislature routinely conforms Wisconsin's Unemployment Insurance Law (Chapter 108) to the federal guidelines found in the Federal Unemployment Tax Act (FUTA). [footnote omitted] This is because when a state's unemployment insurance laws comply with federal standards, private employers in that state receive a substantial tax credit against their federal unemployment tax payments. However, if the state law does not comply with federal standards, then private employers in the state lose this tax credit and the state itself faces the loss of federal funds for unemployment insurance purposes. DILHR v. LIRC, 161 Wis. 2d 231, 247-48, 476 N.W.2d 545 (1991); Milwaukee v. DILHR Department, 106 Wis. 2d 254, 260, 316 N.W.2d 367 (1982).

 


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