Appealing The Denial Of Unemployment Insurance From A Faith-based Higher Education Institution. Does This Mean All Faith-based Universities Are Exempt From Paying Out Unemployment?

I was recently laid off from my full time position at a 501(c)(3) denominational faith-based college (like Calvin University or Hope College, for example). My employer's denomination has the ability to appoint and deny elections to the governing board of trustees, but does not operate the day-to-day operations, if that makes any difference. The denomination makes very minimal, if any, financial contribution to the employer. My employer’s IRS 990 forms show that it was granted exemption by being an educational institution (26 U.S.C. § 170(b)(1)(A)(ii)), not by being a church or convention of churches. It also in separately incorporated from the denomination.

However, I have been denied unemployment benefits in Alaska citing that my employer is a “religious organization.”

Exemption per Alaska law is as follows:

For the purposes of AS 23.20.525 (a)(4) and (12), the term "employment" does not apply to service performed (9) in the employ of * a church or a convention or association of churches; or * an organization that is operated primarily for religious purposes and that is operated, supervised, controlled, or principally supported by a church or a convention or association of churches;

I appealed, stating that 1) the college is not a church or a convention of churches, and 2) as a college it is operated primarily for educational purposes, not religious purposes (it offers various degrees and is accredited by the Alaska Commission on Post-Secondary Education as an institution of higher education).

My appeal was recently denied, citing these cases verbatim from the letter:

“In Kowalski Com. Dec. No. 05 1486, December 19, 2005, the Commissioner of the Department of Labor held that the Fairbanks Rescue Mission operates primarily for religious purposes and its employees meet the exemption under 23.20.526(d)(9)(B). In making that finding, the Commissioner held:

Alaska case law has very little on this issue. Therefore, we must look to other jurisdictions for interpretation. In St. Vincent's Infirmary Medical Center v. Director, Arkansas Employment Security Division, E89-243 Ark. Court of Appeals, October 17, 1990, the court concluded that "the hospital unquestionably delivered health care and health care is not necessarily religious purposes" but was nonetheless a religious organization. The court found:

That SVI (St. Vincent Infirmary] is operated under the sponsorship of SCN (Sisters of Charity of Nazareth) primarily for religious purposes in carrying out its religious mission in the service of God. We believe the religious motivation and purpose of SCN and SVI to be of first importance in the operation of the hospital.

The Arkansas court also agreed with the Massachusetts court, which found in Kendall v. Director of Division of Employment Security, 393 Mass. N.E.2d 196 (1985) that employees of a training center for retarded children to be exempt. The Massachusetts Supreme Court states:

The board found that the Center satisfies these statutory requirements because its purpose, the rehabilitation of the mentally handicapped, is religiously motivated and the Center is subject to control by the Sisters of St. Francis of Assisi and, under canon law, by the Archbishop of Boston....

The claimant asks us to set aside the board's findings and adopt a narrower definition of "religious purposes" than that applied by the board. Essentially, she contends that only if a school is devoted to religious instruction can it be said to operate "primarily for religious purposes." We decline to impose such rigid criteria in defining religious pursuits.

One of the religious missions of the Center's founders, the Sisters of St. Francis of Assisi, is the educational care of mentally handicapped persons. The fact that the Center is open to handicapped children on a non-denominational basis is entirely consistent with the accomplishment of this stated purpose. . . “

The claimant in this case argued that her wages should be covered because the primary purpose of [employer] is education. As cited by the Commissioner in Kowalski, a school does not have to be devoted to religious instruction to be considered primarily for religious purposes. The school in this case holds itself out as a religious organization and as a part of a conference of religious organizations.“

Does it follow, then, that every faith-based, religiously affiliated 501(c)(3) non-profit college and university is exempt from unemployment insurance? Is there anything I can do here? It seems like a legal loophole if anything remotely religious doesn’t have to pay for unemployment.

I will be writing a final appeal. What would I need to do in order to win my unemployment insurance case? I am hoping to establish precedence by looking at the unemployment insurance policies at other faith-based colleges (Jarvis Christian University in Texas and St. John's University in New York, for example, pay unemployment insurance). Will this help me at all?Your thoughts are welcome. Thank you.