Case Title: Newport Church of the Nazarene v. Hensley

Citation: 

Docket Number: S46621

State: oregon

Court: Oregon Supreme Court

Date: 2002-10-24T00:00:00Z

Document:
Filed:  October 24, 2002
IN THE SUPREME COURT OF THE STATE OF OREGON
NEWPORT CHURCH OF THE NAZARENE,
an Oregon nonprofit corporation,
Petitioner on Review/Respondent on Review,
	v.	
GORDON R. HENSLEY,
Respondent on Review,
	and
EMPLOYMENT DEPARTMENT,
Respondent on Review/Petitioner on Review.
(EAB No. 97-AB-2014; CA A99663; SC S46621, S46769)
	On review from the Court of Appeals.*
	Argued and submitted May 15, 2000.
	Kelly E. Ford, Beaverton, argued the cause and filed the
petition for review, briefs, and additional authorities for
petitioner on review/respondent on review Newport Church of the
Nazarene in S46621, waived filing and argument in S46769.  With
him on the briefs was Gregory S. Baylor, pro hac vice, Virginia.
	Paul R. Meyer, Portland, argued the cause for respondent on
review Gordon R. Hensley.  With him on the responses and briefs
was Charles F. Hinkle, ACLU Foundation of Oregon, Inc., Portland. 
Also on the brief in S46621 was Scott Garland, ACLU Foundation of
Oregon, Inc., Portland.
	Robert M. Atkinson, Assistant Attorney General, Salem,
argued the cause and filed the briefs and additional authorities
for respondent on review/petitioner on review Employment
Department.  Christine A. Chute, Assistant Attorney General filed
the petition for review.  Also on the petition, briefs, and
additional authorities were Hardy Myers, Attorney General and
Michael D. Reynolds, Solicitor General.  
	Kelly W.G. Clark, O'Donnell & Clark, LLP, Portland, and
Richard G. Wilkins and Brent E. Rychener, Holme Roberts & Owen
LLP, Colorado, filed the brief of amici curiae for The Christian
& Missionary Alliance, Council on Religious Freedom, General
Conference of Seventh-Day Adventist Church, General Council on
Finance and Administration of the United Methodist Church,
International Church of the Foursquare Gospel, National
Association of Evangelicals, Oregon District Assemblies of God,
Presbyterian Church (U.S.A.), and the Presbytery of Cascades.  
	Before Carson, Chief Justice, and Gillette, Durham, Leeson,
and Riggs, Justices.**
	CARSON, C.J.
	The decision of the Court of Appeals is affirmed in part and
reversed in part.  The order of the Employment Appeals Board is
affirmed.
	*Appeal from Employment Appeals Board, 161 Or App 12, 983 P2d 1072 (1999).
	**Van Hoomissen, J., retired December 31, 2000, and did not
participate in the decision of this case.  Kulongoski, J.,
resigned June 14, 2001, and did not participate in the
consideration or decision of this case.  De Muniz and Balmer,
JJ., did not participate in the consideration or decision of this
case.
		CARSON, C.J.
		This case presents two issues for review.  The first is
whether claimant, formerly a youth minister for the Newport
Church of the Nazarene (church), is entitled to unemployment
compensation benefits.  The second, which arises only if claimant
prevails on the first issue, is whether he is entitled to
interest on the benefits award.  The Employment Appeals Board
(board) of the Oregon Employment Department (department) awarded
claimant benefits, but not attorney fees or interest.  
		The church sought judicial review of the board's order,
arguing, among other things, that the inclusion of ministers in
the unemployment compensation program violates the church's right
to autonomy under the First Amendment to the United States
Constitution.  Claimant also sought judicial review, challenging
the board's denial of his request for attorney fees and interest. 
In addition, claimant contended that any exemption of ministers
from the unemployment compensation program violates Article I,
sections 2, 3, and 20, of the Oregon Constitution.  The Court of
Appeals affirmed the board's award of unemployment compensation
benefits and denial of attorney fees, but reversed the board's
denial of interest on the award.  Newport Church of the Nazarene
v. Hensley, 161 Or App 12, 983 P2d 1072 (1999).   
		The church and the department both petitioned for
review in this court.  The church challenged the Court of Appeals
decision respecting claimant's entitlement to benefits, and the
department challenged the Court of Appeals decision respecting
claimant's entitlement to interest on those benefits.  We allowed
both petitions for review.  For the reasons that follow, we
reverse that part of the Court of Appeals decision that allowed
interest and otherwise affirm the Court of Appeals decision and
the board's order. (1)
		The relevant historical facts are undisputed.  Claimant
began working for the church in October 1993 as a youth minister. 
Approximately eight months later, the church discharged claimant
for misconduct that was not connected with claimant's work.  In
September 1994, claimant filed a claim for unemployment
compensation benefits and commenced what became a lengthy process
of administrative and judicial review, certain aspects of which
we discuss in greater detail below.
		To better frame the procedural history and the parties'
arguments, we begin with a brief discussion of the backdrop of
state and federal law against which this case arose.  In 1935, in
response to rampant unemployment associated with the Great
Depression, Congress established an unemployment compensation
program by imposing a federal payroll tax upon employers.  To
induce states to maintain their own unemployment compensation
programs, however, Congress also provided that employers could
offset as much as 90 percent of the federal tax by paying into a
qualified state unemployment compensation program.  To qualify, a
state unemployment compensation program must not exempt more
workers from coverage than are exempt under the federal program. 
Newport Church, 161 Or App at 15-16 n 3; see also 26 USC §§ 3301
to 3311 (2000) (setting out, among other things, statutory
requirements that state's unemployment tax program must meet to
qualify for federal tax credits).  Shortly after the enactment of
the federal payroll tax, every state adopted qualifying programs. 
See generally Salem College & Academy, Inc. v. Emp. Div., 298 Or
471, 476-77, 695 P2d 25 (1985); Steward Machine Co. v. Davis, 301
US 548, 574-78, 57 S Ct 883, 81 L Ed 1279 (1937) (both describing
federal program).
		In Oregon, the department is the agency responsible for
"[a]dminister[ing] the unemployment insurance laws of this state
to support Oregonians during periods of unemployment."  ORS
657.601(1).  In simple terms, those laws provide for the payment
of unemployment compensation benefits from the state Unemployment
Compensation Trust Fund (fund) to eligible individuals.  Under
ORS 657.505, unless exempt, every employer must pay into the
fund.  An employer is 
	"any employing unit which employs one or more
individuals in an employment subject to this chapter in
each of 18 separate weeks during any calendar year, or
in which its total payroll during any calendar quarter
amounts to $225 or more."
ORS 657.025(1).  An employee is 
	"any person * * * employed for remuneration or under
any contract of hire, written or oral, express or
implied, by an employer subject to this chapter * * *."
ORS 657.015.  Employment is defined as "service for an employer 
* * * performed for remuneration or under any contract of hire,
written or oral, express or implied."  ORS 657.030(1).  
		When a claimant applies for unemployment compensation
benefits, the department examines the claim and decides whether
to allow or deny it.  ORS 657.266 - 657.267.  In making that
determination, the department decides, among other things,
whether the claimant has worked for an employer subject to ORS
chapter 657 and investigates whether the reason for the
claimant's unemployment does or does not disqualify the claimant
from unemployment benefits.  ORS 657.176.
		ORS 657.072 excludes certain activities from the
definition of employment, thereby excluding certain types of
employers from the requirements of ORS chapter 657.  ORS 657.072
provides, in part:
		"(1) 'Employment' does not include service
performed:
		"(a) In the employ of:
		"(A) A church or convention or association of
churches; or
		"(B) 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;
		"(b) By a duly ordained, commissioned or licensed
minister of a church in the exercise of ministry or a
member of a religious order in the exercise of duties
required by such order * * *."
Those statutory provisions correspond to provisions in the
federal statute, which now is known as the Federal Unemployment
Tax Act (FUTA), 26 USC § 3309(b)(1) (2000). (2)
		This court has decided two cases under the Oregon
Constitution involving the validity of ORS 657.072(1)(a),
commonly known as the "church exemption."  See Employment Div. v.
Rogue Valley Youth for Christ, 307 Or 490, 493-97, 770 P2d 588
(1989) (involving religious organizations); Salem College, 298 Or
at 495 (involving religious schools).  In each case, this court
held that neither association in question qualified for the
exemption under ORS 657.072(1)(a), but that, in limiting the
exemption from the unemployment compensation program to
"churches," as opposed to all religious organizations, the
statute violated the principle of "equality among pluralistic
faiths * * * embodied in the Oregon Constitution's guarantees of
religious freedom."  Salem College, 298 Or at 495; see also Rogue
Valley, 307 Or at 496-97 (quoting Salem College).  We discuss
those decisions at greater length later in this opinion.
		After this court decided Salem College and Rogue
Valley, the department became concerned that ORS 657.072(1)(b),
commonly known as the "ministerial exemption," also violated the
Oregon Constitution.  Consequently, the department promulgated
OAR 471-31-090(1) (1989), which broadened the "ministerial
exemption" under ORS 657.072(1)(b) from including only ministers
licensed by "churches" to also including ministers licensed by
"religious organization[s]."  
		Thereafter, and, indeed, during the pendency and as a
result of claimant's case, the United States Department of Labor
informed the department that Oregon's unemployment statutes
failed to comply with FUTA.  According to the Department of
Labor, the "ministerial exemption," as OAR 471-31-090(1)(a)
(1989) redefined that category, was too broad, because it
exempted ministers licensed or ordained by "religious
organization[s]," while FUTA limited that exemption to ministers
licensed or ordained by only "churches."  USC § 3309(b)(1) (1988)
(emphasis added).  Because noncompliance meant that Oregon would
lose the FUTA tax benefit, the department responded by promulgating a new rule, OAR 471-031-0090 (1996), (3) that
superseded the ministerial exemption under ORS 657.072(1)(b) and
brought all ministers, regardless of affiliation, within
mandatory unemployment compensation coverage.  It is the validity
of that rule that lies at the heart of this case.
The church contends that ORS 657.072(1)(b) properly
exempts ministers from the state unemployment compensation
program and, therefore, that OAR 471-031-0091 (1996), essentially
overruling that statutory directive, is invalid.  Claimant and
the department, however, contend that the statutory exemption is
invalid under Article I, sections 2, 3, and 20, of the Oregon
Constitution, (4) as this court previously has interpreted those
provisions in Salem College and Rogue Valley.  The church
responds that, even if the statutory exemption for ministers is
invalid under the Oregon Constitution, the state is prohibited
from subjecting ministers of churches to the unemployment
compensation program under the First Amendment to the United
States Constitution. (5)  In response to that argument, claimant and
the department assert that the First Amendment does not exempt
ministers of churches from a generally applicable law, such as
the unemployment compensation program. (6)  We proceed to our
discussion of the merits of those arguments, beginning with the
Oregon Constitution.
		As noted, claimant and the department argue that ORS
657.072(1)(b) is unconstitutional under Article I, sections 2, 3,
and 20, of the Oregon Constitution because the statute
distinguishes between church and nonchurch ministers.  They base
that position upon this court's earlier case law holding that ORS
657.072(1)(a), the "church exemption," violates those
constitutional provisions.  The church responds that, properly
construed, subsection (b) of ORS 657.072(1) -- unlike subsection
(a) -- does not present any unconstitutional distinction between
church and nonchurch ministers.  Alternatively, the church argues
that any such distinction is not of constitutional significance
because both churches and nonchurches can hire church-licensed
ministers.  
		Because it is the focus of the parties' arguments, and
because, as explained below, it is dispositive of those
arguments, we turn to this court's case law concerning the
"church exemption" set out in ORS 657.072(1)(a).  In Salem
College, this court construed that statute as it applied to a
Christian school and concluded:
		"The legislature could not constitutionally
exclude from unemployment compensation coverage
religious schools and their employees if they are
controlled or principally supported by organizations
described as 'churches' and extend coverage to
otherwise similar religious schools operated by
religious organizations that are not 'churches.'  The
distinction contravenes the equality among pluralistic
faiths and kinds of religious organizations embodied in
the Oregon Constitution's guarantees of religious
freedom."
298 Or at 495.  This court then held that the distinction
violated Article I, sections 2, 3, and 20, of the Oregon
Constitution.  Id. at 490.
	Later, in Rogue Valley, 307 Or 490, this court again
construed ORS 657.072(1)(a) -- in that case, as it applied to a
church-supported youth organization.  Acknowledging the close
relationship between ORS 657.072(1)(a) and FUTA, this court held
that the statutory scheme violated the Oregon Constitution as
interpreted in Salem College:
		"The core problem involves the definition of the
word 'church.'  Defining 'church' too narrowly --
including, for example, only hierarchical churches such
as the Roman Catholic Church, -- might comply with
FUTA, but it would violate the Oregon Constitution
because the protections of the Oregon Constitution
extend to worship even outside organized churches.  On
the other hand, if 'church' is defined too broadly,
organizations would be exempted from the unemployment
tax when FUTA requires that they be included.
		"It may be possible to expound a judicial test for
'church' consistent with both the intent of the Oregon
legislature and with FUTA.  Any such definition,
however, would still face the problem discussed in
Salem College -- that is, Oregon would still be put in
the position of treating unequally what, at least for
Oregon constitutional purposes, are religious
organizations.  Creating such a 'distinction
contravenes the equality among pluralistic faiths and
kinds of religious organizations embodied in the Oregon
Constitution's guarantees of religious freedom.' 
Therefore, we hold that Oregon must treat all religious
organizations similarly whether or not they would
qualify as churches under FUTA * * *."
Id. at 496-97 (citations omitted).
	In sum, the case law demonstrates that, under Article
I, sections 2, 3, and 20, of the Oregon Constitution, it is
impermissible for a statute to draw a distinction between
churches and nonchurch religious organizations.  ORS
657.072(1)(b) draws such a distinction, in that it exempts from
unemployment coverage "duly ordained, commissioned or licensed
minister[s] of * * * church[es]," but does not exempt other
religious leaders not ordained by churches, in determining who is
entitled to unemployment compensation benefits.  That
distinction, like the distinction in ORS 657.072(1)(a) that this
court concluded was constitutionally infirm in Salem College and
Rogue Valley, violates Article I, sections 2, 3, and 20, of the
Oregon Constitution.
	As noted above, the church disagrees with the
conclusion that ORS 657.072(1)(b) presents any sort of
unconstitutional distinction.  That is so, the church argues,
because there cannot be a minister of a religious organization;
rather, there are only church ministers.  The church
alternatively argues that any distinction between church and
nonchurch ministers would not rise to a level of constitutional
significance because both churches and nonchurches can hire
church-licensed ministers.  We are not persuaded by those
arguments.  As the Court of Appeals correctly noted, "[i]t is the
distinction based on licensing by a 'church' that matters * * *." 
Newport Church, 161 Or App at 19. 
	Having concluded that the distinction set out in ORS
657.072(1)(b) violates several provisions of the Oregon
Constitution, the next issue before us is whether to invalidate
that statute or to construe it -- consistent with OAR
471-031-0090 (1996) -- so as to include ministers not only of
churches, but also of other religious organizations in Oregon's
unemployment compensation program.  In Salem College and Rogue
Valley, this court chose the latter approach, reasoning that the
legislature would have so intended, to avoid any state
constitutional violation.  See Rogue Valley, 307 Or at 497
("Although the answer is by no means obvious, we believe that the
legislature would have chosen to include all religious
organizations in the unemployment compensation program."); Salem
College, 298 Or at 494 ("In a choice between exempting
independent religious schools and losing conformity with FUTA or
maintaining that conformity and extending coverage to all
religious schools, the legislature in 1977 [when it enacted ORS
657.072(1)(a)] surely would have chosen the latter course.").  In
accordance with that precedent, we similarly construe ORS
657.072(1)(b) so as to include ministers of both churches and
other religious organizations in Oregon's unemployment
compensation program.
		Having concluded that ministers of churches are
included within Oregon's unemployment compensation program, we
proceed to consider the church's argument that, in construing the
statutory scheme in that manner, the program now effects a
violation of the United States Constitution.  
		As to the United States Constitution, the church
contends that subjecting a minister of a church to the state
unemployment compensation program violates the First Amendment
because, during an investigation into whether a minister claimant
is entitled to benefits, the state necessarily must investigate
the circumstances under which the church had terminated the
minister's employment.  That, the church contends, would intrude
impermissibly into internal church affairs.
		The premise of the church's argument is the church
autonomy doctrine, which, it asserts, stems from both the Free
Exercise Clause and the Establishment Clause of the First
Amendment.  Relying upon that doctrine, the church argues that
government is not permitted to interfere in church decisions
regarding, for example, the choice of its leaders.  See, e.g.,
Serbian Orthodox Diocese v. Milivojevich, 426 US 696, 96 S Ct
2372, 49 L Ed 2d 151 (1976) (decision of church tribunal to
defrock bishop not subject to judicial review); Rayburn v.
General Conf. of Seventh-Day Adventists, 772 F2d 1164 (4th Cir
1985) (church decision not to hire woman as pastor insulated from
review for discrimination under Title VII).
		Recent federal cases have identified the Free Exercise
Clause as the basis for the autonomy doctrine, because freedom of
worship is closely related to the selection of officials to lead
that worship.  See, e.g., Young v. N. Ill. Conf. Of United
Methodist Church, 21 F3d 184, 187 (7th Cir 1994) ("the Free
Exercise Clause of the First Amendment forbids a review of a
church's procedures when it makes employment decisions affecting
its clergy"); Rayburn, 772 F2d at 1168 ("Any attempt by
government to restrict a church's free choice of its leaders thus
constitutes a burden on the church's free exercise rights.").  In
Employment Div., Ore. Depart. of Human Res. v. Smith, 494 US 872,
110 S Ct 1595, 108 L Ed 2d 876 (1990), the United States Supreme
Court set out a test for free exercise challenges that do not
combine First Amendment religion claims with other constitutional
claims.  The Court stated that "the right of free exercise does
not relieve an individual of the obligation to comply with a
valid and neutral law of general applicability on the ground that
the law proscribes (or prescribes) conduct that his religion
prescribes (or proscribes)."  494 US at 879.  
		The applicability of Smith in the context of church
autonomy is not clear.  See, e.g., E.E.O.C. v. Roman Catholic
Diocese of Raleigh, NC, 213 F3d 795, 800 n * (4th Cir 2000)
(noting agreement among federal circuits that Smith did not
affect church autonomy doctrine in context of Title VII claims). 
Were we to apply that standard here, however, we would conclude
that the unemployment compensation program is a valid and neutral
law of general applicability, from which the church and its
ministers are not exempt upon the ground that the church is a
religious organization.  Cf. Salem College, 298 Or at 487 (noting
that administrative and clerical burdens of program "are not
different in principle from a host of other secular regulatory
requirements such as health inspections of cafeteria workers or
kitchens, safety inspection of school busses, and licensing of
drivers"). 
		Alternatively, under a more traditional free exercise
analysis, we must examine whether the state regulation -- here,
unemployment coverage for ministers -- imposes a burden upon
religion.  United States v. Lee, 455 US 252, 256-57, 102 S Ct
1051, 71 L Ed 2d 127, 132 (1982).  If such a burden exists, then
an overriding state interest may justify the burden if it is
essential to accomplish the state interest.  Id.
		In the context of the state's inquiry whether to grant
unemployment compensation benefits to a discharged minister, the
alleged burden is that the church might have to disclose the
circumstances of the termination.  Once a discharged worker has
met certain threshold criteria, the department must inquire
whether the circumstances of the claimant's termination
disqualified him or her for benefits due to, for example,
termination for misconduct, voluntary separation without good
cause, or excessive absence or tardiness because of substance
abuse.  ORS 657.176; see also OAR 471-030-0038(3)(a) (1999)
(misconduct is "willful or wantonly negligent violation of the
standards of behavior which an employer has the right to expect
of an employee" or "[a]n act or series of actions that amount to
a willful or wantonly negligent disregard of an employer's
interest"); OAR 471-030-0038(3)(b) (1999) (following are not
misconduct: "[i]solated instances of poor judgment, good faith
errors, unavoidable accidents, absences due to illness or other
physical or mental disabilities, or mere inefficiency resulting
from lack of job skills or experience").
		Conceivably, such an inquiry might burden the church,
because it might require the church to disclose what otherwise
would be an internal matter, namely, the selection, performance,
and retention of its religious leaders.  As the church argues,
requiring it to disclose and justify its reasons for firing a
religious leader might affect the church's decision whether to
terminate that leader's employment at all, thus burdening the
free exercise of its faith.  Indeed, as the church further
contends, the economic burden of having to pay unemployment
benefits also might cause the church to refrain from firing a
minister who otherwise might be terminated for that minister's
disagreement with the church on doctrinal issues. (7)
		On the other hand, the state interest in providing
unemployment compensation is one that this court previously
identified and explained in Rogue Valley:
		"There are few governmental tasks as important as
providing for the economic security of its citizens.  A
strong unemployment compensation system plays a
significant role in providing this security.  Given the
existence of FUTA, any state's unemployment tax must,
as a practical matter, comply with FUTA's requirements
or the state's employers would face a double tax.  Such
a double tax would, in turn, create a very undesirable
business climate in the state.  This, combined with
Oregon's constitutional interest in treating all
religious organizations equally, creates an overriding
state interest in applying the unemployment payroll
taxes to all religious organizations."
307 Or at 499.
	As noted, in determining whether a requirement of this
state's unemployment compensation program excessively burdens the
free exercise of religion under the First Amendment, we must
compare the interests of the state with the burdens upon the
church.  Lee, 455 US at 256-57.  The burden upon the church, we
conclude, almost always will be small in comparison to the state
interest.  Under the statutory scheme, the state does not dictate
to the church how it may worship or who it may hire and fire as
its leaders.  Instead, to administer the state unemployment
compensation law, the state must determine only why a person was
terminated.  The church autonomy doctrine might insulate the
church from the dictates of a secular court regarding liturgy and
leadership, but it does not permit a church, as a general matter,
to cloak its decisions and actions in secrecy when the law
requires compliance with the requirements of civil law.  See
United Methodist Church v. Superior Court, 439 US 1369, 1373, 99
S Ct 36, 38, 58 L Ed 2d 77 (1978) (Rehnquist, Circuit Justice)
(principle of church autonomy not applicable to purely secular
disputes between third parties and a particular defendant, albeit
a religious affiliated organization, in which fraud, breach of
contract, and statutory violations are alleged); Bollard v.
California Province of Soc. of Jesus, 196 F3d 940 (9th Cir 1999)
(church autonomy doctrine does not shield church from former
novice's sexual harassment claim).  We, therefore, conclude that
church's broad-based argument under the Free Exercise Clause
fails. (8)
	As noted, the church also asserts that the autonomy
doctrine has its basis in the Establishment Clause of the First
Amendment.  However, as explained above, the Supreme Court has
concluded that the doctrine has its basis in the Free Exercise
Clause, not the Establishment Clause.  We therefore reject the
church's Establishment Clause argument without further
discussion.
	In sum, we conclude that, in purporting to draw a
distinction between church ministers and leaders of other
religious organizations, ORS 657.072(1)(b) violates Article I,
sections 2, 3, and 20, of the Oregon Constitution.  In light of
that conclusion, and in accordance with Salem College and Rogue
Valley, we construe the statute consistently with OAR
471-031-0090 (1996) to include both ministers and leaders of
other religious organizations in Oregon's unemployment
compensation program.  Such an application of the statutory
scheme does not violate the Free Exercise Clause of the First
Amendment to the United States Constitution, because the burdens
placed upon the church are essential to accomplishing the
overriding state interest in providing unemployment compensation
benefits.
		We now turn to the issue raised in the department's
petition for review, that is, whether claimant statutorily is
entitled to an award of interest on his unemployment compensation
benefits.  In this court, the department primarily contends that
the doctrine of sovereign immunity shields the state from
claimant's interest claim.  In response to that contention,
claimant asserts that, because the department did not raise
sovereign immunity as a theory in support of its assertion that
the relevant statutes do not permit the recovery of interest in
this circumstance, the department has waived that theory.  We
disagree.
	The department argued below that ORS 82.010(1)(a),
Oregon's general interest statute, does not apply to the payment
of unemployment compensation benefits, although for reasons
different from the reason upon which the department primarily now
relies.  It remains, however, that the statute properly is in
play, and its meaning is for this court to resolve.  In doing so,
this court may be aided by the arguments of counsel as to the
legislature's intent, but it is not bound by them.  See, e.g.,
State v. Hitz, 307 Or 183, 187-88, 766 P2d 373 (1988); Stull v.
Hoke, 326 Or 72, 77, 948 P2d 722 (1997) (to that effect).  In any
given instance, the court might ascertain legislative intent in
light of particular arguments that counsel (1) made consistently
throughout the proceedings, (2) made for the first time on appeal
or review, or (3) never made at all -- so long as the issue of
the meaning of the statute has been preserved.  We therefore
proceed to consider whether the legislature intended, based upon
considerations of sovereign immunity or otherwise, to subject the
state to claims of interest on unemployment compensation
benefits.
	ORS 82.010(1)(a) provides:
		"The rate of interest for the following
transactions, if the parties have not otherwise agreed
to a rate of interest, is nine percent per annum and is
payable on:
		"(a) All moneys after they become due[.]"
ORS 82.010(1) is a general rule regarding the payment of
interest.  We note that ORS chapter 657, the unemployment
compensation statute, makes no mention of the payment of interest
to a claimant under circumstances such as this.  We also have not
found, neither have the parties suggested, that the legislature
anywhere explicitly has provided for awards of interest on
unemployment compensation benefits.
	Only clear expression by the legislature waives the
state's sovereign immunity.  Hunter v. City of Eugene, 309 Or
298, 303, 787 P2d 881 (1990); Rapp v. Multnomah County, 77 Or
607, 609-10, 152 P 243 (1915).  This court recognized the state's
immunity from awards of interest under the general interest
statute in Seton v. Hoyt, 34 Or 266, 55 P 967 (1899).  In that
case, the statute before the court was nearly identical to ORS
82.010(1)(a). (9)  Although the doctrine of sovereign immunity did
not apply to the claim at issue in Seton, the court observed: 
	"'Interest, when not stipulated for by contract, or
authorized by statute, is allowed by the courts as
damages for the detention of money, or of property, or
of compensation, to which the plaintiff is entitled;
and, as has been settled upon grounds of public
convenience, is not to be awarded against a sovereign
government, unless its consent to pay interest has been
manifested by an act of the legislature, or by a lawful
contract of the executive officers.'  The rule applies
as well to a sovereign state as to the national
government."
Id. at 272-73 (quoting United States v. North Carolina, 136 US
211, 216, 10 S Ct 920, 34 L Ed 336 (1889)).  In addition, the
court specifically added that "the state [is not] within the
purview of a general law regulating the rate of interest upon
money due or to become due, and this goes upon the ground that a
sovereign is not bound by the words of a statute unless it is
expressly named."  34 Or at 273.   See also generally Pendell v.
Dept. of Rev., 315 Or 608, 612, 847 P2d 846 (1993) (stating,
respecting payment of interest on tax refund, that "[t]he state
is not required to pay interest unless self-imposed by statute");
NW. Ice & Cold Stor. v. Multnomah Co., 228 Or 507, 516-17, 365
P2d 876 (1961) (quoting Seton with approval).
	Claimant cites several cases that he claims run
contrary to Seton.  In North Pac. Const. Co. v. Wallowa County,
119 Or 565, 249 P 1100 (1926), the plaintiff obtained an award of
interest against a county on damages awarded for an underpaid
highway project.  North Pacific, however, mentioned neither
sovereign immunity nor Seton, and it appears that the county did
not raise the defense in that case.  Further, in Eldon et al. v.
Chandler et al., 202 Or 407, 275 P2d 748 (1954), the court relied
upon North Pacific in awarding interest against the state and
also relied upon Public Market Co. v. Portland, 171 Or 522, 621,
130 P2d 624, 138 P2d 916 (1943).  Public Market, however, was an
action against a city, and cities are not immune from the general
interest statute.  See Shipley v. Hacheney, 34 Or 303, 55 P 971
(1899) (cities, unlike counties, are not extensions of state and
do not enjoy state's immunity from interest).  Thus, North
Pacific and Eldon provide questionable guidance in this case.
	In short, we conclude that the legislature did not
intend, either through the general interest statute or through
the statute pertaining to the unemployment compensation program,
that the state pay interest on unemployment compensation
benefits.  The Court of Appeals therefore erred in holding that
claimant was entitled to an award of interest.
	The decision of the Court of Appeals is affirmed in
part and reversed in part.  The order of the Employment Appeals
Board is affirmed.


1. 	As respondent on review, claimant reiterated his
arguments respecting the board's award of unemployment
compensation benefits and denial of interest.  Claimant, however,
did not petition this court to review the Court of Appeals
affirmance of the board's denial of his request for attorney
fees.  Consequently, the attorney fees issue is not before us on
review.

2. 	In 1997, Congress added to the exemption in 26 USC
section 3309(b)(1) "service performed * * * in the employ of * *
* an elementary or secondary school [that, among other things,]
is operated primarily for religious purposes * * *."  Pub L 105-33, § 5407, 111 Stat 605 (1997).

3. 	OAR 471-031-0090 (1996) provided:
	"Notwithstanding ORS 657.072, the term
'employment' as used in ORS Chapter 657 includes
service performed in the employ of a church or other
nonprofit religious organization including service
performed by a minister of a church or by a member of a
religious order."

4. 	Article I, section 2, provides:  "All men shall be
secure in the Natural right, to worship Almighty God according to
the dictates of their own consciences."  
		Article I, section 3, provides:  "No law shall in any
case whatever control the free exercise, and enjoyment of
religeous (sic) opinions, or interfere with the rights of
conscience."  
		Article I, section 20, provides:  "No law shall be
passed granting to any citizen or class of citizens privileges,
or immunities, which, upon the same terms, shall not equally
belong to all citizens."

5. 	The First Amendment provides, in part:  "Congress shall
make no law respecting an establishment of religion, or
prohibiting the free exercise thereof[.]"  The First Amendment
applies to the states through the Fourteenth Amendment to the
United States Constitution.  See Fidanque v. Oregon Govt.
Standards and Practices, 328 Or 1, 3 n 2, 969 P2d 376 (1998) (so
noting).

6. 	Claimant also asserts that the church has not preserved
its constitutional arguments.  We disagree, for the reasons set
out in the Court of Appeals opinion.  Newport Church, 161 Or App
at 20.

7. 	The basis for our statement earlier in this opinion
that claimant's termination here was not for misconduct lies in
the fact that the board earlier so concluded, and the church did
not challenge that determination.  Later, the church sought to
reopen the record to introduce evidence of misconduct, but the
motion was denied.  Newport Church, 161 Or App at 18 n 7. 
Accordingly, as the case comes to us, the only issue is whether
the potential of an inquiry at all, and not any particular
inquiry, infringes impermissibly on church autonomy.

8. 	That is not to say that an impermissible interference
with church autonomy never can occur in the unemployment
compensation context.  In a particular instance, under particular
facts, the department's inquiry might cross the constitutional
line.  As this court noted in Salem College:
"This eventuality can adequately be dealt with if and
when it happens; we have no reason to believe that
discharges of school employees over matters of
religious doctrine are so frequent as to require the
employer's entire exemption from the unemployment
compensation system on that account."
298 Or at 487.  Although doctrinal questions are more likely to
emerge in respect of the termination of ministers, as opposed to
school employees, the fact remains that challenges can be
resolved on a case-by-case basis.  However, as noted, this case
does not present an as-applied challenge.

9. 	The statute at issue provided:  "The rate of interest
in this state shall be eight per centum per annum, and no more,
on all moneys after the same become due."  Annotated Laws of
Oregon, v II, ch LI, § 3587, p 1559 (Hill 1887).