Title: Mid Vermont Christian School v. Department of Employment & Training

State: vermont

Issuer: Vermont Supreme Court

Document:

Mid Vermont Christian School v. Dept. of Employment & Training (2004-473);
178 Vt. 448; 885 A.2d 1210

2005 VT 100

[Filed 26-Aug-2005]

       NOTICE:  This opinion is subject to motions for reargument under
  V.R.A.P. 40 as well as formal revision before publication in the Vermont
  Reports.  Readers are requested to notify the Reporter of Decisions,
  Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of
  any errors in order that corrections may be made before this opinion goes
  to press.

                                 2005 VT 100

                                No. 2004-473

  Mid Vermont Christian School	                 Supreme Court

           v.	                                 On Appeal from
       	                                         Employment Security Board

  Department of Employment and Training
                                                 June Term, 2005

  Anne V. Ginevan, Chair

  Anthony R. Duprey of Neuse Smith & Venman, PC, Middlebury, for
    Plaintiff-Appellant.

  William H. Sorrell, Attorney General, and Bridget C. Asay, Assistant
    Attorney General, Montpelier, for Defendant-Appellee.

  PRESENT:  Reiber, C.J., Dooley, Johnson and Skoglund, JJ., and 
            Allen, C.J. (Ret.),  Specially Assigned  

       ¶  1.  DOOLEY, J.  Appellant, Mid Vermont Christian School (MVCS),
  appeals the Department of Employment and Training's determination that MVCS
  is an employer subject to the unemployment compensation law and must
  therefore pay an employer contribution tax to fund any unemployment
  compensation claims by its employees.  MVCS argues that, as a religious
  school, it is entitled to exemption under the statute, and that denial of
  that exemption violates its constitutional rights.  We agree with the
  appeals referee and the Employment Security Board (ESB) that MVCS is not an
  exempt employer, and hold that applying the statute does not violate MVCS's
  rights under either the United States or the Vermont Constitutions.  
   
       ¶  2.  MVCS is an independent Christian school approved by the
  Vermont State Board of Education with an enrollment of approximately 160
  students in grades preschool through twelve.  In addition to a traditional
  curriculum that includes subjects such as math, science, history, and
  computer science, MVCS integrates teachings from the Bible throughout its
  curriculum.  Students are also required to attend daily Bible classes and
  weekly chapel.

       ¶  3.  The school's stated mission is "to provide a sound, effective
  educational program that is well-integrated with Biblical principles
  directed toward the end that children may occupy their places worthily in
  community, church, state, . . . the world."  MVCS has articulated its
  religious values in a Statement of Faith found in Article II of its
  constitution.  All faculty, staff, board members, full association members,
  and advisory board members must declare their unconditional agreement with
  that Statement of Faith, be regular participants of a church, and be
  scripturally sound in their belief, and lead "exemplary lives."  Parents
  must also assent to the Statement of Faith when enrolling their children at
  MVCS.

       ¶  4.  MVCS is not a church nor is it owned by or affiliated with any
  church.  It does, however, receive financial and promotional support from
  roughly twenty-five to thirty churches.  Annually, these churches
  contribute approximately $64,000 toward the school's $900,000 operating
  budget. 

       ¶  5.  The MVCS Board of Directors supervises the "governance,
  maintenance and growth" of the school.  Specifically, the Board sets school
  policies, oversees school finances and supervises school employees.  It is
  elected by the MVCS Association, which is comprised of students' parents
  and other individuals who make a financial contribution to the school.  A
  pastoral advisory board advises the Board of Directors on how to provide a
  spiritually-sound Christian education. 
   
       ¶  6.  On October 8, 2003, the Vermont Department of Employment and
  Training (DET) presented MVCS with a notice of employer liability, stating
  that MVCS was an employer subject to the provisions of the unemployment
  compensation law.  Based on this status, DET found that MVCS would be
  responsible for payment into the State unemployment compensation fund at
  its assigned contribution rate, and that eligible MVCS employees would be
  entitled to unemployment compensation benefits.  See 21 V.S.A. §§ 1348
  (eligibility procedure), 1344 (disqualifications).  Prior to receipt of
  that notice, MVCS relied upon a 1992 letter from DET that stated that MVCS
  was not an employer as defined by statute. 

       ¶  7.  MVCS appealed the October 2003 determination to the appeals
  referee, who concluded that the services performed by MVCS employees were
  not excluded from unemployment compensation coverage because MVCS was not a
  church or convention of churches, was not operated primarily for religious
  purposes, and was not operated, supervised, controlled, or principally
  supported by a church or convention or association of churches.  MVCS then
  requested review of the referee's decision by the ESB.  On August 31, 2004,
  the ESB sustained the decision of the appeals referee.  On appeal, MVCS
  argues that (1) it is covered by an exemption contained in federal law and
  that the exemption is binding on the State, and (2) the ESB decision
  violates its rights under the United States and Vermont constitutions.  
  DET maintains that MVCS does not qualify for an exemption under the Vermont
  statute, nor is Vermont obligated to adopt the federal exemption.  It also
  argues that application of the Vermont statute to MVCS does not violate the
  school's constitutional rights.   
   
       ¶  8.  We start with the application of the Vermont statute to MVCS
  and its circumstances.  Although MVCS does not challenge the ESB's
  construction of the statute, that construction is central to the resolution
  of MVCS's constitutional arguments.  There is no dispute that MVCS fits
  within the general definition of an employer under the unemployment
  compensation law and that it has employees.  The statute contains, however,
  an exemption from the definition of "employment" for services performed: 

    [I]n the employ of a church or convention or association of
    churches, or 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[.] 

  21 V.S.A. § 1301(6)(C)(vii)(I).  

       ¶  9.  The exemption consists of two parts.  Generally, the first
  clause exempts churches, and the second clause exempts organizations
  "operated primarily for religious purposes" and affiliated with a church. 
  Neither party contends that the first clause applies-that is, they agree
  that MVCS itself is not a "church or convention or association of
  churches."  The ESB found that neither requirement of the second clause
  applies-that is, it found that MVCS is neither "operated primarily for
  religious purposes" nor "operated, supervised, controlled, or principally
  supported by a church or a convention or association of churches."  
   
       ¶  10.  On the first requirement of the second clause, the appeals
  referee and the ESB found that MVCS "is operated primarily for educational,
  not religious purposes."  It concluded that although the school's Bible
  instruction, inculcation of Christian values and glorification of God were
  integral parts of the educational mission, the primary purpose is to
  provide a thorough education, combining traditional and modern subjects to
  prepare the majority of graduates for college.  On the second requirement,
  the referee and the ESB found that MVCS is not "operated, supervised,
  controlled, or principally supported by a church or convention of churches
  or association of churches" based on various statements in the school's
  literature that "[t]he school is independent (not affiliated with any one
  church)," is an "interdenominational Christian School not affiliated with
  any one church," and is "autonomous" and not subject to any ecclesiastical
  entity.  They also relied upon the facts that MVCS is run by an
  independently elected, autonomous board of directors and derives its
  operating funds "almost exclusively from tuition payments." 
   
       ¶  11.  Because MVCS has failed to appeal from the decision of the
  ESB that its employees are covered by the unemployment compensation
  statute, we do not review this ruling.  We note, however, that the issues
  have been litigated extensively in other jurisdictions with mixed results,
  especially with respect to whether similar organizations are operated
  primarily for religious purposes.  See Samaritan Inst. v. Prince-Walker,