Should Our Church Have Employees Sign Contracts?

Q: Should our church have a contract with our employees?

Pastor Dan is preparing to offer Grant a job as the creative director at Hope Church. He has prepared an offer letter and compensation package. Now, he’s wondering if he should draft a contract that spells out the relationship between the church and Daniel as creative director. Should Pastor Dan draft a contract for Grant to sign?

A: If Hope Church desires Grant to be an “at-will” employee, a contract will defeat the advantages of “at-will” employment to the church.

Employees are often defined as either “at-will” or contract employees.

“At-Will” Employees

“At will” employment is a concept in employment law that allows an employer to dismiss an employee for any reason or no reason and without warning, meaning the employer is not required to establish just cause for the termination. However, even an “at-will” employee may not be terminated in violation of constitutional rights—for example, due to sex, age, race, etc. In addition, some states prevent termination of at-will employees when the termination is in violation of public policy.

On the flip side, the employee may also terminate employment at any time and without notice.

Contract Employees

When the employee and employer enter into a contract—whether written or oral (or in some states by implication), the terms of the contract govern how and when the employee can be terminated. By entering the contract, the employer likely loses the ability to terminate the employee for no cause but must assert just cause for the termination.

Employee Handbooks

As an employer, the church likely will develop an employee handbook. Some courts have considered handbooks to contract when the handbook includes statements that limit an employee’s “at-will” status. Such statements can include listing legitimate grounds for dismissal, appeals processes for dismissals, and any requirements that prevent immediate termination. Employee handbooks are an efficient way for employers to inform employees about constantly changing company procedures, but when the handbook includes such language it can be construed as a contract.

In the end, if the church desires to retain the ability to terminate an employee without cause, it should not issue employee contracts, nor should it use language in an employee handbook that could be considered contractual in nature.

*The following states recognize three major exceptions (public policy, implied-contract, and covenant of good faith and fair dealing) to “at-will” employment: Alaska, California, Idaho, Nevada, Utah, and Wyoming.

If you enjoyed this blog, you might be interested in my blog, “What Can I Do to Prevent My Church From Being Sued?” To access that blog, Click Here.

To contact Reynolds Law Group for help with any church legal issues, CLICK HERE.