Young Life v. Division of Employment and Training, 80SA316
| Citation | 650 P.2d 515 |
| Decision Date | 16 August 1982 |
| Docket Number | No. 80SA316,80SA316 |
| Parties | YOUNG LIFE (formerly Young Life Campaign), Plaintiff-Appellant, v. DIVISION OF EMPLOYMENT AND TRAINING, Department of Labor and Employment, Defendants-Appellees. |
| Court | Supreme Court of Colorado |
Holme, Roberts & Owen, James T. Flynn, Michael T. Browning, Colorado Springs, for plaintiff-appellant.
J. D. MacFarlane, Atty. Gen., Richard F. Hennessey, Deputy Atty. Gen., Mary J. Mullarkey, Sol. Gen., David L. Lavinder, Asst. Atty. Gen., Human Resources Section, Denver, for defendants-appellees.
The plaintiff, Young Life, appeals the Denver District Court's affirmance of a decision by the Division of Employment and Training, Department of Labor and Employment (Division) that Young Life is not a "church" for purposes of section 8-70-103(10)(g)(I), C.R.S. 1973 (current version in 1981 Supp.) and therefore is not eligible for an exemption from Colorado's unemployment tax. 1 We affirm the district court's ruling.
Colorado's Employment Security Act (Act), sections 8-70-101, et seq., C.R.S. 1973 and 1981 Supp., provides for a comprehensive system of unemployment insurance. It requires an employer to pay unemployment tax on wages paid to employees in certain areas of covered employment. The Colorado unemployment tax system is part of a cooperative federal-state scheme administered under the Federal Unemployment Tax Act (FUTA), 26 U.S.C. §§ 3301-3311 (1976 ed. and Supp.IV). FUTA imposes a federal excise tax on employers for unemployment compensation, but an employer is allowed a credit of up to ninety percent of the federal tax for contributions paid to a state fund which meets federal approval. 2 For this reason, the unemployment tax statutes of all fifty states closely track the relevant federal provisions.
Prior to 1970, FUTA excluded from the definition of covered employment for which unemployment tax had to be paid all "service performed in the employ of a religious, charitable, educational, or other organization" defined as tax-exempt for federal income tax purposes. Pub.L. 86-778, § 533, 74 Stat. 984 (1960). In 1970, Congress enacted a narrower unemployment tax exemption, limiting those organizations not required to pay the tax to churches, and religious organizations "operated, supervised, controlled or principally supported by a church or convention or association of churches." Employment Security Amendments of 1970, Pub.L. 91-373, § 104(b)(1), 84 Stat. 697, codified at 26 U.S.C. § 3309(b).
The corresponding Colorado statutory provision, section 8-70-103(10)(g)(I), C.R.S. 1973, originally defined exempted employment as service performed "[i]n the employ of a church, convention or association of churches...." It is the Division's interpretation of this statutory language which is at issue in this case. In 1979, the General Assembly amended this provision, adding the clause "or in the employ of an organization which is operated primarily for religious purposes." Colo.Sess.Laws 1979, ch. 67, 8-70-103 at 345. At the urging of the Division, which expressed concern that federal credit might be lost if the wording of Colorado's statute departed from that of the federal provision, the General Assembly again amended this provision in 1980 to add language tracking § 3309(b) of the federal statute. Colo.Sess.Laws 1980, ch. 59, 8-70-103 at 462. The current provision exempts services performed
[i]n the employ of a church, convention, or association of churches or in the employ of 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.
Section 8-70-103(10)(g)(I), C.R.S. 1973 (1981 Supp.). 3
Neither Colorado's Act nor FUTA contains a definition of "church." The 1970 United States House of Representatives Report on § 3309, discussing the language used both in § 3309(b)(1) of FUTA and section 8-70-103(10)(g)(I) of Colorado's Act, stated:
This paragraph excludes [from unemployment tax payment] services of persons where the employer is a church or convention or association of churches, but does not exclude certain services performed for an organization which may be religious in orientation unless it is operated primarily for religious purposes and is operated, supervised, controlled, or principally supported by a church (or convention or association of churches).
H.R.Rep.No.91-612, p. 44 (1969) , quoted in St. Martin Evangelical Lutheran Church v. South Dakota, 451 U.S. 772, 781, 101 S.Ct. 2142, 2147, 68 L.Ed.2d 612 (1981).
Following an initial decision by the Division denying Young Life an exemption from unemployment tax as a "church," Young Life sought a hearing on its exclusion. After the hearing, on September 27, 1979, the Division issued its final review decision in which it determined that Young Life was not a "church" for purposes of the unemployment tax exemption. The Division made extensive findings of fact, including the following:
3. The headquarters of the employer are located in Colorado Springs. Out of a total of approximately 650 full time staff personnel employed by Young Life, about 80 are located at the headquarters.
4. The headquarters staff provides various services to the local "chapters," which are usually run by volunteers who comprise the local "committee." Services which the headquarters staff provide are accounting, data processing, training of personnel, fundraising, planning, and communications.
5. The employer has no private unemployment benefits plan. Some workers have received severance pay upon leaving the organization, but whether a severance allowance will be paid and how much the individual will get is totally within the discretion of the administration. Young Life hires and fires workers in diverse categories of expertise and functions.
6. The employer has no official connection with any local church congregation nor with any denominational church body, being operated under policies set by the board of trustees and carried out by the administrative staff.
7. The employer derives some income from certain of its camping and recreational programs by charging fees to participants (often paid on their behalf by others). However, it is funded primarily by private donations. Of the income from private contributions, 73% comes from individuals, with another 8-9% coming from various local church congregations, another 8-9% coming from private foundations and trusts, and another 5% coming from businesses.
8. The employer operates ranches and camps for youths in various parts of the country. Fees charged to participants help pay for running these facilities. There are both paid staff personnel and volunteers running the camps, which provide youths with a variety of recreational activities, including hiking, swimming, skiing, camping, and other similar activities.
9. The "club meeting" is the most important feature of the Young Life program. Any teenage person can attend regardless of his religious affiliation. There is no "membership" in a club. At the meetings there is singing, reading of minutes, announcements, performance of skits, and a religious message.
10. The local committees, working under the regional directors, oversee the conduct of the club meetings and other activities of the local chapter. Committee members are usually adult volunteers.
11. Young Life is exclusively devoted to working with young people. There is no Young Life program for senior citizens, nor for middle-aged Christians. Young Life does not intend to be the full religious experience of the youths. It is the intent and purpose of Young Life to get teenagers involved with local church congregations.
12. The purpose and function of Young Life is that of a youth organization taking the Christian message to youngsters.
Final Review Order at 3-4.
The Division, recognizing that neither Colorado's Employment Security Act nor FUTA defines "church," and that it is "an ambiguous term with a variety of meanings," noted three common definitions of church: a "local congregation," a "denominational organization" and a local house of worship. See Whelan, "Church" in the Internal Revenue Code: The Definitional Problems, 45 Ford.L.Rev. 885 (1977). The Division concluded that Young Life did not fit under any of these common definitions. It noted that most definitions of church include groups which engage in one or more of the following activities:
(a) [forming] an association together of an indefinite number of persons into an identifiable entity, persons identified as members in an organization, "congregation", "community", or "fellowship" of believers;
(b) [professing] adherence to the same general creed, a sincere following of a set of beliefs or a specific religious viewpoint;
(c) [celebrating] the same rites, joining in the rituals and ceremonies inherent in their beliefs, providing a sincere and meaningful religious experience for members;
(d) promoting the spirituality of its members, watching over the spiritual welfare of each other, promoting the adherence to beliefs, promoting the spread of their beliefs among others;
(e) providing for the granting of ecclesiastical authority, such as ordination of ministers, [and] selection of leaders and teachers;
(f) establishing programs to provide education in the creed, doctrines, and beliefs of the church to members and children; and
(g) establishing themselves at a specific house or location for religious services.
Final Review Order at 5-6. See 66 Am.Jur.2d, Religious Societies, § 1 at 756 (1973).
The Division also found important the fact that church congregations normally cross all sex and age barriers and that church membership is usually exclusive, with persons not normally belonging to...
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