Teacher Employment Practices Liability at Church Schools
A church with twenty employees and a church school with twenty teachers do not carry the same employment risk, even though the headcount matches. The school version is harder, and the reason is contracts.
Church schools typically hire teachers on annual contracts, apply a faith based code of conduct, and make non renewal decisions every spring. Each of those is defensible. Together they generate more employment disputes than almost anything else a congregation does, and most church EPL limits were sized for a congregation.
Where the claims come from
Non renewal that looks like termination
A teacher whose contract is simply not renewed experiences it as being fired. Where the stated reason touches conduct, belief or lifestyle, the gap between the school's understanding and the teacher's can become a claim quickly, and will be expensive to defend even when the school is right.
The ministerial exception, and its edges
Courts have recognised that religious organisations have latitude in employment decisions about people who perform religious functions, and that has been applied to some teachers at religious schools. The protection is real but the boundary is contested, fact specific and does not extend cleanly to every role. A groundskeeper or a bookkeeper at a church school is not usually covered by it.
Two practical consequences follow. First, relying on the exception without legal advice is risky. Second, and more often missed, the exception may defeat the claim but it does not prevent the claim. You still pay to establish it, which is what EPL coverage is for.
Wage and hour
Coaches, aides, after school care staff and summer programs generate overtime and classification questions. Many EPL policies exclude wage and hour damages entirely, or sublimit defence costs. Check which.
Student facing allegations against staff
An allegation involving a student usually implicates both abuse coverage and employment coverage, and the interaction between the two policies determines who defends. That should be understood before it is needed.
Not sure your EPL limit fits the school?
We will look at your limit against your actual headcount, contract structure and conduct policy, and tell you plainly whether it is sized right. Request a free church risk assessment or call 978.712.0111.
What adequate looks like
We regularly see church policies carrying a management liability aggregate of one or two hundred thousand dollars covering forty or more employees across a church and a school. A single defended employment claim can consume that before it reaches a resolution. For a combined church and school operation of this size, limits are usually a conversation that starts at one million rather than ending there, and the defence cost structure matters as much as the limit.
Ask specifically whether defence costs erode the limit or sit outside it. Inside the limit, a long defence leaves nothing for a settlement.
The documents that decide these cases
A written code of conduct that is applied consistently. Teacher contracts that state the basis for renewal clearly. Documented performance management rather than a spring surprise. A complaint procedure people actually use. Underwriters ask for these, and the answers affect both price and availability.
Questions heads of school ask
Does the ministerial exception mean we do not need EPL?
No. It is a defence, not a shield against being sued, and it does not apply to every role. The defence still has to be funded.
Are teachers covered under the church EPL automatically?
Only if the school is a covered entity and its employees are within the definition of insured persons. Where the school is separately incorporated this frequently fails.
Does our handbook matter for insurance?
Materially. Underwriters price the absence of a current handbook, a documented complaint process and consistent application of the conduct policy.
What about volunteers who coach?
Usually outside EPL, which responds to employment claims, but potentially inside general liability or abuse coverage. Worth confirming where unpaid coaches sit across all three.
Not ready for a full review? Start with our church insurance checklist, a short list of the coverages and limits worth confirming on your current policy before you talk to anyone.
If you would like a second opinion on whether your employment practices and school staffing is properly structured for insurance purposes, contact us for a free church risk assessment.
Contact Hale Street Insurance at 978.712.0111 or [email protected] for a free church insurance review. You can also visit our church insurance page or request a quote to get started.
Jake Lubinski is the founder of Hale Street Insurance and a licensed insurance broker with years of church board and stewardship experience. Based in Boxford, MA he works with churches throughout Massachusetts and the US to build insurance and risk programs designed around how ministry actually operates. Reach Jake at [email protected] or 978.712.0111.
Related reading: Church Employment Practices Liability | Discrimination and the Ministerial Exception | Church Employee Handbook and HR Policies | Negligent Hiring at Churches
