Petitioner Church, located in South Dakota, is a member of the
Wisconsin Evangelical Lutheran Synod. It operates an elementary
Christian day school that is not a separate legal entity from the
Church, but is financed by the Church's congregation and controlled
by a Board elected from the congregation. Petitioner Academy is a
secondary school in South Dakota owned, supported, and controlled
by the Synod, and it also is not separately incorporated.
Petitioners claim exemption with respect to their school employees
from unemployment compensation taxes imposed by the Federal
Unemployment Tax Act (FUTA) and South Dakota's complementary
statutes. Title 26 U.S.C. § 3309(b) provides an exemption with
respect to,
inter alia,
"service performed -- (1) in the employ of (A) a church or
convention or association of churches, or (B) an organization . . .
which is operated, supervised, controlled, or principally supported
by a church or a convention or association of churches."
A previous exemption under § 3309(b)(3) for service performed in
the employ of a school that is not an institution of higher
education was repealed in 1976 when FUTA was amended. After
petitioners' unsuccessful administrative appeal from South Dakota's
imposition of the taxes upon them and a successful appeal to a
state court, the South Dakota Supreme Court held petitioners
subject to the taxes.
Held: Petitioners are exempt from unemployment
compensation taxes under § 3309(b)(1)(A). Pp.
451 U. S.
780-788.
(a) Section 3309(b)(1)(A), as enacted in 1970, applies to
schools, like petitioners', that have no separate legal existence
from a church, or, as in the Academy's case, from a "convention or
association of churches." The employees working within these
schools plainly are "in the employ of . . . a church or convention
or association of churches" within the meaning of § 3309(b)(1)(A).
And instead of construing the term "church" in § 3309(b) as being
limited to the actual house of worship, a construction that would
contradict the phrasing of FUTA, such term must be construed as
referring to the congregation or the hierarchy itself, that is, the
church authorities who conduct the business of hiring, discharging,
and directing church employees. Pp.
451 U. S.
781-785.
Page 451 U. S. 773
(b) The legislative history, including the repeal of §
3309(b)(3), discloses no intent by Congress to alter the scope or
meaning of § 3309(b)(1). Pp.
451 U. S.
785-788.
290 N.W.2d
845, reversed and remanded.
BLACKMUN, J., delivered the opinion of the Court, in which
BURGER, C.J., and BRENNAN, STEWART, WHITE, MARSHALL, POWELL, and
REHNQUIST, JJ., joined. STEVENS, J., filed an opinion concurring in
the judgment,
post, p.
451 U. S.
788.
Page 451 U. S. 774
JUSTICE BLACKMUN delivered the opinion of the Court.
Petitioners, St. Martin Evangelical Lutheran Church (St.
Martin), at Watertown, S.D. and Northwestern Lutheran Academy
(Academy), at Mobridge in that State, claim exemption with respect
to their school employees from taxes imposed by the Federal
Unemployment Tax Act (FUTA), 26 U.S.C. §§ 3301-3311 (1976 ed. and
Supp. III), and by South Dakota's statutes complementary thereto,
S.D.Codified Laws § 61-1-1
et seq. (1978 and Supp. 1980).
The exemption is claimed on both statutory and First Amendment
grounds. The provisions primarily at issue are FUTA's § 3309(b)
[
Footnote 1] and South Dakota's
§ 61-1-10.4. [
Footnote 2]
Page 451 U. S. 775
I
A
FUTA appeared originally as Title IX of the Social Security Act
of 1935, 49 Stat. 639, and was enacted in response to the
widespread unemployment that accompanied the Great Depression. It
called for a cooperative federal-state program of benefits to
unemployed workers. [
Footnote
3] The Act has undergone a series of amendments that
progressively have expanded coverage of the Nation's workforce.
[
Footnote 4]
This case concerns one of the more recent of those amendments,
namely, that effected by § 115(b)(1) of the Unemployment
Compensation Amendments of 1976, Pub.L. 94-566, 90 Stat. 2670. The
Secretary of Labor has determined that this statute rendered
nonprofit church-related primary and secondary schools subject to
FUTA. The South Dakota authorities went along with that ruling in
their interpretation of the State's amended statute. Petitioners
are among those religiously affiliated schools so claimed to be
required to pay the FUTA and South Dakota taxes. They contest this
construction of the statutes. They argue also, however, that
holding them subject to the taxes would violate both
Page 451 U. S. 776
the Free Exercise Clause and the Establishment Clause of the
First Amendment.
B
Proper understanding of the effect of the 1976 amendment
requires a review of FUTA's development. From 1960 to 1970, FUTA,
by § 3306(c)(8), unrestrictedly excluded from the definition of
"employment" all
"service performed in the employ of a religious, charitable,
educational, or other organization described in section 501(c)(3)
which is exempt from income tax under section 501(a)."
Pub.L. 86-778, § 533, 74 Stat. 984. [
Footnote 5] Under this definition, nonprofit
church-related schools, of course, were exempt from the tax. A 1970
amendment, however, served to narrow that broad exemption of
nonprofit organizations. [
Footnote
6]
See Employment Security Amendments of 1970, Pub.L.
91-373, § 104(b)(1), 84 Stat. 697. The amendment generally required
state coverage of employees of nonprofit organizations, state
hospitals, and institutions of higher education. Simultaneously,
however,
Page 451 U. S. 777
Congress enacted a new and narrower exemption of nonprofit
organizations and governmental entities. So far as pertinent to
this case, that exemption was set forth in a new § 3309(b), which
then provided:
"This section shall not apply to service performed -- "
"(1) 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;"
"(2) by a duly ordained, commissioned, or licensed minister of a
church in the exercise of his ministry or by a member of a
religious order in the exercise of duties required by such
order;"
"(3) in the employ of a school which is not an institution of
higher education. . . ."
No one, including the Secretary of Labor, disputes that
church-run elementary and secondary schools remained exempt under
this new § 3309(b).
In 1976, Congress again amended the Act. Unemployment
Compensation Amendments of 1976, Pub.L. 9566, § 115(b)(1), 90 Stat.
2670. The effect of the 1976 amendment, so far as pertinent to this
case, was to eliminate completely the theretofore existing
subsection (b)(3). [
Footnote 7]
Subsections (b)(1) and (b)(2), dealing specifically with religious
employment, remained unchanged. [
Footnote 8]
Page 451 U. S. 778
In 1978, the Secretary of Labor announced, in a letter made
public, that the 1976 repeal of § 3309(b)(3) of FUTA was
"clearly intended to result in State coverage of church-related
schools, whose employees constitute over 80 percent of the
employees of all nonprofit schools. In light of the repeal of
3309(b)(3), we think the only services performed in the schools
that may reasonably be considered within the scope of the exclusion
permitted by 3309(b)(1) are those strictly church duties performed
by church employees pursuant to their religious responsibilities
within the schools."
Letter dated April 18, 1978, of Secretary Marshall to the Most
Reverend Thomas C. Kelley, O.P., General Secretary, United States
Catholic Conference.
The Secretary also ruled that neither § 3309(b)(1)(A) nor §
3309(b)(1)(B) was applicable to church-run schools. He notified the
States, and they took steps for the collection of unemployment
taxes from church-related schools.
See Employment and
Training Administration, U.S. Department of Labor, Unemployment
Insurance Program Letter No. 3978 (May 30, 1978), reprinted in
[1978 Transfer Binder] CCH Unemp.Ins.Rep. � 21,522.
II
Both St. Martin and the Academy are members of the Wisconsin
Evangelical Lutheran Synod and, as such, are organizations exempt
from federal income tax under 26 U.S.C. § 501(c)(3). St. Martin
operates a state-certified elementary Christian day school at
Watertown that offers kindergarten through eighth-grade education.
The school, which is not a separate legal entity from the church,
is controlled by a Board of Education elected from the local
congregation. The congregation entirely finances the school's
operation. The Academy is a state-certified 4-year secondary school
at Mobridge, and is owned, supported, and controlled by the
Page 451 U. S. 779
Synod. It also is not separately incorporated. Approximately
half of its students go on to become ministers within the Church.
According to the record, all courses given at St. Martin and at the
Academy are taught from a religious point of view based on the
Synod's scriptural convictions.
When South Dakota proposed to tax them under § 61-110.3,
petitioners took an administrative appeal. The Appeals Referee of
the State's Department of Labor, Unemployment Insurance Division,
ruled that service performed by employees of each petitioner was
"employment" within the meaning of the statute. Although finding
that the Synod "believes a theological basis exists for their
schools" and operates them because it
"holds the conviction that training of the youth involves both
education and religion, and that the two are so closely interwoven
they cannot be separated,"
App. to Pet. for Cert. A-36, the Referee declined to rule that
petitioners were exempt under § 61-1-10.4, the state analogue to 26
U.S.C. § 3309(b).
See nn.
1 and |
1 and S.
772fn2|>2,
supra. He ruled that petitioners were not
eligible for exemption under § 61-1-10.4(1)(a) because, in his
view, the term "church," as used in that section, referred only to
the "individual
house of worship' maintained by a particular
congregation." App. to Pet. for Cert. A-43. He also ruled,
ibid., that they were ineligible for exemption under §
61-1-10.4(1)(b) because "the primary purpose of the schools is
education."
On appeal, the Hughes County Circuit Court reversed, finding the
Referee's decision clearly erroneous. App. to Pet. for Cert. A-25.
The court ruled that both St. Martin and the Academy were exempt
under § 61-1-10.4(1)(b); that the term "church" referred to "an
organization of worshippers," rather than to a "house of worship";
and that the primary purpose of the schools was the propagation of
the Synod's faith, a religious concern. App. to Pet. for Cert. A-30
to A-33. The South Dakota Supreme Court, by a divided vote, in turn
reversed the judgment of the Circuit Court, and held petitioners
subject to the unemployment
Page 451 U. S. 780
compensation taxes. [
Footnote
9]
In re Northwestern Lutheran Academy, 290 N.W.2d
845 (1980). Noting the growing number of conflicting federal
and state decisions on this issue, [
Footnote 10] we granted certiorari. 449 U.S. 950
(1980).
III
A statute, of course, is to be construed, if such a construction
is fairly possible, to avoid raising doubts of its
constitutionality.
Crowell v. Benson, 285 U. S.
22,
285 U. S. 62
(1932);
Machinists v. Street, 367 U.
S. 740,
367 U. S. 79-750
(1961);
United States v. Clark, 445 U. S.
23,
445 U. S. 27
(1980). Accordingly, we turn first to he federal statute itself.
From our reading of the legislation and of its history, we conclude
that the only reasonable construction of 26 U.S.C. § 3309(b)(1) is
one
Page 451 U. S. 781
that exempts petitioners' church-run schools, and others
similarly operated, from mandatory state coverage.
A
Section 3309 was added to FUTA in 1970. Although the legislative
history directly discussing the intended coverage of its subsection
(b)(1) is limited, [
Footnote
11] the House Report had the following explanation:
"This paragraph excludes 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). Thus, the services of the janitor of a church would be
excluded, but services of a janitor for a separately incorporated
college, although it may be church related, would be covered. A
college devoted primarily to preparing students for the ministry
would be exempt, as would a novitiate or a house of study training
candidates to become members of religious orders. On the other
hand, a church related (separately incorporated) charitable
organization (such as, for example, an orphanage or a home for the
aged) would not be considered under this paragraph to be operated
primarily for religious purposes."
H.R.Rep. No. 91-612, p. 44 (1969).
Page 451 U. S. 782
The Senate Report contained identical language.
See
S.Rep. No. 91-752, pp. 48-49 (1970).
Respondent would read this discussion, as the South Dakota
Supreme Court majority did, to mean that Congress in 1970 intended
to bring within mandatory state coverage all institutions of higher
education, including those with no separate legal existence from
the church or churches that operate them, except for the narrow
category of seminaries and novitiates. From this, respondent
extrapolates that Congress intended § 3309(b)(1) to be read very
narrowly, and that the later 94th Congress, in 1976, similarly
intended to include within mandatory state coverage all primary and
secondary educational institutions, including those entirely within
the internal structure of churches.
The above quotation from the 1969 House Report and its Senate
counterpart, however, are susceptible of a simpler and more
reasonable explanation that corresponds directly with the language
of the subsection. Congress drew a distinction between employees
"of a church or convention or association of churches," §
3309(b)(1)(A), on the one hand, and employees of "separately
incorporated" organizations, on the other.
See H.R.Rep.
No. 91-612, at 44. The former uniformly would be excluded from
coverage by § 3309(b)(1)(A), while the latter would be eligible for
exclusion under § 3309(b)(1)(B) only when the organization is
"operated, supervised, controlled, or principally supported by a
church or convention or association of churches." [
Footnote 12] To hold, as respondent
Page 451 U. S. 783
would have us do, that "organization" in subsection (b)(1)(B)
also includes a church school that is not separately incorporated
would make (b)(1)(A) and (b)(1)(B) redundant.
The distinction between church schools integrated into a
church's structure and those separately incorporated is given
further credence by the statute's use of specific words. The
Department of Labor would interpret the term "church" in §
3309(b)(1) as limited to the actual house of worship used by a
congregation.
See Brief for United States as Amicus Curiae
115. [
Footnote 13] This
reading, however, appears to us to deny several of FUTA's phrases
their intended meaning. Section 3309(b), exempting "service
performed -- (1) in the employ of (A) a church . . . ," is phrased
entirely in terms of the nature of the
employer, and not
in terms of the work performed or the place at which the employee
works. Congress further defined "employer" in § 3306(a) as "any
person who -- . . . paid wages . . . or . . . employed at
least one individual" (emphasis added). It defined "employee" as
"any individual who, under the usual common law rules applicable
in
Page 451 U. S. 784
determining the employer-employee relationship, has the status
of an employee." §§ 3306(i) and 3121(d)(2). Thus, to hold "church"
synonymous solely with a physical building that is a house of
worship contradicts the phrasing of the statute. [
Footnote 14] The word "church" in § 3309(b)
must be construed, instead, to refer to the congregation or the
hierarchy itself, that is, the church authorities who conduct the
business of hiring, discharging, and directing church employees.
[
Footnote 15]
We conclude that, at the time of its enactment in 1970, §
3309(b)(1)(A) was meant to apply to schools, like petitioners',
that have no separate legal existence from a church, or, as in the
Academy's case, from a "convention or association of churches." As
the Referee found, St. Martin directly finances, supervises, and
controls its school's operations. The Synod similarly supports and
controls the Academy. Only teachers trained and certified by the
Synod may teach at either school, and, again as the Referee found,
these teachers, both male and female, "receive a divine, life-long
call" to the church. App. to Pet. for Cert. A-38. Male teachers
("teaching ministers") have equal status in the church and an equal
vote on Synod matters, including matters of doctrine, with
preaching ministers.
Id. at A-37. Neither school has a
separate legal existence. Thus, the employees
Page 451 U. S. 785
working within these schools plainly are "in the employ . . . of
a church or convention or association of churches. . . ." [
Footnote 16] § 3309(b)(1)(A).
B
The 1976 Amendments did not alter the scope of § 3309(b)(1),
either directly or by implication. [
Footnote 17] Congress, in eliminating the old §
3309(b)(3), made no change in § 3309(b)(1). It did not discuss
churches or church schools, and it intimated that § 3309(b)(1)
remained unchanged.
See, e.g., H.R.Rep. No. 9755, pp. 23,
41, 55-56 (1975)(explaining the then-current coverage of § 3309(b)
and the anticipated effect of the repeal, and containing no
indication that the proposed amendments would alter §
3309(b)(1)).
Page 451 U. S. 786
Respondent places particular emphasis on legislative statements
expressing an intention, for example, to extend coverage "on the
basis of services performed for all educational institutions,"
H.R.Rep. No. 9755, at 56, [
Footnote 18] and to "employees of nonprofit elementary
and secondary schools,"
id. at 2.
See also id. at
41 ("This section requires States, as a condition for tax offset
credit to their employers, to extend coverage to employees of
nonprofit primary and secondary institutions of education, thus
broadening present required coverage limited to nonprofit
institutions of higher education"); S.Rep. No. 91265, pp. 2, 9-10
(1976).
These references are simply too general and too ambiguous to
bear the weight respondent would assign to them. [
Footnote 19] There is no indication that
Congress, in these references, had in mind the scope of §
3309(b)(1) and religious organizations. Rather, all the evidence
demonstrates that it was concerned solely with the then-existing §
3309(b)(3) and secular educational institutions, particularly the
public schools. Furthermore, the reported comments implying total
coverage of all educational institutions, as a result of the repeal
of the former § 3309(b)(3), could not be taken as literally true,
because the 1970 Report expressly had noted that a college
Page 451 U. S. 787
"devoted primarily to preparing students for the ministry,"
H.R.Rep. No. 91-612, at 44, would be exempt. All institutions of
higher education had not been covered by the 1970 Amendments.
Respondent also relies on a single statistic estimating the
number of employees newly to be covered as a result of the repeal
of the then § 3309(b)(3).
See S.Rep. No. 94-1265 at 8
(table). This statistical reference, to the effect that 242,000
employees of nonprofit organizations would be covered by the 1976
repeal of subsection(b)(3), is much too meager to sustain
respondent's position. The Committee Report's table containing this
figure is devoid of any explanation, source, or supporting data.
The South Dakota Supreme Court relied on the figure, however,
reasoning that, because it "approximates the total number of
teachers in all nonprofit elementary and secondary schools" in
1975, [
Footnote 20] 290
N.W.2d at 849 and n. 5, Congress must have included within that
number religious school teachers, who constitute more than half the
staff of all private elementary and secondary schools in the United
States. Yet, in repealing § 3309(b)(3), Congress intended to
include not just full-time teachers, but all
employees of
the newly covered nonprofit private elementary and secondary
schools (custodians, cafeteria workers, nurses, part-time help
counselors, etc.). Thus, the inclusion of all employees in
nonprofit private lower schools within the number of persons
brought within FUTA by the repeal would far exceed the 242,000
contained in the Report's table, rendering it, in our view, of
dubious significance for the present issue.
This legislative history does not reveal any clear intent to
repeal § 3309(b)(1) or to alter its meaning. The Court has
Page 451 U. S. 788
had frequent occasion to note that such indefinite congressional
expressions cannot negate plain statutory language and cannot work
a repeal or amendment by implication.
"In the absence of some affirmative showing of an intention to
repeal, the only permissible justification for a repeal by
implication is when the earlier and later statutes are
irreconcilable."
Morton v. Mancari, 417 U. S. 535,
417 U. S. 550
(1974);
see also Watt v. Alaska, ante, p.
451 U. S. 259;
TVA v. Hill, 437 U. S. 153,
437 U. S.
189-190 (1978);
FTC v. A. P. W. Paper Co.,
328 U. S. 193,
328 U. S.
202-203 (1946);
Posadas v. National City Bank,
296 U. S. 497,
296 U. S.
503-505 (1936);
United States v. Noce,
268 U. S. 613,
268 U. S.
618-619 (1925);
United States v. Greathouse,
166 U. S. 601,
166 U. S. 605
(1897). This long-established canon of construction carries special
weight when an implied repeal or amendment might raise
constitutional questions.
See NLRB v. Catholic Bishop of
Chicago, 440 U. S. 490
(1979). We therefore hold that the repeal of § 3309(b)(3) did not
alter the meaning of § 3309(b)(1). Petitioners are eligible for
exemption under subsection (b)(1)(A) by virtue of the nature of
their relationship to the church bodies that employ them.
This makes it unnecessary for us to consider the First Amendment
issues raised by petitioners.
The judgment of the Supreme Court of South Dakota is reversed,
and the case is remanded to that court for further proceedings not
inconsistent with this opinion.
It is so ordered.
[
Footnote 1]
Title 26 U.S.C. § 3309(b) reads in pertinent part:
"This section shall not apply to service performed -- "
"(1) 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;"
"(2) by a duly ordained, commissioned, or licensed minister of a
church in the exercise of his ministry or by a member of a
religious order in the exercise of duties required by such order. .
. ."
[
Footnote 2]
This South Dakota statute provides:
"For the purposes of §§ 61-1-10.2 and 61-1-10.3 the term
'employment' does not apply to service performed:"
"(1) 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; or"
"(2) By a duly ordained, commissioned, or licensed minister of a
church in the exercise of his ministry or by a member of a
religious order in the exercise of duties required by such order;
or"
"(3) In the employ of a school which is not an institution of
higher education prior to January 1, 1978. . . ."
[
Footnote 3]
FUTA imposes an excise tax on "wages" paid by an "employer" in
covered "employment," 26 U.S.C. § 3301, as these terms are
statutorily defined. § 3306 (1976 ed. and Supp. III). An employer,
however, is allowed a credit of up to 90% of the federal tax for
"contributions" paid to a state fund established under a federally
approved state unemployment compensation law. § 3302 (1976 ed. and
Supp. III). The requirements for federal approval are contained in
§§ 3304 and 3309 (1976 ed. and Supp. III), and the Secretary of
Labor must annually review and certify the state plan. §§ 3304(a)
and (c) (1976 ed. and Supp. III). All 50 States have employment
security laws implementing the federal mandatory minimum standards
of coverage. A State, of course, is free to expand its coverage
beyond the federal minimum without jeopardizing its federal
certification.
[
Footnote 4]
In response to each federal amendment, the States
correspondingly have amended their statutes to retain their federal
certifications.
[
Footnote 5]
From and after the effective date of the Internal Revenue Code
of 1954 and until 1960, § 3306(c)(8) related the exclusion to
"service performed in the employ of a corporation, community
chest, fund, or foundation, organized and operated exclusively for
religious, charitable, scientific, testing for public safety,
literary, or educational purposes, or for the prevention of cruelty
to children or animals, no part of the net earnings of which inures
to the benefit of any private shareholder or individual, and no
substantial part of the activities of which is carrying on
propaganda, or otherwise attempting, to influence legislation."
68A Stat. 450.
[
Footnote 6]
Inasmuch as the definition of "employment" in § 3306(c)(8)
continued to exclude service performed in the employ of an
organization exempt from federal income tax under § 501(c)(3), the
1970 amendment did not itself serve to impose a federal excise tax
on nonprofit organizations. The amendment, however, as a condition
for federal certification, required state statutes to cover
employees of certain organizations of that type. § 3309(a)(1)(A).
Any covered nonprofit organization must be given the option of
either making regular payments to the state unemployment fund or
reimbursing the fund for benefits paid out to the organization's
employees. § 3309(a)(2). South Dakota amended its unemployment
statutes accordingly.
See 1971 S.D. Laws, ch. 276 (now
codified, as further amended, as S.D.Codified Laws § 61-1-1
et
seq. (1978 and Supp. 1980)).
[
Footnote 7]
In place of subsection(b)(3), Congress substituted a new and
unrelated subsection (b)(3) that concerns the exemption of certain
service in the employ of governmental entities. We continue herein
to refer to the repealed subsection as "§ 3309(b)(3)" or
"(b)(3)."
[
Footnote 8]
Following the 1976 amendment, South Dakota effected
corresponding amendments of its unemployment compensation statutes.
See 1977 S.D. Laws, ch. 420, §§ 9, 10, and 11 (codified as
S.D.Codified Laws §§ 61-110.3 and 61-1-10.4 (1978)). Petitioners
were ruled to be liable for state taxes under these provisions.
[
Footnote 9]
The South Dakota Supreme Court's analysis depended entirely on
its understanding of the meaning of FUTA and the First Amendment,
and did not rest on any independent and adequate state ground. We
therefore are at liberty to review this judgment, although,
literally, it concerns the construction of a state statute. While
the South Dakota courts remain free to construe the State's own law
differently, they deserve to be made aware of the proper and, here,
significant interpretation of the intertwined federal law.
See,
e.g., Zacchini v. Scripps-Howard Broadcasting Co.,
433 U. S. 562,
433 U. S.
566-568 (1977);
United Air Lines, Inc. v.
Mahin, 410 U. S. 623,
410 U. S. 630
631 (1973);
State Tax Comm'n v. Van Cott, 306 U.
S. 511,
306 U. S.
514-515 (1939).
[
Footnote 10]
Most other courts that have addressed this general issue have
ruled in favor of church-related schools.
See, e.g., Alabama v.
Marshall, 626 F.2d 366 (CA5 1980),
cert. pending, No.
80 922;
Lutheran Church-Missouri Synod v. Bowling, 89
Ill.App.3d 100, 411 N.E.2d 526 (1980);
Roman Catholic Church of
the Archdiocese of New Orleans v. State, 387 So. 2d 1248
(La.App. 1980);
Sant Bani Ashram, Inc. v. New Hampshire
Department of Employment Security, 121 N.H. 74, 426 A.2d 34
(1981);
Begley v. Employment Security Comm'n, 50 N.C.App.
432,
274
S.E.2d 370 (1981);
Grace Lutheran Church v. North Dakota
Employment Security Bureau, 294 N.W.2d
767 (N.D.1980);
Employment Division v. Archdiocese of
Portland, 42 Ore.App. 421, 60 P.2d 926 (1979);
Christian
School Assn. v. Commonwealth, 55 Pa.Commw. 555, 423 A.2d 1340
(1980).
But see Ascension Lutheran Church v. Employment
Security Comm'n, 501 F.
Supp. 843 (WDNC 1980).
[
Footnote 11]
On the Senate floor, Senator Long, introducing the bill that
became the 1970 Amendments, merely explained:
"The bill does not require extension of coverage to all jobs in
nonprofit organizations. . . . [C]overage would not have to be
extended to the employees of a church or religious organization, to
clergymen or members of religious orders, [or] to elementary and
secondary schools. . . ."
116 Cong.Rec. 10575 (1970). Subsection (b)(1) was not
specifically mentioned in the debates.
[
Footnote 12]
The importance of this distinction, and of giving meaning to
both (A) and(B), is heightened by the great diversity in church
structure and organization among religious groups in this country.
See 1 A. Stokes, Church and State in the United States
720-883 (1950); Whelan, "Church" in the Internal Revenue Code: the
Definitional Problems, 45 Ford.L.Rev. 885 (1977). This diversity
makes it impossible, as Congress perceived, to lay down a single
rule to govern all church-related organizations. Our holding today
concerns only schools that have no legal identity separate from a
church. To establish exemption from FUTA, a separately incorporated
church school (or other organization) must satisfy the requirements
of § 3309(b)(1)(B): (1) that the organization "is operated
primarily for religious purposes," and (2) that it is "operated,
supervised, controlled, or principally supported by a church or
convention or association of churches."
Because we hold petitioners exempt under § 3309(b)(1)(A), we
leave the issue of coverage under § 3309(b)(1)(B) for the
future.
[
Footnote 13]
The United States strongly urges this construction, noting that
the Department of Labor consistently has advanced this meaning of
"church" since the 1970 enactment.
See U.S. Department of
Labor, Draft Legislation to Implement the Employment Security
Amendments of 1970, pp. 27-28. The amount of deference due an
administrative agency's interpretation of a statute, however,
"will depend upon the thoroughness evident in its consideration,
the validity of its reasoning, its consistency with earlier and
later pronouncements, and all those factors which give it power to
persuade, if lacking power to control."
Skidmore v. Swift & Co., 323 U.
S. 134,
323 U. S. 140
(1944). Carefully considering the merits of the Secretary's
interpretation, we believe it does not warrant deference.
[
Footnote 14]
Congress knew how to limit expressly an exemption to the place
of employment or the type of work performed.
See §
3309(b)(3) ("if such service is performed by an individual in the
exercise of his duties"); § 3309(b)(4) (service performed "in a
facility"); § 3309(b)(5) (service performed "as part of an
unemployment work-relief or work-training program") .
[
Footnote 15]
Although we hold today that the word "church" in § 3309(b) must
be considered as the "employer," and not as a building that is a
house of worship, we disavow any intimations in this case defining
or limiting what constitutes a church under FUTA or under any other
provision of the Internal Revenue Code.
Cf. Riker v.
Commissioner, 244 F.2d 220 (CA9),
cert. denied, 355
U.S. 839 (1957);
Chapman v. Commissioner, 48 T.C. 358
(1967);
American Guidance Foundation, Inc. v. United
States, 490 F.
Supp. 304 (DC 1980);
De La Salle Institute v. United
States, 195 F.
Supp. 891 (ND Cal.1961).
[
Footnote 16]
That church schools like those of the petitioners were eligible
in 1970 for multiple exemptions under overlapping and equally
precise parts of § 3309 is not remarkable. This was true, for
example, for most clergy.
See §§ 3309(b)(1) and
3309(b)(2). Clergy who teach in church-run primary or secondary
schools continue to be exempt under two provisions. The deletion of
only one of these clear, specific, and contemporaneous exemptions
cannot, without evidence of legislative intent, effect repeal of
the other or alter its plain meaning.
Cf. HCSC-Laundry v.
United States, 450 U. S. 1 (1981)
(newly enacted, more precise exemption held to prevail over
earlier, more general exemption on the basis of detailed evidence
of legislative intent).
[
Footnote 17]
The United States argues that Congress must have intended, by
the 1976 Amendments, to include church-related school employees
within mandatory state coverage, because the 1976 Amendments were
passed, in part, to replace the temporary Special Unemployment
Assistance program (established under the Emergency Jobs and
Unemployment Assistance Act of 1974, 88 Stat. 1845), which provided
benefits to practically all workers not then covered under the
permanent FUTA provisions, including employees of church schools.
Brief for United States as
Amicus Curiae 8-10. That
special program, however, was funded entirely with federal money,
without any employer contribution, and the 1976 Amendments did not
attempt entirely to duplicate its coverage; indeed, those
Amendments established new, precise exemptions for a narrow group.
See 26 U.S.C. § 3309(b)(3)(the new provision exempting
certain government employees); 122 Cong.Rec. 33274-33276
(1976)(remarks of Sen. Nelson);
id. at 33277-33278
(remarks of Sen. Williams).
[
Footnote 18]
This comment reads in full:
"Section 115(b) also has the effect of requiring the State to
pay unemployment compensation on the basis of services performed
for all educational institutions. Under existing law, the State is
only required to provide coverage of services performed for
institutions of higher education."
[
Footnote 19]
The United States also relies on Congress' expressed intention
to cover "substantially all of the nation's wage and salary
earners," H.R.Rep. No. 94-755, at 1, and "to provide equal
treatment of all the nation's wage and salary workers under the
permanent unemployment compensation law."
Id. at 2. Such
general statements of overall purpose contained in legislative
reports cannot defeat the specific and clear wording of a statute.
Helvering v. City Bank Co., 296 U. S.
85,
296 U. S. 89
(1935);
Caminetti v. United States, 242 U.
S. 470,
242 U. S. 490
(1917).
Cf. Gooch v. United States, 297 U.
S. 124,
297 U. S. 128
(1936).
[
Footnote 20]
The court noted that census figures for 1975 showed 261,000
full-time teachers in nonprofit elementary and secondary schools,
of which 150,000 were in Roman Catholic schools.
Cf.
Bureau of the Census, Statistical Abstract of the United States 155
(1980)(reporting that in 1976 there were 268,908 teachers in such
schools and that, of these, 206,577 were in schools with a "church
affiliation").
JUSTICE STEVENS, concurring in the judgment.
The legislative history of the Unemployment Compensation
Amendments of 1976, 90 Stat. 2667, persuades me that Congress did
intend the repeal of 26 U.S.C. § 3309(b)(3) to remove the exemption
from coverage under the Federal Unemployment Tax Act (FUTA) for all
employees of private, nonprofit elementary and secondary schools.
Not only do the Senate and House Committee Reports expressly so
Page 451 U. S. 789
state, [
Footnote 2/1] but also
the estimate contained in the Senate Report of the number of
additional employees that would be covered by the FUTA as a result
of the repeal of § 3309(b)(3) confirms the contemporaneous
understanding of the draftsmen of the 1976 Amendments. [
Footnote 2/2] Nothing in the 1976
Amendments
Page 451 U. S. 790
or the corresponding legislative history suggests that Congress
believed the extension of FUTA coverage to nonprofit, private
schools applied only to nonprofit, private,
nonparochial
schools. [
Footnote 2/3]
Despite this legislative history, I agree with the Court's
conclusion that FUTA coverage does not extend to persons employed
in petitioners' schools. Although Congress' intention to cover such
employees was, in my judgment, clear, the 1976 Amendments simply
failed to give effect to that intention. By repealing § 3309(b)(3),
Congress removed only one of the two statutory exemptions that, by
their terms, applied to employees of parochial elementary and
secondary schools. Congress left in place, and did not qualify the
scope of, the separate exemption granted by § 3309(b)(1). The clear
expressions of congressional intent that appear in the legislative
history of the Act that repealed § 3309(b)(3)
Page 451 U. S. 791
cannot alter the clear statutory language of § 3309(b)(1). I
agree with the Court that these church employees are exempt under
the plain language of that provision.
See also Alabama v.
Marshall, 626 F.2d 366 (CA5 1980),
cert. pending, No.
8922.
When the Court is confronted with the task of construing
legislation of this character, there is special force to the rule
that the plain statutory language should control, and that resort
to legislative history is appropriate only when the statute itself
is ambiguous. Congress has a special duty to choose its words
carefully when it is drafting technical and complex laws; we
facilitate our work as well as that of Congress when we adhere
closely to the statutory text in cases like this. [
Footnote 2/4] Failure to follow that approach led
this Court into what I regard as manifest error in its recent
summary per curiam affirmance in
HCSC-Laundry v. United
States, 450 U. S. 1, a case
in which the taxpayer's claim for exemption had equally strong
support in the statutory text and, in my opinion, greater support
in the legislative history than is true here.
See id. at
450 U. S. 19-23
(STEVENS, J., dissenting). Today, although I agree that the Court
reaches the result required by the text of the FUTA, I write this
separate statement to emphasize that this result is not supported
by the legislative history of the 1976 Amendments, nor is it
consistent with the Court's contrary resolution of the parallel tax
exemption issue in
HCSC-Laundry.
Accordingly, I concur in the Court's judgment.
[
Footnote 2/1]
The House Report states:
"Section 115(b) also has the effect of requiring the State to
pay unemployment compensation on the basis of services performed
for all educational institutions. Under existing law, the State is
only required to provide coverage of services performed for
institutions of higher education."
H.R.Rep. No. 94-755, p. 56 (1975).
See also id. at 2,
6, 41. Similarly, the Senate Report provides:
"The bill would require the States to extend the coverage of
their unemployment compensation programs to employees of nonprofit
elementary and secondary schools (present law requires coverage for
employees of institutions of higher education)."
S.Rep. No. 94-1265, p. 2 (1976).
See also id. at 7,
9-11.
In addition, the legislative history contains several references
to the general congressional intention to extend the coverage of
the FUTA to substantially all of the Nation's wage earners.
See, e.g., H.R.Rep. No. 94-755,
supra, at 1-2;
122 Cong.Rec. 22518-22519 (1976);
id. at 22899-22900.
While such general statements of legislative purpose cannot
override plain statutory language,
see ante at
451 U. S. 786,
n.19, they are nonetheless consistent with the more specific
statements of purpose quoted above.
[
Footnote 2/2]
The Senate Report estimated that 242,000 additional employees of
nonprofit organizations would be covered under the FUTA as a result
of the repeal of § 3309(b)(3).
See S.Rep. No. 94-1265,
supra, at 8. This figure approximated the number of
full-time teachers in all private, nonprofit elementary and
secondary schools in 1975.
See ante at
451 U. S. 787,
n. 20. Because well over one-half of these teachers were employed
in parochial schools, respondent argues that this statistic,
although perhaps slightly inaccurate, indicates that Congress
intended to extend coverage to employees of parochial elementary
and secondary schools. As the Court notes, the South Dakota Supreme
Court accepted this argument.
See ante at
451 U. S. 787;
290 N.W.2d
845, 849, and n. 5 (1980).
The Court finds that respondent's reliance upon this statistic
is misplaced because,
"in repealing § 3309(b)(3), Congress intended to include not
just full-time teachers, but all
employees of the newly
covered nonprofit private elementary and secondary schools."
Ante at
451 U. S. 787
(emphasis in original). The Court's observation, however, indicates
only that the statistic was factually inaccurate; it does not
undercut respondent's reliance upon that statistic as a guide to
congressional intent. Whether Congress believed that the figure
242,000 was an estimate of the number of additional teachers that
would be covered by the Act as a result of the repeal of §
3309(b)(3), or an estimate of the number of additional employees
that would be so covered, the estimate would have had meaning only
if at least some parochial school employees were represented among
the 242,000 newly covered individuals.
It also should be noted that the Secretary of Labor, in his
order declining to certify the unemployment compensation programs
of the States of Alabama and Nevada under the FUTA, stated that the
statistic had been supplied to Congress by the Department of Labor
as the then-available best estimate of the total number of
employees in all nonprofit, private elementary and secondary
schools.
See 44 Fed.Reg. 64378, 6438064382, and n. 16
(1979). The Secretary also expressly stated that the estimate
included employees of church-related elementary and secondary
schools.
See ibid.
[
Footnote 2/3]
In light of the fact that approximately 86% of the students,
see Rice, Conscientious Objection to Public Education: The
Grievance and the Remedies, 1978 B.Y.U.L.Rev. 847, and over 50% of
the teachers in private, nonprofit elementary and secondary
schools, are in parochial schools, Congress' failure to mention any
exception for such schools is surely significant.
[
Footnote 2/4]
The Court of Appeals in
Alabama v. Marshall accurately
characterized the judicial function in cases such as this:
"If Congress desires to change the established exemption of
unemployment compensation coverage for elementary and secondary
parochial school employees, it is well within its ability to amend
the law to reflect that desire by drafting a clear statement to
that effect. But it is not the responsibility or function of this
court to perform linguistic gymnastics in order to upset the plain
language of Congress as it exists today."
626 F.2d at 369.