01-15-2026
Employers, particularly those of religious-based organizations should monitor legislation and ensure their internal policies reflect current laws and ordinances.
Annette Lorenzo worked as a staff member at the San Francisco Zen Center, a nonprofit religious organization that operated several temples and rented out overnight rooms and event spaces to the public. In that capacity, she assisted the executive chef, took inventory, ordered supplies, prepared lunches for guests, and acted as a librarian. After the Center fired her, Lorenzo brought unpaid minimum wage, overtime, and other compensation claims before the state Labor Commissioner. The Commissioner found the Center and two individual directors personally liable for their actions related to unfair employment practices under a California Labor Code section. The Center appealed the decision.
In its holding, the appellate court distinguished between legal claims touching on spiritual self-governance and those arising from statutory wage rights. Religious organizations engaging in commercial functions are subject to neutral wage and hour obligations. The court relied on a U.S. Supreme Court case (Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC), which explained that the Ministerial Exception does not provide complete immunity and is limited to situations pertaining to strictly ecclesiastical matters. The scope of the exception encompasses what is necessary to comply with the First Amendment. There is a difference between selection (hiring and firing) and compensation under the Ministerial Exception. Labor protections under California law extend to employees working for religious institutions performing commercial tasks, absent a showing of conflict with central religious governance or faith practices. Claims for not paying compensation are permissible, unless the reason for non-payment is based on religious grounds. The same is true for failure to provide meal periods, rest breaks, and overtime pay.