Limits on State Regulation of Religious Organizations: Where We Are and Where We Are Going

The breadth of activities and organizational forms among religious organizations rivals that of nonprofits generally, and religious organizations are vulnerable to the same types of problems that justify state regulation and oversight of nonprofits. Such problems include excessive compensation, improper benefits for board members and other insiders, misleading or fraudulent fundraising, employment discrimination, unsafe working conditions, consumer fraud, improper debt collection, and many others. Religious organizations are different, however, in that under federal and state law they enjoy unique protections from state regulation. This paper describes how such federal and state protections limit state regulation of religious organizations under current case law. It also explores the tension between the general ability of states to apply neutral and generally applicable laws to religiously motivated conduct and the special legal protections provided for some internal actions of religious organizations — particularly employment actions relating to ministers and certain internal disputes. It concludes by exploring how courts are likely to develop such limits in the future