The D.C. Court of Appeals ruled yesterday that the city's Catholic archdiocese is exempt from paying unemployment taxes for the approximately 1,500 lay employes of its schools.
The appeals court, ruling in favor of Archbishop James A. Hickey, in whose name the suit was filed, reversed an earlier decision of the D.C. Department of Employment Services that had required the archdiocese to pay the unemployment taxes for the past three years.
Attorneys for the archdiocese argued that the lay employes are not covered by the Federal Unemployment Tax Act because they work for church-run schools. The DES decision, they said, constituted state intervention into church affairs.
The appeals court ruling left open the question of whether the archdiocese may recover from the city the unemployment taxes it has paid over the past three years. Paul F. Interdonato, attorney for the archdiocese, said the archdiocese would file a separate suit to recover that money. He estimated that the amount of money involved was "in the thousands."
Interdonato said the archdiocese plans to institute its own unemployment compensation fund for its lay employes starting next September. He said the employes of Catholic schools who are priests and nuns are also exempt from coverage under local and federal unemployment provisions.