On November 21, 2025, the California Court of Appeal ruled that religious employers are not automatically exempt from wage and hour laws under state regulations. This decision arose from the case of Lorenzo v. San Francisco Zen Center, which examined whether the First Amendment’s ministerial exception prohibits wage claims brought by ministers. The court concluded that California’s wage and hour statutes apply to religious staff engaged in commercial activities, as long as enforcing these laws does not infringe on core religious governance or doctrine.
The case involved Annette Lorenzo, who worked as an apprentice and staff member at the San Francisco Zen Center, a nonprofit religious organization operating several temples and renting out event spaces. Following her termination, Lorenzo filed claims with the Labor Commissioner for unpaid minimum wage, overtime, and related compensation under California law. The Labor Commissioner determined that the Center and two individual directors, Galijan and Smith, were personally liable under Labor Code section 558.1, awarding Lorenzo $149,177.15.
Upon appeal, only the Zen Center posted the required undertaking, resulting in the dismissal of the appeals by the individual directors due to noncompliance with the bond requirement. The Court of Appeal’s analysis differentiated between claims relating to spiritual self-governance and those based on statutory wage rights. Drawing on the precedent set in Tony & Susan Alamo Foundation v. Secretary of Labor, the court emphasized that religious organizations engaging in commercial functions are still subject to neutral wage and hour regulations.
The court reiterated that statutory requirements such as minimum wage and overtime do not conflict with religious doctrine or result in excessive entanglement. A significant aspect of the ruling relied on Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, which established that the ministerial exception is not a blanket immunity but is limited to matters strictly related to ecclesiastical functions, such as the hiring or firing of ministers.
The Lorenzo court cautioned against a broad interpretation of the ministerial exception, noting that such an interpretation could inadvertently protect misconduct and undermine the purpose of wage laws. The ruling highlights that labor protections under California law extend to religious workers performing commercial tasks, unless there is clear evidence of conflict with central religious governance or practices.
In addition, the decision clarified that under Labor Code section 98.2, subdivision (b), any employer appealing a Labor Commissioner’s award must post an undertaking equal to the full award amount as a condition for an appeal. Since Lorenzo secured judgments against both the Center and the two individual directors, the court determined that each liable party needed to post a separate undertaking to proceed with their appeals. While the Zen Center fulfilled this requirement, the directors did not, leading to their appeals being dismissed on jurisdictional grounds.
Moving forward, religious organizations and their management must ensure compliance with wage and hour laws for all commercial activities. They should also be prepared to meet procedural obligations when contesting wage awards. Individual directors and officers face significant risks for personal liability and must fulfill procedural requirements to exercise their appeal rights.
Religious organizations should adjust their compliance strategies to align with both their spiritual missions and the realities of employment law. Employers seeking guidance on navigating California’s wage and hour laws, especially in the context of religious or nonprofit organizations, are advised to consult experienced employment counsel.
