On December 9th, 2011 in Henry v. Red Hill Evangelical Lutheran Church of Tustin, California (California Courts of Appeal- 4th District, No. G044556), the court held that a Church is exempt from the definition of employer. Resulting, the court found that the Fair Employment and Housing Act does not apply to Churches because they are religious organizations rather than private, for-profit corporations.
In Henry, a Lutheran school terminated a preschool teacher after learning that the teacher was cohabitating with the father of her child without being married. Importantly, part of her position required acting as a Christian role-model.
The court found that because a church is exempt from the definition of employer, a discrimination cause cannot be brought under the Fair Employment and Housing Act. The court held "Henry's employment was terminated not due to her marital status or because she had a baby out of wedlock, but rather, because she continued to live with her boyfriend in a sexual relationship while unmarried, in violation of a church precept." Because the termination revolved around religious reasons, it was possible to exempt the church from liability.