On November 21, 2025, the California Court of Appeal issued important guidance confirming that religious employers are not categorically exempt from wage and hour obligations under state law. In Lorenzo v. San Francisco Zen Center, the court addressed whether the First Amendment’s ministerial exception—a doctrine barring judicial intervention in certain employment disputes involving religious organizations—precludes wage claims brought by ministers. Significantly, the court held that California’s wage and hour statutes apply to religious staff engaged in commercial activities, absent specific evidence that enforcing these laws would infringe upon core religious governance or doctrine.
The plaintiff, Annette Lorenzo, worked as an apprentice and later 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. After her employment was terminated, Lorenzo brought claims before the Labor Commissioner for unpaid minimum wage, overtime, and related compensation under California law. The Labor Commissioner found the Center, as well as two individual directors, Galijan and Smith, personally liable under Labor Code section 558.1, awarding Lorenzo $149,177.15. On appeal, only the Center posted the required undertaking, resulting in the dismissal of the individuals’ appeals due to noncompliance with the bond requirement.
In its analysis, the Court of Appeal distinguished claims implicating spiritual self-governance from those based on statutory wage rights. Drawing on Tony & Susan Alamo Foundation v. Secretary of Labor, the court reiterated that religious organizations engaging in commercial functions remain subject to neutral wage and hour regulations, emphasizing that statutory requirements such as minimum wage and overtime do not interfere with religious doctrine or create excessive entanglement. Central to the decision was the court’s reliance on Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, which clarified that the ministerial exception is not an umbrella immunity; rather, it is limited to situations involving inquiries into strictly ecclesiastical matters, such as the selection or removal of ministers.
Notably, the Lorenzo court warned against an expansive reading of the ministerial exception, recognizing that it could inadvertently shield misconduct and undermine the remedial purpose of wage laws. The opinion underscores that labor protections under California law extend to religious workers performing commercial tasks, barring a demonstrated conflict with central religious governance or faith practices. By adopting this nuanced framework, the court harmonized First Amendment considerations with California statutory requirements, ensuring that a ministerial role or religious identity alone does not place commercial activities outside the scope of regulatory oversight.
The decision also clarified that under Labor Code section 98.2, subdivision (b), any employer appealing a Labor Commissioner’s award must post an undertaking equivalent to the full amount of the award as a condition of perfecting an appeal. Because Lorenzo obtained judgments against both the Center and two individual directors—each deemed an “employer” under section 558.1—the court determined that every individually liable party was required to post a separate undertaking to pursue their respective appeals. While the Center satisfied this requirement, the directors failed to do so, resulting in the dismissal of their appeals on jurisdictional grounds.
Going forward, religious organizations and their managers should closely monitor wage and hour compliance for all commercial activities and be prepared to meet all procedural requirements when contesting wage awards. Individual directors and officers also face real risks for personal liability and must meet procedural requirements to exercise appeal rights. Religious organizations should adapt their compliance strategies accordingly, balancing their spiritual mission with the realities of employment law.