By the Hand Club for Kids, NFP, Inc. v. Dep't of Emp't Sec.

2020 IL App (1st) 181768

BY THE HAND CLUB FOR KIDS, NFP, INC., Plaintiff-Appellee, v. THE DEPARTMENT OF EMPLOYMENT SECURITY,THE DIRECTOR OF EMPLOYMENT SECURITY,THE BOARD OF REVIEW OF THE DEPARTMENT OF EMPLOYMENT SECURITY,and KIM E. WIMBERLY, Defendants(The Department of Employment Security, the Director of Employment Security,and the Board of Review of the Department of Employment Security, Defendants-Appellants).

No. 1-18-1768

APPELLATE COURT OF ILLINOIS FIRST JUDICIAL DISTRICT THIRD DIVISION

December 30, 2020

Appeal from the Circuit Court of Cook County

2017-L-050886

Honorable James M. McGing, Judge Presiding

JUSTICE McBRIDE delivered the judgment of the court, with opinion.

Justice Ellis concurred in the judgment and opinion.

Justice Cobbs dissented, with opinion.

OPINION

¶ 1 The Department of Employment Security, its director, and its Board of Review (Board), which we will refer to collectively as IDES, appeal from a circuit court judgment reversing the Board's determination that By The Hand Club for Kids, NFP (By The Hand) is not exempt from the Unemployment Insurance Act (Act) (820 ILCS 405/100 et seq. (West 2016)). By The Hand, which is separately incorporated from Moody Church, operates a nonprofit afterschool program in Chicago. The dispositive issue is whether By The Hand demonstrated to the Board that it is an organization "operated primarily for religious purposes" within the meaning of the exemption stated in section 211.3(A)(2) of the Act. 820 ILCS 405/211.3(A)(2) (West 2016). It is undisputed that By The Hand meets the two other requirements for exemption in that it is "not an institution of higher education" and that it is "operated, supervised, controlled or principally supported by a church." 820 ILCS 405/211.3(A)(2) (West 2016).

¶ 2 Kim E. Wimberly was By The Hand's human resources director and volunteer coordinator between 2015 to 2016, earning approximately $32,000 per year. Wimberly subsequently filed for unemployment compensation. By The Hand opposed the claim, contending she was ineligible for benefits because By The Hand was exempted by the statute that is cited above and because she left her job voluntarily. After an IDES local office determined that Wimberly's employment was "insured work," however, By The Hand appealed, and the question of its statutory obligation proceeded to a hearing.

¶ 3 The hearing officer heard testimony from Julie Heth, By The Hand's director of human resources and volunteer development; Marc Kole, By The Hand's senior director of finance, and Tom Sawyer, By The Hand's principal officer and board chair. Sawyer also held positions with Moody Church, as the vice chair of the church's board of trustees and as the vice chair of the church's board of elders, which is Moody Church's governing body. Donnita Travis, a long-term member of the church and the founder and executive director of By The Hand, could not attend the hearing but submitted an affidavit. The testimony, sworn statement, and other documents established the following.

¶ 4 The afterschool program was started in 2001 by Travis, who proposed the idea to the board of elders after the idea of a "holistic" afterschool program came to her in 1997 during a two-day retreat that she took to consider her career. Travis wanted to be "sharing the gospel, praying, teaching the bible every step of the way and getting kids and families in church." The organization's office is located at 1635 North La Salle Drive in Chicago, Illinois, and participants in the afterschool program meet at five locations in Chicago, two of which are located in churches and three of which are located in commercial buildings. The program started with 16 students meeting in the Cabrini-Green community and has expanded to the Altgeld, Austin (two locations), and Englewood neighborhoods. Each location can accommodate 160 to 300 students.

¶ 5 An Illinois not-for-profit corporation named "Kids' Club North America, NFP" was formed in 2005 and renamed "By The Hand Club for Kids, NFP" in 2007. Articles of incorporation provide that By The Hand is "organized and operated exclusively for religious and charitable purposes." Travis described the "corporate purpose of By The Hand" as "an expression of the Biblical Book, the Gospel of John, chapter 10, verse 10, 'I have come that I might bring life and bring life more abundantly.' " Bylaws indicate the organization's "General Purposes" are "religious and charitable purposes" and that By The Hand "is a Christ-centered, after school program that helps children have an abundant and eternal life by nurturing the whole child—mind, body and soul." In addition, "For the mind[,] we have homework help, tutoring, language and reading literacy programs. For the body[,] we provide health education and access to health services, as well as a meal program. For the soul, we teach and model biblical truths." The bylaws also include a "Doctrinal Statement" consisting of more than a page of single-spaced text setting out Christian beliefs. The bylaws require By The Hand to obtain approval of Moody Church'sboard of elders for certain acts, including electing By The Hand's directors, adopting an annual budget, encumbering the corporation's assets, and amending the articles of incorporation or bylaws.

¶ 6 Participation in the program is free of charge. By The Hand's 2016 budget was about $8 million, nearly all of which was contributed by individual and "institutional donors and foundations" in response to solicitations indicating that the program improves literacy skills. Chicago Public Schools remits $200,000 of the $245,000 that is spent on meals. Moody Church adds $100,000 to compensate By The Hand's executive director; however, the long-term incumbent (program founder Travis) has never taken a salary. The corporation applied to the Internal Revenue Service and was granted tax-exempt status as a public charity as described in Section 501(c)(3) of the Internal Revenue Code, due to the source of its funding. 26 U.S.C. § 501(c)(3) (2012).

¶ 7 Staff members are required to be Christian and to annually sign the program's statement of faith and "biblical standards of living." However, all children, regardless of their religious background, are welcome in the program. Parents and children are told that By The Hand "teaches Christian-based principles on a daily basis." By The Hand considers its employees and volunteer personnel to be ministry workers as they lead Bible study and chapel service, discuss faith and morals, and pray with the children. According to Heth, prayer occurs often. When asked which parts of the program she would characterize as ministry, Heth responded, "Every part of the program."

¶ 8 Each of the five locations posts the John 10:10 Bible verse in the classrooms and lobby, and with few exceptions, Christian music is played in the vehicles that transport the children fromtheir schools to the program locations and field trip sites. Every child receives a Bible and an "evangelistic gospel track" upon enrollment (provided that the parents consent). Chapel services, which are frequent, include time not only for a speaker and prayer but also memorization of a Bible passage. The children are taught a code of conduct which is known as "A-OK for Jesus," in which the "A" is short for paying attention to adults and the surroundings, the "O" is for being obedient to the organization's rules, and the "K" is short for being kind to "every person at By The Hand." Students must abide by a dress code. They are not permitted to use their cell phones during program time.

¶ 9 If it appears that a child needs an eye exam or dental care, By The Hand assists them in obtaining those services. Some providers do not charge By The Hand for their services.

¶ 10 The majority of the program's participants attend approximately 17 Chicago public schools. Teachers will sometimes recommend a child, and parents will ask that a child be included in the program. By The Hand prioritizes admittance to children who have deficiencies in literacy. During the school year, the program runs five afternoons per week, from approximately 3:30 p.m. to 6:30 p.m. On Mondays, Tuesdays, Wednesdays, and Fridays, there is about an hour for a meal, which Heth described as "the best time [for employees and volunteers] to build relationship[s]" with the children by discussing matters of faith, morals, and character. Three or four staff members will serve food and free up the other adults to pray and converse with the children. This is followed by about 30 minutes of chapel or Bible reading and then 20 minutes each of homework assistance, reading improvement, and reading aloud. To improve reading comprehension, By The Hand utilizes the Lexia self-study software and has a reading specialist at each site. During read-aloud rotation, the children and staff will read and discuss material from the Bible or a similar source.

On Thursdays, there is a meal and homework help, but the usual reading enrichment time is shortened, so that time in chapel and Bible study can be increased to at least an hour. During chapel, By The Hand uses the "Evangelism Explosion" curriculum to teach children about evangelical Christian faith. Each of the five locations has a spiritual development director to ensure consistency in the chapel services and Bible studies. According to Heth, "We are praying all the time." The high school students take field trips on Thursdays during the school year to GRIP, which is a Christ-centered urban youth ministry. The lower grades might take a field trip once a month to visit a church or to gather with participants from all five of By The Hand's locations for "Bible bowl," which quizzes the students' recollection of scripture. Additionally, By The Hand runs a five-week summer program that places less emphasis on reading enhancement exercises and includes cultural field trips, Christian-oriented activities such as concerts, and college visits.

¶ 11 By The Hand's team...