Current interpretation of federal law prevents federal courts from meddling in church labor disputes. That's why Cesar Rosas' 2006 lawsuit against the Corporation of the Catholic Archbishop of Seattle was dismissed. Twice. But today Rosas was granted a hearing before a full-panel of federal appeals judges. Meaning that if he succeeds, every nun, very right reverend, etc. who has beef with their respective church over discrimination, harassment or some other labor issue will be able to get just as litigious as the rest of us.
Alcazar's harassment claim was eventually settled. The wage violation claim, however, was brought to a U.S. District Court in Seattle where a federal judge dismissed Rosas' claim, citing the so-called "ministerial exception."
According to the judge's ruling it "prohibits a court from inquiring into the decisions of a religious organization concerning the hiring, firing, promotion, rate of pay, placement or any other employment related decision concerning ministers and other non-secular employees."
Rosas' suit fared no better on appeal. From the 9th Circuit's unanimous affirmation of the previous ruling: "the district court correctly dismissed the case on the pleadings because requiring the Catholic Church to pay overtime wages to Rosas would interfere with the Church's employment decisions regarding its minister."
Thus did the line between church and state remain intact, at least until the result of the "en banc" hearing, which is scheduled to be heard in San Francisco on September 20.