Suit Says Trinity Network’s Crouch Fired Family of 3 Over Tax Protests : Litigation: TBN’s former personnel director says she opposed the policy of disguising regular employees as “independent contractors.”

The former personnel director of Trinity Broadcasting Network, a multimillion-dollar Christian programming service based here, filed a lawsuit Thursday charging that she was fired when she objected to a scheme to avoid payment of federal and state payroll and Social Security taxes.

In a civil suit alleging wrongful discharge, filed in Orange County Superior Court in Santa Ana, Ruth Ward charged that she, her husband and son--all Trinity employees--were fired by Trinity’s president and founder, Paul Crouch, because she consistently opposed the policy of disguising “a considerable number” of regular employees as “independent contractors.”

The suit charges that this is illegal because it circumvents the payment of required taxes. Neither Crouch nor his attorney, Colby M. May, would comment.

The Internal Revenue Service declined to comment on the specifics of the Ward suit. However, according to IRS spokesman Frank Keith, the critical factor in determining whether an individual is a regular employee or an outside contract laborer is “whether you operate under the will and control of another person. . . . “

“Typically, a person who goes to a locale provided by the person for whom the work is being done, where a person tells you what to do, when to do it and how to do it, would support an employer-employee relationship,” Keith explained.

Founded in 1974, Trinity and its subsidiary organizations own more than 200 television stations, mostly in the United States, and at least a dozen other stations are controlled through large loans from Trinity or by Crouch family members. The 24-hour-a-day, satellite-fed service has another two dozen stations on the air or under construction. Crouch puts the tax-exempt network’s market value at $500 million and says it is virtually debt-free, operating on a yearly budget of about $50 million. Its flagship station is KTBN-Channel 40.

In the seven years before she moved from Oklahoma to work for Trinity, Ward worked as a bookkeeper for a certified public accountant. Soon after she was hired as Trinity personnel director in 1989, Ward became aware that the network was categorizing regular, full-time employees as contract employees, according to the the suit. She brought the matter to the attention of Crouch and the network’s attorney and “demanded that it be changed forthwith,” at times becoming “very vocal” on the matter. Crouch and others refused, the suit says.

The suit alleges the following sequence of events:

* On June 18, Ward was informed that her position was being eliminated and was offered the option of being demoted to the position of mail reader, or be fired. She accepted the mail-reader position, at a drop in salary, she said, from $36,400 to $17,680. The same day, Ward’s husband, Ralph, who had left his job in Oklahoma to accept a position as a shipping and warehouse supervisor at Trinity, also was informed that he was being demoted to work leader, a position he accepted even though it also entailed a pay cut. No reason was given for his demotion.

* Four days later, both Ruth and Ralph Ward were fired from their new positions. Two days after that, June 24, the Wards’ son, Bruce, was fired from his job at Trinity as a computer programmer, a position that he had held since April, 1988, on the ground that he had spoken with a female employee in a hallway during working hours.

The suit maintains that each of the Wards “had received outstanding performance review and appraisals for job performance.” Ruth Ward said she had written Trinity’s employee handbook and the payroll-procedure manual before her demotion. In an interview Thursday, Ward said that her family had been “devastated” by the dismissals, mainly because “we are born-again Christians.”

The suit also charges that Crouch and others “were fearful that (Ruth Ward) might discover and attempt to change other illegal practices . . . if she were to continue in the position of personnel director,” including “the ordainment of non-ministers into the ministry for the purpose of avoiding payment of income taxes.”

Trinity Broadcasting Network and its affiliate, Trinity Christian Center, are considered a church by the IRS. They file yearly state and federal financial-disclosure forms required of all nonprofit, tax-exempt organizations. As the head of the organization, Crouch--who gave up his Assemblies of God ministerial affiliation more than 15 years ago--is permitted to ordain Trinity employees.

According to the IRS’ Keith, church employees can claim the ministerial “parsonage allowance,” enabling them to exempt a portion of their income, if the employee performs such ministerial duties as weddings, burials and baptisms at the direction of the church.