A lower court had ruled churchgoers were effectively employees of Cathedral Buffet, located at Ernest Angley's church in Cuyahoga (ky-uh-HOH'-guh) Falls.
The U.S. Department of Labor argued that Angley coerced people into working by saying refusal could be a sin.
The appeals court said Monday that the law deals with economic coercion, not spiritual coercion. The judges said churchgoers were not employees because they had no expectation of compensation.
The restaurant closed after the lower court said it owed workers nearly $400,000.
Angley's attorney said he was pleased the decision. The labor department didn't immediately respond to a request for comment.
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