The exemption was added in 2002 and was based on the religious exemption in Title VII of the Civil Rights Act of 1964.
On February 28, 2023, the Department of Labor’s (DOL) Office of Federal Contract Compliance Programs (OFCCP) issued regulations rescinding a Trump-era rule that expanded the powers of federal contractors to make employment decisions on the basis of religious faith. The regulation in question was issued in the final days of the Trump administration. While it purported to clarify the religious exemption scope, opponents (and the current DOL) believe that it created confusion―and potentially created additional flexibility for contractors to discriminate. The final rule will become effective on March 31, 2023, 30 days after publication in the Federal Register.
What Is the Religious Exemption Under Executive Order 11246?
Executive Order 11246 prohibits federal contractors and subcontractors from discriminating on the basis of race, color, religion, sex, sexual orientation, gender identity and national origin, and requires contractors to take affirmative action in employment. EO 11246 contains a religious exemption that states the order:
[S]hall not apply to a Government contractor or subcontractor that is a religious corporation, association, educational institution, or society, with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.
This exemption permits qualifying entities to make employment decisions based on acceptance of and adherence to religious tenets embraced by the company, even where such decisions may not otherwise be consistent with EO 11246’s anti-discrimination provisions. The exemption was added in 2002 and was based on the religious exemption in Title VII of the Civil Rights Act of 1964.
OFCCP’s 2020 Rule and the Agency’s Current Rationale for Rescinding the 2020 Rule
OFCCP’s 2020 rule sought to clarify the scope and application of the religious exemption by defining specific terms in the exemption, such as defining “particular religion” to mean, in part, “acceptance of or adherence to sincere religious tenets as understood by the employer as a condition of employment” and by directing the exemption to be construed in favor of the broadest protections available under the law. Shortly after it took effect on January 8, 2021, the 2020 rule was challenged by two federal court lawsuits.
OFCCP Director Jenny Yang explained in her February 28, 2023, blog post that the Trump-era rule improperly deviated from Title VII’s approach both by broadening the test for exemption beyond religious grounds and espousing “an inappropriately categorical approach” to how OFCCP would handle potential religious freedom claims. By rescinding the 2020 rule, OFCCP believes it is returning it back to the framework and longstanding practice of Title VII case law and EO 11246.
What This Means for Federal Contractors
The return to the pre-2020 rule approach to religious exemptions will not impact most businesses that contract with the federal government. However, religious organizations who had relied on the expanded scope of the exemption under the 2020 rule should evaluate how they are considering religion and applying their religious beliefs and tenets in their employment practices―particularly if they adopted changes to their practices in reliance on the 2020 rule.
For More Information
If you have any questions about this Alert, please contact Christopher D. Durham, Zev L. Grumet-Morris, any of the attorneys in the Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.
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