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Last week, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) published a new rule Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption, seeking to clarify for federal contractors the interplay between recent Supreme Court interpretations of religious freedom claims under Title VII and existing Executive Orders prohibiting discrimination in employment. Specifically, this new rule attempts to better define what will be considered a religious organization while setting forth the entitlement of federal contractors satisfying this definition to certain religious exemptions from non-discrimination rules.

Answers to Frequently Asked Questions issued by the Department of Labor explain that while Section 202 of Executive Order 11246 requires that federal contracting agencies and contractors include an equal opportunity clause in their contracts, section 204(c) exempts certain religious organizations “with respect to the employment of individuals of a particular religion to perform work connected with the carrying on” of those religious organizations’ activities.

To qualify for the religious exemption, a corporation, association, educational institution, society, school, college, university, or institution of learning must:

1. Be organized for a religious purpose;
2. Hold itself out to the public as carrying out a religious purpose;
3. Engage in activity consistent with, and in furtherance of, that religious purpose; and
4. Either operate on a not-for-profit basis or present other strong evidence that its purpose is substantially religious.

The new rule defines key terms and adds a rule of construction intended to provide the maximum legal protection of religious exercise permitted by the Constitution and the law. The rule also seeks to enhance understanding of which organizations qualify for this exemption by providing examples of “religious corporation, association, educational institution, or society.”

Generally speaking, this rule does not affect federal contractors’ responsibility to abide by the equal employment opportunity and affirmative action obligations of Executive Order 11246, and the Department anticipates relatively few federal contractors will seek and be deemed eligible for the religious exemption.

The new rule has been criticized as endorsing discrimination, and its future under the next administration is unclear. President-elect Biden has declined to comment on the new rule specifically, but broadly speaking, has committed to restoring “full implementation” of President Obama’s executive order prohibiting discrimination by federal contractors based on sexual orientation and gender identity.

The final rule and FAQs discuss the above in much greater detail. Contractors with questions about the rule or this Alert should contact Shulman Rogers Employment Law attorneys to discuss this topic further.

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The contents of this Alert are for informational purposes only and do not constitute legal advice. If you have any questions about this Alert, please contact the Shulman Rogers attorney with whom you regularly work or a member of the Shulman Rogers Employment and Labor Law Group.