The Office of Federal Contract Compliance Programs issued its Final Rule on “Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption.” The agency’s Notice of Proposed Rulemaking on this topic generated heated controversy and more than 109,726 comments.

Notwithstanding the strong interest in the OFCCP’s rulemaking, the impact will be limited to religious organizations that choose to contract with the federal government. The OFCCP notes that “[t]he vast majority of contractors and their employees, as well as OFCCP’s enforcement program, will be unaffected by this rule.” 

Background

Executive Order 11246 prohibits discrimination on the basis of religion and was amended by President George W. Bush to exempt religious organizations in the same fashion as they are exempted from Title VII. The OFCCP’s regulations implement this exemption and currently provide that the non-discrimination requirements

shall 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. Such contractors and subcontractors are not exempted or excused from complying with the other requirements. . . .

 41 C.F.R. § 60-1.5(a)(5).

The existing regulations also provide a similar exemption for institutions of higher education that are “owned, supported, controlled, or managed by a particular religion or by a particular religious corporation, association, or society, or if the curriculum of such . . . institution of learning is directed toward the propagation of a particular religion.” 41 C.F.R. § 60.1.5(a)(6). 

New regulations

The Final Rule clarifies the scope of the religious exemption under Executive Order 11246 and “ensure[s] that OFCCP respects religious employers’ free exercise rights, protects workers from prohibited discrimination, and defends the values of a pluralistic society.” Although religious organizations may make employment decisions based on an employee’s "particular religion," the OFCCP states that “[r]eligious organizations can never make employment decisions on the basis of other protected characteristics unrelated to religious considerations” and that “the religious exemption never permits employment discrimination on the basis of race, even if purportedly justified on religious grounds.”

To qualify for the religious exemption, the entity must 

• be organized for a religious purpose,
• hold itself out to the public as carrying out a religious purpose,
• engage in activity consistent with, and in furtherance of, that religious purpose, and
• either operate on a not-for-profit basis or present other strong evidence that its purpose is substantially religious.

The new regulations provide definitions for purposes of determining when the exemption applies. 

Religion is defined as “all aspects of religious observance and practice, as well as belief.”

Particular religion is defined as “the religion of a particular individual, corporation, association, educational institution, society, school, college, university, or institution of learning, including acceptance of or adherence to sincere religious tenets as understood by the employer as a condition of employment, whether or not the particular religion of an individual employee or applicant is the same as the particular religion of his or her employer or prospective employer.”

Sincere is defined as “sincere under the law applied by the courts of the United States when ascertaining the sincerity of a party’s religious exercise or belief.”

Another component of the new regulation mandates that the exemption be construed broadly in favor of protecting religious exercise to the maximum extent permitted by law. 

The OFCCP has posted Frequently Asked Questions on the Final Rule, which will take effect on January 8.