[Federal Register Volume 85, Number 237 (Wednesday, December 9, 2020)]
[Rules and Regulations]
[Pages 79324-79372]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-26418]
[[Page 79323]]
Vol. 85
Wednesday,
No. 237
December 9, 2020
Part III
Department of Labor
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Office of Federal Contract Compliance Programs
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41 CFR Part 60-1
Implementing Legal Requirements Regarding the Equal Opportunity
Clause's Religious Exemption; Final Rule
Federal Register / Vol. 85 , No. 237 / Wednesday, December 9, 2020 /
Rules and Regulations
[[Page 79324]]
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DEPARTMENT OF LABOR
Office of Federal Contract Compliance Programs
41 CFR Part 60-1
RIN 1250-AA09
Implementing Legal Requirements Regarding the Equal Opportunity
Clause's Religious Exemption
AGENCY: Office of Federal Contract Compliance Programs, Labor.
ACTION: Final rule.
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SUMMARY: The U.S. Department of Labor's (DOL's) Office of Federal
Contract Compliance Programs (OFCCP) publishes this final rule to
clarify the scope and application of the religious exemption. These
clarifications to the religious exemption will help organizations with
federal government contracts and subcontracts and federally assisted
construction contracts and subcontracts better understand their
obligations.
DATES: Effective Date: These regulations are effective January 8, 2021.
FOR FURTHER INFORMATION CONTACT: Tina Williams, Director, Division of
Policy and Program Development, Office of Federal Contract Compliance
Programs, 200 Constitution Avenue NW, Room C-3325, Washington, DC
20210. Telephone: (202) 693-0104 (voice) or (202) 693-1337 (TTY).
SUPPLEMENTARY INFORMATION:
I. Executive Summary
On August 15, 2019, OFCCP issued a notice of proposed rulemaking
(NPRM) to clarify the scope and application of Executive Order 11246's
(E.O. 11246) religious exemption consistent with recent legal
developments. 84 FR 41677. During the 30-day public comment period,
OFCCP received 109,726 comments on the proposed rule.\1\ This total
included over 90,000 comments generated by organized comment-writing
efforts. Comments came from individuals and from a wide variety of
organizations, including religious organizations, universities, civil
rights and advocacy organizations, contractor associations, legal
organizations, labor organizations, and members of Congress. Comments
addressed all aspects of the NPRM. OFCCP appreciates the public's
robust participation in this rulemaking, and the agency has revised
certain aspects of this regulation in response to commenters' concerns.
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\1\ Of the 109,726 comments, 35 comments were inadvertently
posted on Regulations.gov before redactions were made. The posted
comments were withdrawn, redacted, and then reposted. When the
comments were reposted, the number of comments on Regulations.gov
increased to 109,761.
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As stated in the NPRM, on July 2, 1964, President Lyndon B. Johnson
signed the landmark Civil Rights Act of 1964. See Public Law 88-352, 78
Stat. 241. This legislation prohibited discrimination on various
grounds in many of the most important aspects of civic life. Its Title
VII extended these protections to employment opportunity, prohibiting
discrimination on the basis of race, color, religion, sex, or national
origin. In Title VII, Congress also provided a critical accommodation
for religious employers. Congress permitted religious employers to take
religion into account for employees performing religious activities:
``This title shall not apply . . . to a religious corporation,
association, 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, or society of its religious
activities . . . .'' Public Law 88-352, 702(a), 78 Stat. 241, 255
(codified as amended at 42 U.S.C. 2000e-1(a)). Congress provided a
similar exemption for religious educational institutions. See id. Sec.
703(e)(2), 78 Stat. at 256 (codified at 42 U.S.C. 2000e-2(e)(2)).
Title VII's protections for religious organizations were expanded
by Congress in 1972 into their current form. Congress added a broad
definition of ``religion'': ``The term `religion' includes all aspects
of religious observance and practice, as well as belief, unless an
employer demonstrates that he is unable to reasonably accommodate to an
employee's or prospective employee's religious observance or practice
without undue hardship on the conduct of the employer's business.''
Equal Employment Opportunity Act of 1972, Public Law 92-261, 2(7), 86
Stat. 103 (codified at 42 U.S.C. 2000e(j)). Congress also added
educational institutions to the list of those eligible for section
702's exemption. In addition, Congress broadened the scope of the
section 702 exemption to cover not just religious activities, but all
activities of a religious organization: ``This title [VII] shall not
apply . . . to 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.'' Id. Sec. 3, 86 Stat. at 104 (codified at 42
U.S.C. Sec. 2000e-1(a)). The Supreme Court unanimously upheld this
expansion of the religious exemption to all activities of religious
organizations against an Establishment Clause challenge. See Corp. of
the Presiding Bishop of the Church of Jesus Christ of Latter-day Saints
v. Amos, 483 U.S. 327, 330 (1987).\2\
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\2\ Justice White wrote the majority opinion for five justices.
Justices O'Connor, Blackmun, and Brennan (with Justice Marshall
joining) wrote opinions concurring in the judgment.
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One year after President Johnson signed the Civil Rights Act, he
signed E.O. 11246, requiring equal employment opportunity in federal
government contracting. The order mandated that all government
contracts include a provision stating that ``[t]he contractor will not
discriminate against any employee or applicant for employment because
of race, creed, color, or national origin.'' Exec. Order No. 11246,
Sec. 202, 30 FR 12319, 12320 (Sept. 28, 1965). Two years later,
President Johnson expressly acknowledged Title VII of the Civil Rights
Act when expanding E.O. 11246 to prohibit, as does Title VII,
discrimination on the bases of sex and religion. See Exec. Order No.
11375, Sec. 3, 32 FR 14303-04 (Oct. 17, 1967). In 1978, the
responsibilities for enforcing E.O. 11246 were consolidated in DOL. See
Exec. Order No. 12086, 43 FR 46501 (Oct. 5, 1978). In its implementing
regulations, DOL imported Title VII's exemption for religious
educational institutions. See 43 FR 49240, 49243 (Oct. 20, 1978) (now
codified at 41 CFR 60-1.5(a)(6)); cf. 42 U.S.C. 2000e-2(e)(2). In 2002,
President George W. Bush amended E.O. 11246 by expressly importing
Title VII's exemption for religious organizations, which likewise has
since been implemented by DOL's regulations. See Exec. Order No. 13279,
Sec. 4, 67 FR 77143 (Dec. 16, 2002) (adding E.O. 11246 Sec. 202(c));
68 FR 56392 (Sept. 30, 2003) (codified at 41 CFR 60-1.5(a)(5)); cf. 42
U.S.C. 2000e-1(a).
Because the exemption administered by OFCCP springs directly from
the Title VII exemption, it should be given a parallel interpretation,
consistent with the Supreme Court's repeated counsel that the decision
to borrow statutory text in a new statute is a ``strong indication that
the two statutes should be interpreted pari passu.'' Northcross v. Bd.
of Educ. of Memphis City Sch., 412 U.S. 427, 428 (1973) (per curiam).
OFCCP thus generally interprets the nondiscrimination provisions of
E.O. 11246 consistent with the principles of Title VII. Because OFCCP
regulates federal contractors rather than private employers generally,
OFCCP must apply Title VII principles in a manner that
[[Page 79325]]
best fit its unique field of regulation, including when applying the
religious exemption.
With that said, there has been some variation among federal courts
of appeals in interpreting the scope and application of the Title VII
religious exemption, and many of the relevant Title VII court opinions
predate Supreme Court decisions and executive orders that shed light on
the proper interpretation. The purpose of this final rule is to clarify
the contours of the E.O. 11246 religious exemption and the related
obligations of federal contractors and subcontractors to ensure that
OFCCP respects religious employers' free exercise rights, protects
workers from prohibited discrimination, and defends the values of a
pluralistic society. See, e.g., Bostock v. Clayton Cnty., 140 S. Ct.
1731, 1754 (2020) (``[T]he promise of the free exercise of religion . .
. lies at the heart of our pluralistic society.''). This rule is
intended to correct any misperception that religious organizations are
disfavored in government contracting by setting forth appropriate
protections for their autonomy to hire employees who will further their
religious missions, thereby providing clarity that may expand the
eligible pool of federal contractors and subcontractors.
Recent Supreme Court decisions have addressed the freedoms and
antidiscrimination protections that must be afforded religion-
exercising organizations and individuals under the U.S. Constitution
and federal law. See, e.g., Masterpiece Cakeshop, Ltd. v. Colo. Civil
Rights Comm'n, 138 S. Ct. 1719, 1731 (2018) (holding the government
violates the Free Exercise Clause of the First Amendment when its
decisions are based on hostility to religion or a religious viewpoint);
Trinity Lutheran Church of Columbia, Inc. v. Comer, 137 S. Ct. 2012,
2022 (2017) (holding the government violates the Free Exercise Clause
of the First Amendment when it decides to exclude an entity from a
generally available public benefit because of its religious character,
unless that decision withstands the strictest scrutiny); Burwell v.
Hobby Lobby Stores, Inc., 573 U.S. 682, 719 (2014) (holding the
Religious Freedom Restoration Act applies to federal regulation of the
activities of for-profit closely held corporations); Hosanna-Tabor
Evangelical Lutheran Church & Sch. v. EEOC, 565 U.S. 171, 196 (2012)
(holding the ministerial exception, grounded in the Establishment and
Free Exercise clauses of the First Amendment, bars an employment-
discrimination suit brought on behalf of a minister against the
religious school for which she worked). Recent executive orders have
done the same. See Exec. Order No. 13831, 83 FR 20 715 (May 8, 2018);
Exec. Order No. 13798, 82 FR 21 675 (May 9, 2017). Additional decisions
from the Supreme Court, issued after the NPRM, have likewise extended
Title VII's protections while affirming the importance of religious
freedom. See Bostock, 140 S. Ct. at 1754 (holding Title VII's
prohibition on discrimination because of sex prohibits ``fir[ing] an
individual merely for being gay or transgender''); Little Sisters of
the Poor Saints Peter & Paul Home v. Pennsylvania, 140 S. Ct. 2367,
2379-84 (2020) (holding the Departments of Labor, Health and Human
Services, and the Treasury had authority to promulgate religious and
conscience exemptions from the Affordable Care Act's contraceptive
mandate); Espinoza v. Mont. Dep't of Revenue, 140 S. Ct. 2246 (2020) (a
state ``cannot disqualify some private schools [from a subsidy program]
solely because they are religious'' without violating the Free Exercise
clause); and Our Lady of Guadalupe Sch. v. Morrissey-Berru, 140 S. Ct.
2049, 2069 (2020) (holding the ministerial exception applies ``[w]hen a
school with a religious mission entrusts a teacher with the
responsibility of educating and forming students in the faith''). These
decisions are discussed in the final rule's analysis as appropriate and
applicable.
In this final rule, OFCCP has sought to follow the principles
articulated by these recent decisions and orders, and has interpreted
older federal appellate-level case law in light of them as applicable.
OFCCP has chosen a path consistent with the Supreme Court's religion
and Title VII jurisprudence as well as what OFCCP views to be the more
persuasive reasoning of the federal courts of appeals in these areas of
the law.
A. Title VII and the EEOC Generally
Some commenters on the NPRM agreed that OFCCP's proposal was
appropriately consistent with Title VII principles. For example, a
faith-based advocacy organization commented that the religious employer
exemption in federal contracting regulations is modeled on Title VII,
and should therefore be understood ``in the strong way'' the Title VII
exemptions have traditionally been understood.
Other commenters asserted that OFCCP's proposal was inconsistent
with Title VII overall. Some of these commenters stated that the
proposal's interpretation of the exemption was contrary to
congressional intent. For example, an affirmative action professionals
association commented that Congress has repeatedly declined to extend
the Title VII exemption to government-funded entities. A lesbian, gay,
bisexual, and transgender (LGBT) rights advocacy organization commented
that, at the time Title VII was enacted, Congress could not have
envisioned that religious organizations that would qualify for the
Title VII exemption would also seek to contract with the federal
government, ``let alone be given a broad right to discriminate based on
religion while accepting federal funding.''
In a related vein, OFCCP also received comments objecting generally
to the provision of a religious exemption for federal contractors or
specifically to OFCCP's proposal. Most of these commenters
characterized the religious exemption as taxpayer- or government-funded
discrimination that was contrary to the purpose of E.O. 11246. For
example, an affirmative action professionals association commented that
``[t]he Federal Government should not be in the business of funding
employment discrimination'' and emphasized that religious organizations
should not expect to maintain autonomy and independence from the
government when they solicit and accept government contracts. An
international labor organization submitted a similar comment, stating
that organizations that choose to accept government funding through
government contracts should not be allowed to conduct what it described
as discrimination against qualified job applicants and employees.
Relatedly, a public policy research and advocacy organization
commented that no one should be disqualified from a taxpayer-funded job
because they are the ``wrong'' religion or do not adhere to any
religion. A technology company commented that the proposal conflicted
with the spirit of nondiscrimination law. A group of U.S. Senators
commented: ``The government cannot use religious exemptions as a
pretext to permit discrimination against or harm others.''
Some religious organizations were among the commenters that opposed
the provision of a religious exemption for federal contractors. One
religious organization commented that, in line with its commitment to
religious freedom, it opposed granting government contracts to
organizations that, in its words, discriminate against qualified
individuals based on their practices and beliefs. One religious
organization commented that barring people from taxpayer-funded jobs
based on their faith violates principles of equality and meritocracy.
Another faith-
[[Page 79326]]
based organization cited First Amendment separation of church and state
principles, and commented that, while some religious organizations hire
staff based on religion, accommodations for religious hiring should not
be applied broadly in the federal contracts context, as federal
contracts are not provided to advance religious ends. Other commenters
stated that the proposal's expansion of the exemption was contrary to
Title VII case law or principles. For example, an international labor
organization commented that, in its view, the proposed rule
mischaracterized federal case law in order to transform provisions
designed to protect workers from religious discrimination into
exemptions that would allow federally funded employers to discriminate
against workers for religious reasons.
Some commenters stated that the proposal was inconsistent with the
interpretation of Title VII by the EEOC, the agency primarily
responsible for enforcing Title VII. A group of state attorneys general
commented that OFCCP should not undermine the EEOC's efforts, ``as
would occur under the Proposed Rule, which takes positions contrary to
the EEOC.'' The state attorneys general asserted that the proposal
would not increase clarity because it would create two separate legal
standards for federal contractors and OFCCP staff--one under Title VII
and one under E.O. 11246. A contractor association asserted that
``federal contractors could face the Hobson's choice of determining
whether compliance with an OFCCP regulation will result in liability
under Title VII.'' Other commenters stated that the overall proposal
departed from OFCCP's prior interpretation, which they asserted had
been consistent with the EEOC's interpretation of Title VII prior to
August 2018, when OFCCP issued Directive 2018-03, concerning the
religious exemption in section 204(c) of E.O. 11246. For example, a
public policy research and advocacy organization asserted that, until
August 2018, the Department consistently interpreted the E.O. 11246
religious exemption narrowly to permit preferences for coreligionists
by certain religious organizations, and applied the ``motivating
factor'' test to evaluate claims of discrimination.
OFCCP agrees with the comments stating that the rule will provide
necessary clarity for contractors and potential contractors about the
scope of the E.O. 11246 religious exemption. Regarding comments that a
religious exemption protecting government contractors is contrary to
congressional intent or that such an exemption is misplaced in the
government contracting context, that question is not at issue in this
rulemaking. The religious exemption was added to E.O. 11246 almost
twenty years ago, and OFCCP's implementing regulations are nearly as
old. The existence of the exemption itself is not at issue in this
rulemaking.
Regarding comments that the rule deviates from the EEOC's
interpretation of the Title VII religious exemption or creates two
separate standards, OFCCP believes these concerns are unfounded. This
rule is restricted to the application of the religious exemption. The
vast majority of contractors and their employees, as well as OFCCP's
enforcement program, will be unaffected by this rule. As for the
religious exemption specifically, OFCCP has followed the Title VII case
law it finds most persuasive, especially in light of the principles of
religious equality and autonomy reinforced by recent executive orders
and Supreme Court decisions. OFCCP has also adapted Title VII
principles to ensure a proper fit in the government contracting
context. OFCCP's specific choices in this regard and how they compare
to the EEOC's stated views are explained more fully in the section-by-
section discussion and a section at the end of this preamble. OFCCP has
also made some revisions to align this rule even more closely with
Title VII. But even assuming any variation with the EEOC as to the
exemption, this rule does not create a ``Hobson's choice'' for
government contractors. The exemption, to describe it most broadly, is
an optional accommodation for religious organizations, not a
requirement mandating compliance. In the rare, hypothetical instance
where a contractor would be entitled to the E.O. 11246 exemption but
not the Title VII exemption, the contractor would not face conflicting
liability regardless of its choice: Rather, it would face potential
liability under one enforcement scheme rather than two. OFCCP
acknowledges that it is often helpful to regulated parties for
regulators to try to harmonize their approaches when enforcing related
legal requirements. OFCCP believes its approach here is consistent with
Title VII and religious-accommodation principles, adapted appropriately
to its own regulatory context and the government contracting community.
OFCCP also is not concerned about this rule purportedly decreasing
clarity by creating two standards for additional reasons. For one, it
was not a concern primarily raised by commenters who may qualify for
the E.O. 11246 religious exemption. Those commenters--the ones who
would actually need to negotiate the purportedly two different
standards--were by and large supportive of the rule and did not raise
this concern. For another, OFCCP believes that this rule, which
incorporates many recent Supreme Court decisions and other case law and
is in accord with recent Executive Orders and guidance from the
Department of Justice, offers clarity as compared to less recent
guidance from EEOC that does not incorporate these more recent
developments.
B. The Relevance of Recent Supreme Court Cases
Commenters both supported and opposed OFCCP's acknowledgement of
recent Supreme Court cases granting antidiscrimination protections for
persons bringing religious claims in a variety of contexts. These cases
included Hobby Lobby, Trinity Lutheran, and Masterpiece Cakeshop.
Supreme Court decisions in employment and religion cases issued after
the proposed rule's publication are addressed elsewhere in the preamble
as appropriate.
Some commenters expressed support for OFCCP's interpretations of
these Supreme Court cases and their application to the proposal in
general. For example, a group of members of the U.S. House of
Representatives noted approvingly that the proposed rule was consistent
with these cases, each of which ``came with the cost'' of religious
Americans shouldering the material, emotional, and spiritual burdens
associated with litigating issues related to their faith. Discussing
Masterpiece Cakeshop, a religious public policy women's organization
commented that the Supreme Court in that case acknowledged ``the
blatant, systematic government bias'' against the owner of Masterpiece
Cakeshop for refusing to participate in a same-sex wedding ceremony,
noting that the owner continues to be harassed for his faith ``to this
day.'' The commenter stated that this and other such cases prove that
further clarification regarding existing First Amendment protections
are necessary. Addressing Trinity Lutheran, a religious public policy
advocacy organization asserted that the Supreme Court in that case made
clear that Trinity Lutheran Church's status as a church did not prevent
it from participating on an equal playing field with secular
organizations in seeking government grants. The commenter continued
that OFCCP's proposed rule simply reaffirmed a principle the
[[Page 79327]]
Supreme Court had held to be consistent with the First Amendment.
Other commenters criticized OFCCP's reliance on these Supreme Court
cases. Many of these commenters stated that the cases were inapplicable
because they did not involve federal contractors. For example, a
secular humanist advocacy organization criticized the proposed rule for
its reliance on case law unrelated to employment discrimination laws or
the text of E.O. 11246. Many of the commenters stated that the cases
cited, if interpreted properly, did not provide support for OFCCP's
proposal. For example, a labor union commented that the decisions cited
did not authorize ``the expansive view that the Proposed Rule seeks to
support.'' A group of U.S. Senators commented: ``The Court has long
held federally-funded employers cannot use religion to discriminate.
Each of the cases cited in the proposed rule are consistent with that
approach.''
Many of the commenters who criticized OFCCP's discussion of
Masterpiece Cakeshop pointed to this sentence from the Court's opinion:
``While . . . religious and philosophical objections are protected, it
is a general rule that such objections do not allow business owners and
other actors in the economy and in society to deny protected persons
equal access to goods and services under a neutral and generally
applicable public accommodations law.'' 138 S. Ct. at 1727. A labor
union asserted that Masterpiece Cakeshop was irrelevant in the
``entirely secular'' context of federal contracting, and argued that
the Establishment Clause dictates that federal contracting must be
entirely secular. A transgender civil rights organization commented
that, in the proposed rule, OFCCP did not suggest that its existing
requirements or prior conduct reflect the sort of hostility to
religious beliefs that the Court was concerned with in Masterpiece
Cakeshop, and noted that, on the contrary, ``EEO requirements for
federal contractors fall squarely within the `general rule' stated by
the Court.'' A group of state attorneys general commented that, if
anything, Masterpiece Cakeshop stands for the proposition that overly
broad religious objections to civil rights laws of general
applicability are inappropriate.
Commenters also criticized OFCCP's discussion of Trinity Lutheran.
Many of these commenters read the decision narrowly--as holding that
``the state violated the First Amendment by denying a public benefit to
an otherwise eligible recipient solely on account of its religious
status,'' as one contractor association described it--and asserted that
the decision was therefore inapplicable to OFCCP's proposal. Some of
these commenters pointed to a footnote in the Court's opinion limiting
it to ``express discrimination based on religious identity with respect
to playground resurfacing.'' Trinity Lutheran, 137 S. Ct. at 2024 n.3.
Many commenters stated that there are legally significant distinctions
between government grant programs and government contracts. A labor
union argued, regarding the Supreme Court's decision, that it would
have been perfectly lawful for the government to deny grants to
religious applicants who restricted access to their playgrounds on the
basis of sexual orientation, for example. The union also asserted that
``Federal contracting is not a generally available public benefit, but
a reticulated system for the funding and delivery of governmental
functions and services by private parties.'' A religious organization
commented that Trinity Lutheran did not address whether a religious
institution can discriminate with public funds, and stressed that the
government's interest in prohibiting discrimination in taxpayer-funded
jobs is ``of the highest order.'' A group of state attorneys general
commented that the Court's decision drew a careful distinction between
situations where a benefit is denied to an entity based solely that
entity's religious identity and situations involving neutral and
generally applicable laws that restrict an entity's actions. The group
asserted that E.O. 11246's anti-discrimination provisions are directed
toward the latter. An LGBT rights advocacy organization commented that,
because the decision involved a religious grant applicant that had
agreed to abide by certain nondiscrimination provisions, its holding
was inapplicable in the federal contracting context where funding is
awarded on a competitive basis, as well as in situations where the
contractor has no intention of complying with governing
nondiscrimination rules.
Some commenters similarly criticized OFCCP's discussion of Hobby
Lobby. Many of these commenters quoted or paraphrased the following
paragraph from the Supreme Court's decision:
The principal dissent raises the possibility that discrimination
in hiring, for example on the basis of race, might be cloaked as
religious practice to escape legal sanction. . . . Our decision
today provides no such shield. The Government has a compelling
interest in providing an equal opportunity to participate in the
workforce without regard to race, and prohibitions on racial
discrimination are precisely tailored to achieve that critical goal.
Hobby Lobby, 573 U.S. at 733. For example, a city public advocate
argued that the Hobby Lobby decision affirmed that securing equal
access to workplace participation is a compelling interest. A civil
liberties and human rights legal advocacy organization commented that
the Court in Hobby Lobby expressly declined to promulgate a rule
authorizing for-profit corporations that willingly enter into contracts
with the federal government to discriminate against workers ``because
of who they are.'' A contractor organization commented that it is ``not
at all clear'' that Hobby Lobby supports the idea that religious rights
override any other legal rights, given that the decision concerns only
the availability of government programs.
Finally, some commenters criticized OFCCP's discussion of Hosanna-
Tabor. Many of these commenters pointed out that this case applied the
(constitutionally grounded) ministerial exception developed by courts
and not the (statutory) Title VII religious exemption enacted by
Congress. Some commenters expressed doubt that the ministerial
exception was applicable to federal contractors. For example, a
transgender legal professional organization commented that, though the
ministerial exception bars ministers from pursuing employment
discrimination cases, most federal contractors are unlikely to employ
ministers or others who ``preach or teach the faith.'' Other commenters
expressed concern that OFCCP intended to broaden the scope of the
religious exemption to mimic the ministerial exception and asserted
that Hosanna-Tabor did not support such an expansion. For example, a
labor union commented that the decision could not be read to extend the
ministerial exception to lay people employed by religious institutions,
or to private for-profit businesses whose owners may also hold
religious beliefs.
OFCCP believes the critical comments here are misplaced because
OFCCP did not acknowledge these Supreme Court cases for the
propositions that commenters said the agency did. OFCCP acknowledged in
the NPRM that these Supreme Court cases did not specifically address
government contracting. And indeed, with the exception of Hosanna-
Tabor, they did not specifically address employment law, Title VII, or
E.O. 11246. Rather, OFCCP noted the recent Supreme Court cases for the
general and commonsense propositions that the government must
[[Page 79328]]
be careful when its actions may infringe private persons' religious
beliefs and that it certainly cannot target religious persons for
disfavor. These principles are not new, but these recent cases show
that those principles remain vital. That is especially important when
government at times has been callous in its treatment of religious
persons.\3\ Those general themes of caution, permissible accommodation,
and equality for religious persons have informed the policy approach in
this rule. Where specific holdings or language in these Supreme Court
decisions--and additional Supreme Court decisions issued since--suggest
answers to specific aspects of this rule, they are noted in the
section-by-section analysis. Comments on those more specific issues are
addressed there as well.
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\3\ See, e.g., Nat'l Inst. of Family & Life Advocates v.
Becerra, 138 S. Ct. 2361, 2368 (2018); Masterpiece Cakeshop, 138 S.
Ct. at 1729-30; Holt v. Hobbs, 574 U.S. 352, 359 (2015).
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C. Clarity and Need for the Rule
The NPRM noted that prior to its publication, some religious
organizations provided feedback to OFCCP that they were reluctant to
participate as federal contractors because of uncertainty regarding the
scope of the religious exemption contained in section 204(c) of E.O.
11246 and codified in OFCCP's regulations. The NPRM also noted that
while ``only a subset of contractors and would-be contractors may wish
to seek this exemption, the Supreme Court, Congress, and the President
have each affirmed the importance of protecting religious liberty for
those organizations who wish to exercise it.'' 84 FR at 41679. The NPRM
also noted throughout OFCCP's desire to provide clarity in this area of
regulation.
OFCCP received numerous comments addressing the need for the
proposed rule. Some commenters stated that the proposal was necessary
to ensure that religious entities could contract with the federal
government without compromising their religious identities or missions.
Many of these commenters noted the important services provided by
religious organizations. For example, a religious school association
encouraged the federal government to protect religious staffing ``in
all forms of federal funding,'' asserting that doing so would enable
religious organizations to expand the critical services they provide. A
religious liberties legal organization likewise commented that
religious organizations are often uniquely equipped to respond to the
needs of the communities they serve and predicted that the proposal
would allow religious contractors to better ``order[ ] their affairs.''
A religious convention commission approved of the rule on the basis
that the government should not be in the business of judging theology
or privileging certain religious beliefs over others.
A few commenters expressed support for the proposal specifically
because they believed it would exempt religious organizations from the
prohibitions on discrimination based on sexual orientation and gender
identity that were added when E.O. 11246 was amended by Executive Order
13672 (E.O. 13672). 79 FR 42971 (July 23, 2014). For example, a faith-
based advocacy organization praised OFCCP for ``the important positive
precedent that will be set by the proposed strong protection of the
religious staffing freedom in the context of the requirement of no
sexual-orientation or gender-identity employment discrimination in
federal contracting.'' An evangelical chaplains' advocacy organization
commented that ``E.O. 13672 . . . prohibited military chaplains from
selecting religious support contractors who did not affirm sexual
orientation, same-sex marriage and gender identity'' in violation of
these chaplains' free exercise rights.
Some commenters agreed with OFCCP's observation that religious
organizations have been reluctant to provide the government with goods
or services as federal contractors because of the lack of clarity or
perceived narrowness of the E.O. 11246 religious exemption. One
individual commenter who identified himself as a legal adviser to
federal contractors noted that imposing ``pass through'' contracting
obligations on subcontractors can be challenging, as religious
subcontractors often fear that complying with federal anti-
discrimination laws will require them to compromise their religious
integrity. Two other commenters offered examples or evidence of
religious organizations' reluctance to participate in other contexts,
such as federal grants. A religious medical organization cited a survey
suggesting that many individuals working in faith-based organizations
(FBOs) overseas feel that the government is not inclined to work with
FBOs, and called for outreach programs to correct this perception.
A religious legal organization referenced an audit of the
Department of Justice's Office of Justice Programs (OJP) which revealed
that, though religious organizations were interested in participating
in many programs, ``the percentage of OJP funds distributed to
religious organizations to help the public through these programs was
abysmally small--0.0025%.'' The organization cited the concern of
religious organizations that their right to hire members of their faith
would be eroded as one of the reasons for this discrepancy.
Many commenters expressed skepticism that religious organizations
have been reluctant to participate as federal contractors because of
the lack of clarity or perceived narrowness of the religious exemption.
Most of these commenters stated that OFCCP had provided no evidence to
support its claim. For example, a legal think tank commented that the
proposal was ``a regulation in search of a problem,'' and criticized
OFCCP for failing to provide data regarding the number of religious
organizations reluctant to enter into federal contracts, the number of
contractors that have invoked the Section 204(c) exemption in the past,
and the number of contractors expected to avail themselves of the
``expanded exemption'' in the proposed rule. A labor union commented:
``[T]here is no evidence that the current, settled interpretation of
the E.O. 11246 religious exemption has deterred organizations from
submitting competitive bids for federal contracts or prevented them
from obtaining such contracts. At best, the Proposed Rule is an
unjustified rulemaking solution in search of a problem.''
A few commenters stated that the proposal was unnecessary given the
applicability of Title VII case law. For example, a contractor
association commented that the extent to which religious employers can
condition employment on religion has been addressed by a long line of
Title VII cases, rendering an executive rulemaking on this topic
unnecessary. Some commenters cited evidence that federal contracts are
being awarded to faith-based organizations. For example, a group of
state attorneys general cited the 2016 congressional testimony of
Oklahoma Representative Steve Russell, who explained that more than
2,000 federal government contracts were being awarded to religious
organizations and contractors per year. As examples of faith-based
organizations that were awarded contracts in the previous year, the
state attorneys general listed the following:
Army World Service Office ($27.5 million), Mercy Hospital
Springfield ($14.4 million), Young Women's Christian Association of
Greater Los Angeles California ($10.2 million), City of Faith Prison
Ministries ($5.2 million), Riverside Christian Ministries, Inc.
($2.7 million), Jewish Child and Family
[[Page 79329]]
Services ($2.1 million), Catholic Charities, various affiliates
(over $1 million in sum total), to name a few.\4\
---------------------------------------------------------------------------
\4\ The commenter cited USASPENDING.GOV, https://www.usaspending.gov/#/recipient.
In addition, several commenters cited a report from a progressive
policy institute noting that some religious organizations continue to
be federal contractors despite their objections to a lack of an
expanded religious exemption in E.O. 13672.
Some commenters expressed skepticism that the proposal would
encourage participation in federal contracting because, they asserted,
the rule as proposed would increase rather than reduce confusion. For
example, a contractor association commented that OFCCP's proposal would
create more confusion than clarity for federal contractors. An atheist
civil liberties organization echoed this concern, commenting that the
proposal would increase confusion because, in its view, the proposed
rule deviated from decades of Title VII law. Other commenters stated
that the proposal would have negative effects because of increased
uncertainty about or expansion of the exemption. These commenters
stated that the proposal would undercut other entities' enforcement of
nondiscrimination obligations, increase EEOC enforcement actions,
increase contractors' noncompliance, and strain OFCCP's resources. For
example, a group of state attorneys general commented that, given the
prevalence of workplace discrimination, expanding E.O. 11246's
religious organization exemption to lessen OFCCP's oversight could
result in employers claiming the exemption in bad faith when faced with
charges of discrimination. The state attorneys general commented that
the proposed rule had the potential to strain OFCCP's limited resources
due to employers requesting determinations of whether they are exempt,
and challenging the applicability of OFCCP enforcement actions already
underway.
OFCCP appreciates the comments supporting its view that clarity
regarding the exemption would be useful, and notes their accounts of
religious organizations that are hesitant to participate as government
contractors, as well as their evidence of a perception among faith-
based organizations that the federal government could do more to
demonstrate that it will select the best organizations for its
partners, whether faith-based or not. Given certain statements by these
commenters regarding discrimination on the basis of sexual orientation
or gender identity, OFCCP repeats here as it did many times in the NPRM
that the religious exemption does not permit discrimination on the
basis of other protected categories. The section-by-section analysis of
Particular religion addresses the application of the religious
exemption and other legal requirements to E.O. 11246's other
protections including those pertaining to sexual orientation and gender
identity, and the application of the Religious Freedom Restoration Act
(RFRA) in certain situations.
Regarding comments that the rule is unnecessary because religious
organizations are not presently deterred from contracting with the
government, OFCCP believes that clarifying the law for current
contractors is a valuable goal in itself, regardless of whether more
religious organizations would participate as federal contractors or
subcontractors. The disputes among commenters over the proper
interpretation of the Title VII case law suggests as well that the
guidance provided by this rule would be valuable to the contracting
community. And in fact, as just noted, other commenters offered
evidence that faith-based organizations have indeed been reluctant to
contract with the federal government because of the lack of certainty
about the religious exemption. The fact that some faith-based
organizations have been willing to enter into federal contracts or
subcontracts does not mean that other faith-based organizations have
not been reluctant to do so. Admittedly, OFCCP cannot perfectly
ascertain how many religious organizations are government contractors,
or would like to become such, and how those numbers compare to the
whole of the contracting pool. But neither does OFCCP find persuasive
commenters' assertions that faith-based organizations are already well-
represented among government contractors, when those assertions are
based on examples showing contracting awards to them totaling only tens
of millions, when the federal government expended $926.5 billion on
contractual services in fiscal year 2019 \5\ and, according to one
estimate, faith-based organizations account for hundreds of billions of
dollars of economic activity annually in the United States.\6\ OFCCP
disagrees that the rule will introduce confusion. OFCCP anticipates
this rule will have no effect on the vast majority of contractors or
the agency's regulation of them, since they do not and would not claim
the religious exemption. As commenters noted, religious organizations
do not appear to be a large portion of federal contractors. While this
rule may add clarity that encourages more religious organizations to
seek to become federal contractors and subcontractors, OFCCP does not
believe the increase will greatly influence the composition or behavior
of the contractor pool that it regulates. The exemption is a helpful
accommodation for this small minority of religious organizations that
may seek its protection. For them specifically, the rule is intended to
bring clarity. For instance, as explained below, this rule provides a
clear three-part test for determining whether an entity can qualify for
the exemption. Contrary to the assertions of some commenters, and as
described more fully below, Title VII case law offers differing tests
on a jurisdiction-by-jurisdiction basis, and some of those tests
provide little guidance at all. As another example, this rule provides
a clear approach to determining when a religious employer is
appropriately taking action on the basis of an employee's particular
religion, another area where the case law is not uniform.
---------------------------------------------------------------------------
\5\ See USA Spending, Spending Explorer (select Object Class,
Fiscal Year 2019), https://www.usaspending.gov/#/explorer/object_class.
\6\ See Brian J. Grim and Melissa E. Grim, ``The Socio-economic
Contribution of Religion to American Society: An Empirical
Analysis,'' Interdisciplinary Journal of Research on Religion, vol.
12 (2016), article 3, p. 10, 25, (describing revenues of faith-based
charities, congregations, healthcare networks, educational
institutions, and other organizations), www.religjournal.com/pdf/ijrr12003.pdf.
---------------------------------------------------------------------------
OFCCP also disagrees that this rule will impede the agency's
enforcement efforts. OFCCP promulgates this rule from a position of
familiarity with its own enforcement resources, priorities, and budget.
For the reasons just stated above, OFCCP does not see this rule as
significantly affecting the vast majority of its work. OFCCP also does
not anticipate a flood of employers claiming the exemption in bad faith
when faced with discrimination claims. That has not been the experience
under the Title VII exemption thus far: The number of reported cases
involving the exemption since 1964 are in the dozens, not the
thousands. And in those cases, the employer may or may not have
succeeded in claiming the exemption or defending against a
discrimination claim, but in nearly all the employer did not appear to
invoke the exemption nefariously, in bad faith. OFCCP is also
optimistic given the federal government's experience under the RFRA.
This law provides generous accommodation for religious claims and
[[Page 79330]]
strict boundaries for the federal government, yet neither the courts
nor OFCCP have been inundated with claims.\7\
---------------------------------------------------------------------------
\7\ See 42 U.S.C. 2000bb(a)(5) (``[T]he compelling interest test
as set forth in prior Federal court rulings is a workable test for
striking sensible balances between religious liberty and competing
prior government interests.''); Holt, 574 U.S. at 368 (rejecting the
argument that the only workable rule is one of no exceptions);
Gonzales v. O Centro Esp[iacute]rita Beneficente Uni[atilde]o do
Vegetal, 546 U.S. 418, 436 (2006) (rejecting ``slippery-slope
argument'' that RFRA-mandated exceptions would become unworkable).
---------------------------------------------------------------------------
OFCCP appreciates all comments received, and for the reasons stated
believes that proceeding with a final rule clarifying the religious
exemption is warranted. For the small minority of current and potential
federal contractors and subcontractors interested in the exemption,
this will help them understand its scope and requirements and may
encourage a broader pool of organizations to compete for government
contracts, which will inure to the government's benefit. For the vast
majority of contractors, OFCCP does not expect this rule to affect
their operations or OFCCP's monitoring and enforcement.
This final rule is an Executive Order 13771 (E.O. 13771)
deregulatory action because it is expected to reduce compliance costs
and potentially the cost of litigation for regulated entities. Pursuant
to the Congressional Review Act (5 U.S.C. 801 et seq.), OIRA determined
that this rule is not a ``major rule,'' as defined by 5 U.S.C. 804(2).
Details on the estimated costs of this rule can be found in the
economic analysis below.
II. Section-by-Section Analysis
The NPRM proposed five new definitions to clarify key terms used in
OFCCP's religious exemption: Exercise of religion; Particular religion;
Religion; Religious corporation, association, educational institution,
or society; and Sincere. The regulatory codification of the underlying
exemption itself--which is not at issue in this rulemaking--is found at
41 CFR 60-1.5(a)(5). The new definitions were proposed to be placed
with the rest of the regulations' generally applicable definitions at
41 CFR 60-1.3. The NPRM also proposed adding a rule of construction to
Sec. 60-1.5 to provide the maximum legally permissible protection of
religious exercise.
This final rule retains the same basic structure as the NPRM, with
a few changes. First, there have been some modifications to some of the
definitions, and one proposed definition, for Exercise of religion, is
not included in the final rule, as explained below. Second, this final
rule adds several illustrative examples within the definition of
Religious corporation, association, educational institution, or society
to better illustrate which organizations qualify for the religious
exemption. Third, this final rule adds a severability clause.
A. Section 60-1.3 Definitions
The definitions added to Sec. 60-1.3 are interrelated, so they are
discussed below in a particular order. This order is different from
that presented in the NPRM. The change in order is not substantive. The
change is intended only to make the rule as a whole easier to
understand.
1. Definition of Religion
OFCCP's proposed definition of Religion provided that the term is
not limited to religious belief but also includes all aspects of
religious observance and practice. The proposed definition was
identical to the first part of the definition of ``religion'' in Title
VII: ``The term `religion' includes all aspects of religious observance
and practice, as well as belief . . . .'' 42 U.S.C. 2000e(j). The
proposed definition omitted the second portion of the Title VII
definition, which refers to an employer's accommodation of an
employee's religious observance or practice, because that would have
been redundant with OFCCP's existing regulations. OFCCP's regulations
at 41 CFR part 60-50, Guidelines on Discrimination Because of Religion
or National Origin, contain robust religious protections for employees,
including accommodation language substantially the same as that in the
portion of the Title VII definition omitted here. Compare 42 U.S.C.
2000e(j), with 41 CFR 60-50.3. Those provisions continue to govern
contractors' obligations to accommodate employees' and potential
employees' religious observance and practice.
The proposed definition of Religion is used by other agencies. It
is identical to the definition used by the Department of Justice in
grant regulations implementing section 815(c) of the Justice System
Improvement Act of 1979. See 28 CFR 42.202(m). The Small Business
Administration has used the same definition as well in its grant
regulations. See 13 CFR 113.2(c).
Some commenters generally supported the proposed definition, noting
that it is legally sound, as it tracks the Title VII definition and
provides broad protection for religious entities. Commenters also noted
that the definition is sensible and will aid contractors in
understanding the exemption.
Other commenters argued that importing the definition from Title
VII is inappropriate because the context of Title VII is protection of
an employee's individual religious beliefs in the workplace, not those
of the employer. A legal professional organization raised the concern
that this definition is overbroad as applied to the employer,
particularly where it could allow a government-funded employer to make
faith-based employment decisions beyond those currently allowed under
Title VII and E.O. 11246. Commenters also objected to the omission of
the second part of the Title VII definition, arguing that the weighing
of the burden that an employee's request for religious accommodations
places on an employer is an important limitation on Congress's intent
to accommodate religion in the workplace. Commenters stated that, in
their view, an employee's requested accommodations may impose no more
than a de minimis burden on the employer. Commenters argued that
OFCCP's proposed definition is broader than Congress intended in that
it does not consider the burden the employer's assertion of the
religious exemption would impose on employees, thus allowing religious
employers to take adverse actions against employees based on religious
belief no matter the hardship it causes them. Some commenters argued
that partially importing the Title VII definition would ``muddy the
waters'' rather than provide clarity.
Other commenters requested clarification on the proposed definition
of Religion. Specifically, some commenters proposed that the final rule
clarify that ``observance and practice'' includes refraining from
certain activities. Another commenter noted that the proposed rule did
not explain the extent to which it might displace employees' right to
reasonable accommodation of their religious beliefs and practices if
such accommodation conflicts with the contractor's religion.
For the reasons described above and in the NPRM, and considering
the comments received, OFCCP is finalizing the proposed definition of
Religion without modification. No change is needed to make clear that
inaction or omission can be a form of ``observance and practice.'' See,
e.g., Emp't Div., Dep't of Human Res. of Or. v. Smith, 494 U.S. 872,
877 (1990) (holding the ``exercise'' of religion protected by the First
Amendment ``involves not only belief and profession but the performance
of (or abstention from) physical acts''); see also Espinoza, 140
[[Page 79331]]
S. Ct. at 2277 (Gorsuch, J., concurring) (``The right to be religious
without the right to do religious things would hardly amount to a right
at all.'').
OFCCP disagrees with commenters who argued that the definition of
Religion is overbroad and would permit contractors to make faith-based
employment decisions beyond those permitted by law. The definition is
the same as that used in other federal regulations and the same as that
used in Title VII when read in conjunction with the rest of OFCCP's
regulations. The definition must also be construed in harmony with
those regulations, the requirements of which remain in force just as
strongly as before this regulation's promulgation.
OFCCP also disagrees that it should import the second half of Title
VII's definition of religion into its general list of definitions in
Sec. 60-1.3. OFCCP's regulations in part 60-50 governing protection of
employees' religion and national origin already contain this language
and remain in force, and employers must continue to comply with them.
The definition of Religion added to Sec. 60-1.3 is intended to apply
generally, to both employers and employees.
Regarding comments about burden on employees' exercise of religion,
OFCCP looks to the functioning of the religious exemption. E.O. 11246,
like Title VII, requires employers to accommodate employees' religious
practices to a prescribed extent. But the religious exemption is
precisely that: An exemption that relieves ``religious organizations
from Title VII's [or E.O. 11246's] prohibition against discrimination
in employment on the basis of religion.'' Amos, 483 U.S. at 329. That
logically includes a lesser exemption from the duty to accommodate
religious practice. While religious organizations can accommodate
employees' religious practices, and in many instances may find that
desirable, under the exemption, they are not required to do so. See
Kennedy v. St. Joseph's Ministries, Inc., 657 F.3d 189, 194 (4th Cir.
2011).
2. Definition of Religious Corporation, Association, Educational
Institution, or Society
One of the primary objectives of this rulemaking is to clarify the
conditions of eligibility for the religious exemption. Thus the NRPM
proposed a definition of Religious corporation, association,
educational institution, or society. This term is used in E.O. 11246
section 204(c) and 41 CFR 60-1.5(a)(5), and it is the same term used in
the Title VII religious exemption at 42 U.S.C. 2000e-1(a). The
definition as proposed would apply to a corporation, association,
educational institution, society, school, college, university, or
institution of learning.\8\
---------------------------------------------------------------------------
\8\ The words ``school, college, university, or institution of
learning'' also appear in 41 CFR 60-1.5(a)(6), the exemption for
religious educational organizations. They were included in the
definition to make clear that the definition's listing of
``educational institution'' includes schools, colleges,
universities, and institutions of learning. Depending on the facts,
an educational organization may qualify under the Sec. 60-1.5(a)(5)
exemption, the Sec. 60-1.5(a)(6) exemption, both, or neither. The
inclusion of educational organizations is maintained in the final
rule.
---------------------------------------------------------------------------
As explained in the NPRM, clarity on this topic is essential
because federal courts of appeals have used a confusing variety of
tests, and the tests themselves often involve unclear or
constitutionally suspect criteria. The NPRM favored, with some
modifications, the test used by the U.S. Court of Appeals for the Ninth
Circuit in Spencer v. World Vision, Inc., 633 F.3d 723 (9th Cir. 2011)
(per curiam). This was for several reasons, including because the World
Vision test generally prevents invasive inquiries into matters of
faith, the uncertainty and subjectivity of a multifactor balancing
test, and the inherently difficult and constitutionally suspect
exercise of measuring the quantum of an organization's religiosity. See
84 FR 41681-84.
The controlling per curiam opinion in World Vision offered a four-
pronged test for determining an entity's qualification for the
religious exemption:
an entity is eligible for the . . . exemption, at least, if it is
[1] organized for a religious purpose, [2] is engaged primarily in
carrying out that religious purpose, [3] holds itself out to the
public as an entity for carrying out that religious purpose, and [4]
does not engage primarily or substantially in the exchange of goods
or services for money beyond nominal amounts.
World Vision, 633 F.3d at 724 (per curiam).
This four-pronged test reflects the overlap of agreement between
the two judges in the majority, Judges O'Scannlain and Kleinfeld, who
also each wrote separate concurrences that laid out their own preferred
tests. Both judges agreed on the first two prongs, that the entity be
organized for a religious purpose\9\ and hold itself out to the public
as carrying out that religious purpose. The third and fourth prongs
reflect Judge Kleinfeld's view. See id. at 748 (Kleinfeld, J.,
concurring). Regarding the third prong, Judge O'Scannlain would have
employed a broader formulation, requiring that the employer engage ``in
activity consistent with, and in furtherance of, those [founding]
religious purposes.'' Id. at 734 (O'Scannlain, J., concurring). As to
the fourth prong, Judge Kleinfeld restricted the exemption to
organizations that charge little or nothing for their goods or
services, regardless of their formal incorporation as a nonprofit
organization. See id. at 745-47 (Kleinfeld, J., concurring). Judge
O'Scannlain would have broadened the fourth prong (in most instances)
by requiring nonprofit status, including nonprofit organizations that
charge market rates for their goods or services. See id. at 734
(O'Scannlain, J., concurring).
---------------------------------------------------------------------------
\9\ To be precise, Judge O'Scannlain's formulation was that the
entity be ``organized for a self-identified religious purpose (as
evidenced by Articles of Incorporation or similar foundational
documents).'' World Vision, 633 F.3d at 734 (O'Scannlain, J.,
concurring). Judge Kleinfeld noted that some people organize in
religious bodies ``with no corporate apparatus'' and expressed
concerns about the exemption being defeated by an ``[a]bsence of
corporate papers.'' Id. at 745 (Kleinfeld, J., concurring). Judge
Kleinfeld wrote that this ``narrowness problem may be repairable by
a tweak in the test,'' id., which may be why the per curiam opinion
does not include Judge O'Scannlain's parenthetical referring to
Articles of Incorporation. The difference is slight--a ``tweak.''
OFCCP's approach to this first factor, including the necessary
evidence to satisfy it, is discussed below in this preamble.
---------------------------------------------------------------------------
The NPRM proposed to follow a modified World Vision test. The NPRM
proposed adopting the first two prongs of the per curiam opinion. The
NPRM favored Judge O'Scannlain's formulation of the second prong given
the significant constitutional difficulties that accompany determining
whether an organization is ``primarily'' religious. The NPRM also
proposed to revise Judge O'Scannlain's phraseology, that the entity be
engaged ``in activity'' consistent with those religious purposes, with
the requirement that the entity be engaged ``in exercise of religion''
consistent with a religious purpose. No material change was intended by
this adjustment; it was meant to capture in succinct regulatory text
Judge O'Scannlain's lengthy discussion that the kind of activity
contemplated under this prong is religious exercise. See 84 FR at
41683; see also World Vision, 633 F.3d at 737-38 (O'Scannlain, J.,
concurring). Finally, the NPRM proposed not to adopt the fourth prong
of the test, on grounds that a no-charging rule would exclude many bona
fide religious organizations, especially in the government contracting
context, and that an absolute bar on for-profit organizations was
tenuous given other court decisions and the Supreme Court's more recent
decision in Hobby Lobby. See 84 FR at
[[Page 79332]]
41684. The proposed rule could also be viewed as essentially following
Judge O'Scannlain's concurrence save for his requirement that the
entity be nonprofit to qualify for the exemption.
In response to comments and a subsequent reevaluation of World
Vision and other case law, OFCCP is revising the proposed regulatory
text in this final rule. The final rule's test can be viewed as
generally adopting Judge O'Scannlain's concurrence in World Vision,
including by adopting a fourth prong. Satisfaction of this test will be
sufficient to qualify for the exemption, and OFCCP believes that this
is the means by which most organizations interested in the exemption
will qualify. However, OFCCP acknowledges that in certain rare
circumstances, an organization might not satisfy the non-profit prong
of the World Vision test yet still present strong evidence that it
possesses a substantial religious purpose. Thus the regulatory text
includes an alternative means of satisfying the fourth prong: When an
organization does not operate on a not-for-profit basis, it must
present ``other strong evidence that it possesses a substantial
religious purpose.'' The final rule also adds several examples to
illustrate how the test will be applied. The final rule also adds a
clarifying provision regarding the meaning of ``consistent with and in
furtherance of'' a religious purpose, a phrase used in one of the
test's prongs. The Department does not anticipate many for-profit
organizations claiming the exemption, and as explained through the
examples and their accompanying discussion, it may be quite difficult
for such organizations to do so.
This section of the preamble addresses this topic as well as other
comments regarding OFCCP's proposed definition of Religious
corporation, association, educational institution, or society. OFCCP
believes its definition is reasonable in light of Title VII and Supreme
Court case law and that it will contribute to one of OFCCP's primary
goals in this rulemaking, which is to increase economy and efficiency
in government contracting by providing for a broader pool of government
contractors and subcontractors. Issues specific to the EEOC's view on
this matter are also discussed below and later in a separate part of
this preamble.
a. The Selection of World Vision as the Basis for the Religious
Organization Test
OFCCP received numerous public comments on its proposed definition,
including comments on OFCCP's discussion of the shortcomings in some
Title VII case law. Some commenters agreed that OFCCP should reject
non-World Vision tests based on these shortcomings. For example, a
religious legal organization commented that the proposed test
``eliminates the subjectivity inherent in the LeBoon tests. It further
eliminates the Establishment Clause violation present when a court
determines whether an organization is `religious enough,' and it also
prevents inter-religion discrimination.''
Some commenters who supported OFCCP's proposed definition commented
that it provided important clarification that would be helpful to
religious organizations in meeting their missions. For example, a
religious school association commented that the proposal is especially
important considering that local control and leadership are central to
many of its participating schools' beliefs. A religious charities
organization commented that the proposed definition would help it
advance its mission of providing essential services to people in need--
a mission rooted in its religious convictions.
Other commenters disagreed with OFCCP's characterization of the
existing religious employer tests in Title VII case law. For example, a
legal professional organization noted that courts have generally agreed
that the following factors are relevant in deciding whether an
organization qualifies for the religious exemption: (1) The purpose or
mission of the organization; (2) the ownership, affiliation, or source
of financial support of the organization; (3) requirements placed upon
staff and members of the organization; and (4) the extent of religious
practices in or the religious nature of products and services offered
by the organization.
Other commenters opposed the proposed definition because they
viewed it as too broad and unsupported by Title VII case law. For
example, an organization that advocates separation of church and state
asserted that the definition in the proposed rule has not been proposed
or used by any federal court and represents an attempt by OFCCP to
vastly expand the scope of the existing narrow exemption. A labor
organization likewise commented that, in its view, the definition in
the proposed rule is contrary to law and does not reflect the Title VII
definition.
Some commenters objected generally to OFCCP's selection or
modification of the World Vision test. For example, one contractor
association commented that the proposed rule removes critical limits on
the standard set forth by Judge O'Scannlain. Another contractor
association emphasized that World Vision involved the removal of two
employees by a religious organization based on the employees' failure
to adhere to the organization's religious views. Therefore, according
to the association, the World Vision test should not apply to for-
profit organizations holding themselves out as religiously motivated. A
group of U.S. Senators criticized the proposal not only for adopting
the test set forth in the concurrence, but also for modifying part of
that test.
A legal think tank asserted that OFCCP appeared to have created its
own test, designed to qualify more types of contractors for the
exemption. This commenter went on to say that the ``exceedingly more
expansive criteria'' proposed by OFCCP are untethered to Title VII case
law and not in line with the ``measured'' exemption required by the
Establishment Clause, quoting Cutter v. Wilkinson, 544 U.S. 709, 722
(2005) (``Our decisions indicate that an accommodation [of religious
observances] must be measured so that it does not override other
significant interests.'').
As explained in the NPRM, OFCCP believes that a LeBoon-type test
invites subjectivity and uncertainty. See LeBoon v. Lancaster Jewish
Cmty. Ctr. Ass'n, 503 F.3d 217 (3d Cir. 2007). That is problematic in
any circumstance, but especially so in the context of government
contracting, where parties' obligations should be as clear as possible.
OFCCP also declines to attempt to write a definition that purports to
synthesize all the Title VII case law on this subject. OFCCP is
doubtful that such a task could be done, especially given Judge
O'Scannlain's observation (with which Judge Kleinfeld agreed) that
several factors used by other courts are constitutionally suspect,
including, contrary to the commenter's suggestion above, an assessment
of the religious nature of an organization's products and services. See
World Vision, 633 F.3d at 730-32 (O'Scannlain, J., concurring); id. at
741 (Kleinfeld, J., concurring). OFCCP's approach in the final rule,
like World Vision, instead requires consideration of a discrete set of
factors that can be reliably ascertained in each case.
OFCCP acknowledges that the definition it is promulgating here
modifies the World Vision test in some respects, or alternatively can
be viewed as following Judge O'Scannlain's concurrence with one
addition. OFCCP describes those modifications in more detail below
along with its reasons for making them, including the need to provide
clarity to contractors and enforcement staff. OFCCP disputes the
[[Page 79333]]
relevance of commenters' assertions that these modifications are being
made for the purpose of qualifying more organizations for the
exemption. OFCCP acknowledges that the modifications may allow
marginally more organizations to qualify for the exemption and that the
final rule is intended to increase the pool of federal contractors.
But, as described herein, OFCCP believes the test adopted by this final
rule is appropriately measured and serves the purpose of qualifying
only genuinely religious organizations for the exemption.
b. OFCCP's Application of the Definition Generally
The NPRM proposed how OFCCP would apply the factors in its proposed
test for religious organizations. The NPRM stated ``that it would be
inappropriate and constitutionally suspect for OFCCP to contradict a
claim, found to be sincere, that a particular activity or purpose has
religious meaning''; that ``all the factors . . . are determined with
reference to the contractor's own sincerely held view of its religious
purposes and the religious meaning (or not) of its practices''; and
that the proposed three-factor test would be exclusive ``stand-alone
components and not factors guiding an ultimate inquiry into whether an
organizations is `primarily religious' or secular as a whole.'' 84 FR
at 41682-83.
The NPRM proposed this approach for several reasons. The NPRM
relied on World Vision's concerns about courts' substituting their own
judgment for what has religious meaning when the question is disputed:
``The very act of making that determination . . . runs counter to the
`core of the constitutional guarantee against religious establishment.'
'' World Vision, 633 F.3d at 731 (O'Scannlain, J., concurring) (quoting
New York v. Cathedral Acad., 434 U.S. 125, 133 (1977)). ``[I]nquiry
into . . . religious views . . . is not only unnecessary but also
offensive. It is well established . . . that courts should refrain from
trolling through a person's or institution's religious beliefs.'' Id.
(alterations in original) (quoting Mitchell v. Helms, 530 U.S. 793, 828
(2000) (plurality opinion) (internal quotation marks omitted)).
Further, such inquiries could lead to discrimination among religions.
See id. at 732 & n.8. The NPRM also drew on Supreme Court and Title VII
case law showing the constitutional and practical difficulties of
determining whether a particular religious belief is ``central'' to
one's faith or whether an organization is ``primarily'' religious. See
84 FR at 41682-83.
Commenters expressed a variety of views on the NPRM's proposed
approach. Some were supportive. For instance, a religious legal
organization commented that Judge O'Scannlain's test requires little
judicial ```trolling' through'' an organization's religious beliefs,
because it is based exclusively on information the organization makes
public. Relatedly, the same commenter observed that OFCCP staff can
easily and consistently apply the test, with positive implications for
the rule of law. Other commenters objected generally to OFCCP's
description of how it would determine whether a contractor had met the
test. For example, a civil liberties organization expressed concern
that OFCCP would not enforce baseline evidentiary standards in
determining whether an entity meets the test's factors. A contractor
association commented that the modified World Vision test ``is unclear
on its face and problematic in application.'' A transgender civil
rights organization commented that the test relies on ill-defined
criteria that must be measured from the perspective of the employer.
Many of the commenters who opposed the proposed definition
expressed concern that it would have negative consequences. For
example, a legal professional association asserted that the proposal
would allow even nominally religious entities to discriminate on the
basis of religion in hiring, potentially exposing them to legal
liability under federal and state law despite their ability to retain
their status as federal contractors. A group of state attorneys general
stated that OFCCP's proposed test represents a sharp departure from
precedent and thus would be difficult for OFCCP staff and adjudicators
to apply. The attorneys general also commented that the test would
likely cause non-compliance by increasing legal uncertainty about which
organizations qualify.
Other commenters requested clarity. Regarding the NPRM's statement
that the three factors would be standalone provisions rather than
factors guiding an ultimate ``primarily religious'' inquiry, a
contractor association commented that, in its view, the statement was
unclear and did not lend credence to OFCCP's assertion that the test
would be easy to apply or likely to be consistent in application. The
commenter asked for clarification as to how OFCCP would apply the
factors of the test as standalone factors, rather than as factors
leading to the ultimate determination whether the contractor is
primarily religious or secular. The commenter sought explanation from
OFCCP as to how it could easily conduct the required analysis when even
the courts struggle to do so. The commenter requested more specific
examples of how the proposed test will apply and asked that the
contractor community be consulted before a test is adopted.
OFCCP appreciates these comments and has re-reviewed World Vision
and other relevant case law in light of them. World Vision and its
antecedent cases in the Ninth Circuit, as well as LeBoon in the Third
Circuit, begin from the premise that the religious exemption should
cover only organizations that are, in fact, primarily religious. But
courts have labored over how to operationalize that requirement into a
set of factors that can be applied neutrally, objectively, and with
minimal constitutional entanglement. See World Vision, 633 F.3d at 729
(O'Scannlain, J., concurring) (``Though our precedent provides us with
the fundamental question--whether the general picture of World Vision
is primarily religious--we must assess the manner in which we are to
answer that question in the case at hand.''); LeBoon, 503 F.3d at 226.
That does not mean that courts have dispensed with an organization's
need to present evidence in order to claim the exemption. Rather, it
means that the evidence required must be of a kind that courts are
competent to evaluate and that avoids entanglement. See World Vision,
633 F.3d at 730-33 (O'Scannlain, J., concurring); cf. NLRB v. Catholic
Bishop of Chi., 440 U.S. 490, 502 & n.10 (1979); id. at 507-08
(appendix). Indeed, one of the purposes of Congress's expansion of the
Title VII religious exemption to cover all of an employer's activities,
rather than simply its religious activities, was to avoid difficult
line-drawing between religious and secular activities and the
interference with religious organizations that could result. See Amos,
483 U.S. at 336. In OFCCP's view, World Vision generally, and Judge
O'Scannlain's concurrence in particular, has done the best job of
formulating a test that meets the competing and delicately balanced
goals of giving the exemption only its proper reach while employing
useable and constitutionally proper inquiries.
With that in mind, OFCCP clarifies here its general approach to
applying the exemption, addresses the particular evidence needed for
each factor, and adds to the regulatory text examples with accompanying
explanation to further illustrate its approach. First, OFCCP
acknowledges the need to clarify and revise its statement that the
factors are ``stand-alone components and not factors guiding an
ultimate inquiry'' in order to make clear the agency's intent. 84 FR at
41683. OFCCP agrees with
[[Page 79334]]
commenters that the aim of any test in this context is to determine
whether the organization qualifies as a religious organization, and
that any components are intended to guide or define that ultimate
inquiry. The NPRM's statement was intended to mean that OFCCP would
apply the proposed three factors as the exclusive elements for
ascertaining whether an organization qualifies for the religious
exemption, rather than as mere considerations to be weighed along with
other facts and circumstances.
OFCCP affirms that approach here as the predominant path by which
organizations are anticipated to qualify for the exemption. This
approach is consistent with World Vision. The per curiam opinion and
both concurrences provided slightly different factors, but in each
instance the factors were presented as sufficient to determine an
organization's entitlement to the exemption. See World Vision, 633 F.3d
at 724 (per curiam) (holding ``an entity is eligible for the . . .
exemption, at least, if it'' meets four factors (emphasis added)); id.
at 734 (O'Scannlain, J., concurring) (holding ``a nonprofit entity
qualifies for the . . . exemption if it establishes that it'' satisfies
three factors (footnote omitted)); id. at 748 (Kleinfeld, J.,
concurring) (``To determine whether an entity is a `religious
corporation, association, or society,' determine whether it [satisfies
the four factors].'').
Second, the World Vision-derived test promulgated here is not a
subjective one. OFCCP shares commenters' concern about contractors
attempting to claim the exemption with little evidence other than their
own testimony that theirs is a religious organization. (Though OFCCP is
also skeptical that many contractors would attempt to do so. As noted
above, bad-faith claims to the Title VII exemption have been rare.) The
World Vision factors have been selected because they provide objective
criteria for determining an organization's religious status without the
need for intrusive religious inquiries. See id. at 733 (O'Scannlain,
J., concurring) (holding where religious activities or purposes are
``hotly contested, . . . we should stay our hand and rely on
considerations that do not require us to engage in constitutionally
precarious inquiries''). The World Vision factors are similar to a test
used in the National Labor Relations Act context, which similarly
``avoids . . . constitutional infirmities'' while providing ``some
assurance that the institutions availing themselves of the Catholic
Bishop exemption are bona fide religious institutions.'' Univ. of Great
Falls v. NLRB, 278 F.3d 1335, 1344 (D.C. Cir. 2002); see also Duquesne
Univ. of the Holy Spirit v. NLRB, 947 F.3d 824, 831 (D.C. Cir. 2020).
It is true that in applying the World Vision factors, OFCCP will
not substitute its own judgment for a contractor's view--found to be
sincere--that a particular activity, purpose, or belief has religious
meaning. For instance, OFCCP would not contradict a drug-rehabilitation
center's view, found to be sincere, that its work is a religious
healing ministry by stating that its work is merely secular healthcare
delivery. See Amos, 483 U.S. at 344 (Brennan, J., concurring) (finding
religious organizations ``often regard the provision of [community]
services as a means of fulfilling religious duty''); cf. World Vision,
633 F.3d at 745 (Kleinfeld, J., concurring) (``Religious missionaries
and Peace Corps volunteers both perform humanitarian work, but only the
latter is secular.''). Any other course would risk severe
constitutional difficulties. ``The prospect of church and state
litigating in court about what does or does not have religious meaning
touches the very core of the constitutional guarantee against religious
establishment . . . .'' New York v. Cathedral Acad., 434 U.S. 125, 133
(1977). But a contractor must prove its sincerity, which is a question
of fact to be proved or disproved in the same manner as any other
question of fact. And questions about religious characterization apply
to only some aspects of the test. For instance, whether an organization
operates on a nonprofit basis is a factual determination to which
religious characterizations have little if any relevance. Similarly, as
clarified in this final rule, an organization's holding itself out as
religious requires an objective evidentiary showing. Finally, OFCCP
does not defer to any contractor's assessment that it is entitled to
the exemption itself. Whether an organization is a religious
corporation, association, educational institution, or society under
E.O. 11246 is a legal determination based on whether the organization
satisfies the relevant factors.
OFCCP next addresses specific issues related to each factor,
including the evidence necessary to satisfy each factor.
c. The First Factor: The Organization's Religious Purpose
As stated in the NPRM, to qualify for the religious exemption, a
contractor must be organized for a religious purpose, meaning that it
was conceived with a self-identified religious purpose. This need not
be the contractor's only purpose. Cf. Universidad Cent. de Bayamon v.
NLRB, 793 F.2d 383, 401 (1st Cir. 1985) (finding no NLRB jurisdiction
when, among other things, an educational institution's mission had
``admittedly religious functions but whose predominant higher education
mission is to provide . . . students with a secular education''). A
religious purpose can be shown by articles of incorporation or other
founding documents, but that is not the only type of evidence that can
be used. See World Vision, 633 F.3d at 736 (O'Scannlain, J.,
concurring); id. at 745 (Kleinfeld, J., concurring) (noting that some
religious entities have ``no corporate apparatus''). And finally, ``the
decision whether an organization is `religious' for purposes of the
exemption cannot be based on its conformity to some preconceived notion
of what a religious organization should do, but must be measured with
reference to the particular religion identified by the organization.''
Id. at 735-36 (O'Scannlain, J., concurring) (quoting LeBoon, 503 F.3d
at 226-27).
Some commenters objected that this factor, as described in the NPRM
and summarized above, was too relaxed or that OFCCP was proposing to
accept insufficient evidence. Many of these commenters stated that the
proposal was inconsistent with Judge O'Scannlain's requirement of
demonstrating religious purpose through ``Articles of Incorporation or
similar foundational documents.'' Id. at 734. For example, a labor
union asserted that OFCCP's implementation of this factor would be
``more lax than Judge O'Scannlain's concurrence.'' A contractor
association stated that the test was vague and overly simple. An
individual commenter requested more guidance as to what types of
evidence OFCCP would accept to prove a contractor's organization for a
religious purpose. An organization that advocates separation of church
and state commented that an organization that fails to document a
religious purpose in any of its foundational documents was likely not
organized for a religious purpose.
OFCCP appreciates these comments and is revising its approach in
response. OFCCP agrees that additional clarity is needed here and that
this factor should require documentary evidence of an organization's
religious purpose in its foundational documents. Judge O'Scannlain's
concurrence examined World Vision's Articles of Incorporation, bylaws,
core values, and mission statement. See id. at 736. An organization may
have other foundational documents, such as a statement of faith,
company code of conduct, business policies, or other
[[Page 79335]]
governance documents demonstrating a religious purpose. No one
particular document is necessary. For instance, some federal
contractors may be unincorporated proprietorships or partnerships and
thus not have formal corporate-formation documents. But the
organization must be able to show a religious purpose in documents that
are central to the organization's identity and purpose. OFCCP believes
this requirement for documentary evidence will reduce uncertainty,
provide objective means for the agency to confirm an organization's
satisfaction of this factor of the test, and help contractors better
understand the kind of showing they will need to make to satisfy this
factor.
OFCCP emphasizes that it will not challenge a sincere claim
characterizing a document's statements as religious in the contractor's
view. See id. at 735-36. But OFCCP will rarely be able to find a claim
of religious purpose to be sincere where the documents themselves are
no different from standard corporate documents or where an organization
adds a religious purpose to its documents after it becomes aware of
potential discrimination liability or government scrutiny, including
through an OFCCP compliance review. Sincerity is a factual
determination, so each case where sincerity is at issue will turn on
its own particular circumstances.\10\
---------------------------------------------------------------------------
\10\ As noted in the proposed rule, see 84 FR at 41685,
sincerity is often not at issue.
---------------------------------------------------------------------------
d. The Second Factor: Engages in Activity Consistent With, and in
Furtherance of, Its Religious Purpose
Second, the contractor must engage in activity consistent with, and
in furtherance of, its religious purpose. Here too, ``religious
purpose'' means religious as ``measured with reference to the
particular religion identified by the contractor.'' Id. This factor is
adopted from Judge O'Scannlain's World Vision concurrence rather than
the per curiam opinion. Cf. id. at 734. The regulatory text of the
final rule has been slightly revised from the proposed language to more
closely reflect Judge O'Scannlain's formulation. This factor is now the
second factor in the test rather than the third. No material change is
intended. This factor also now states that the organization must
exercise religion consistent with, and in furtherance of, ``its''
religious purpose, rather than ``a'' religious purpose. OFCCP does not
view this change as significant, since a religious organization is
quite unlikely to further a religious purpose other than its own.
As explained in the NPRM, OFCCP proposed not to follow the World
Vision per curiam opinion's formulation of this factor for both
practical and legal reasons. The per curiam opinion would require a
contractor to be ``engaged primarily in carrying out [its] religious
purpose.'' Id. at 724 (per curiam) (emphasis added). But such a
formulation would invite OFCCP to balance things that cannot be
balanced consistently and leave contractors without the kind of clarity
that ought to prevail in contractual relations. Further, the Supreme
Court and lower courts have cautioned against drawing lines between
religious activity or belief that is ``central'' or ``primary'' and
religious activity or belief that is not. See 84 FR at 41682, 41683.
Also as explained in the NPRM, OFCCP proposed to use the phrase
``engages in exercise of religion'' rather than Judge O'Scannlain's
phrase, ``engages in activity.'' See World Vision, 633 F.3d at 734
(O'Scannlain, J., concurring) (``engaged in activity consistent with,
and in furtherance of, those religious purposes''). No material change
was intended by this adjustment; it was meant to capture in succinct
regulatory text Judge O'Scannlain's lengthy discussion that the kind of
activity contemplated under this prong is religious exercise. See 84 FR
at 41683; see also World Vision, 633 F.3d at 737-38.
OFCCP received many comments on this aspect of the NPRM. A
religious organization asked OFCCP to clarify that ``consistent'' as
used in the third factor does not mean that OFCCP will be assessing
``the coherence or consistency of the contractor's religious beliefs,
see Thomas v. Review Bd., 450 U.S. 707 (1981) (forbidding such an
inquiry), but only [making] a determination that the contractor is
engaged in activity reflecting a religious, as opposed to a secular,
purpose.'' OFCCP confirms that its intent in including this element is
to determine whether the contractor's exercise of religion is
consistent with its religious purpose, not to test the internal
consistency of a contractor's religious beliefs. To make this point as
clear as possible, OFCCP has added regulatory text explaining that
``[w]hether an organization's engagement in activity is consistent
with, and in furtherance of, its religious purpose is determined by
reference to the organization's own sincere understanding of its
religious tenets.''
As with other factors, some commenters asserted that this factor,
as described in the NPRM and summarized above, was too relaxed or that
OFCCP was proposing to accept insufficient evidence. Many of these
commenters stated that the incorporation of ``exercise of religion'' as
defined in RFRA into this factor further loosened the standard. For
example, a group of state attorneys general asserted that incorporation
of the RFRA standard revealed confusion on the part of OFCCP as to the
fundamental difference between the religious organization exemption and
RFRA. The state attorneys general stated that the religious
organization exemption is triggered only when an organization's
exercise of religion is so significant that the organization's overall
identity becomes religious and criticized the proposed rule for
focusing instead on whether an organization engages in exercises of
religion generally. A civil liberties organization characterized the
preamble as mistakenly stating that inquiry into the religious nature
of entities' actions is impermissible. A labor union commented that
this aspect of OFCCP's proposal could lead businesses to feign
religiosity solely for the purpose of cloaking discriminatory activity.
Some commenters also criticized the exclusion from OFCCP's proposed
test of the requirement that a contractor be ``primarily religious,''
or ``engaged primarily in carrying out that religious purpose.'' Some
of these comments stated that OFCCP did not persuasively explain why it
was excluding this element from the definition. A contractor
association commented that Title VII's religious organization exception
has traditionally been limited to institutions whose ``purpose and
character are primarily religious,'' and that OFCCP has no basis to
depart from this principle. An anti-bigotry religious organization
commented that OFCCP should consider all relevant circumstances in
determining whether a contractor is indeed religious, as OFCCP proposed
to do for Sincere (that is, taking into account all relevant facts).
The organization commented that the Supreme Court in Hosanna-Tabor
reviewed the employee's religious and secular functions, undermining
OFCCP's claim that it cannot engage in a similar type of balancing.
OFCCP disagrees with the idea that this factor, either as proposed
or as adopted in the final rule, confuses the religious exemption with
RFRA. An organization that exercises religion under RFRA may not
satisfy this factor of the test, yet even if it did, that alone would
not satisfy the other factors of the test necessary to claim the E.O.
11246 religious exemption. Further, as will be discussed shortly, OFCCP
has revised this prong to adhere to Judge
[[Page 79336]]
O'Scannlain's formulation, which should alleviate any confusion
regarding RFRA.\11\
---------------------------------------------------------------------------
\11\ Because of this change, the phrase ``exercises religion''
no longer appears in this prong. Thus, as explained later in this
preamble, the definition for Exercise of religion is no longer
needed and has been removed from the final rule.
---------------------------------------------------------------------------
OFCCP agrees with commenters that activity consistent with the
contractor's religious purpose must be a substantial aspect of the
contractor's operations. Insofar as the NPRM could be read to suggest
that a one-time or de minimis amount of religious activity would be
sufficient, OFCCP clarifies that understanding here. The need for a
material amount of religious activity flows from the text used in the
regulation, that the entity ``engage in religious activity.'' To engage
is ``[t]o employ or involve oneself; to take part in; to embark on,''
Black's Law Dictionary (11th ed. 2019), or to ``involve oneself or
become occupied; participate,'' American Heritage Dictionary (5th ed.
2020). It suggests more than occasional or half-hearted efforts. The
case law further illustrates that there must be a significant level of
religious activity. For instance, World Vision easily satisfied that
requirement since activity consistent with its religious purpose was
``essentially all World Vision appears to do.'' World Vision, 633 F.3d
at 737-38 (O'Scannlain, J., concurring). The examples added to the
final regulatory text also help illustrate the religious activity
needed to qualify for the exemption.
OFCCP disagrees with commenters to the extent they argue that an
organization must engage solely in religious activity (and explains
below that such an inquiry would be difficult and constitutionally
imprudent). When an organization engages in other, secular, activities,
that alone does not diminish its ability to satisfy this factor of the
test. See LeBoon, 503 F.3d at 229; cf. Univ. of Great Falls, 278 F.3d
at 1342. This is made clear by the text of the religious exemption. The
Title VII exemption was expanded in 1972 (and that expanded language is
used in E.O. 11246) to cover religious organizations' employees engaged
in any of the organization's activities, rather than only employees
engaged in the organization's religious activities. Thus the exemption
contemplates that religious organizations will engage in activities
that are not religious, and it makes clear that religious organizations
do not forfeit the exemption simply because they do.
OFCCP also disagrees with commenters who argued that the
organization's religious activity under this factor must be shown to
``constitute a comprehensive religious identity.'' That is simply a
rephrasing of the ultimate inquiry underlying the World Vision test.
This factor has a crucial role to play in that inquiry, but it should
not be mistaken for the whole of it. One of the most useful aspects of
the World Vision test is that it provides a step-by-step framework for
assessing an organization's religious nature, including this factor,
rather than leaving the inquiry an open-ended assessment in which a
religious organization is simply known when it is seen. Cf. Jacobellis
v. State of Ohio, 378 U.S. 184, 197 (1964) (Stewart, J., concurring).
Regarding comments that applying Judge O'Scannlain's concurrence
rather than a ``primarily engaged'' factor is an unjustified departure
from Title VII jurisprudence or reflects an overly prophylactic view of
religious inquiry, OFCCP respectfully disagrees. OFCCP's position
requires being mindful of the distinction between the test's underlying
inquiry and the factors used to ascertain the answer to that inquiry.
The test's underlying inquiry is whether an organization's ``purpose
and character are primarily religious.'' See, e.g., World Vision, 633
F.3d at 726 (O'Scannlain, J., concurring). But World Vision
operationalized that inquiry into four factors. Thus any constitutional
or practical problems regarding the inquiry's ``primarily religious''
formulation are academic because OFCCP will be answering the inquiry by
means of applying the factors. That is one of the reasons why OFCCP
prefers the World Vision test to other formulations.
When it comes to those four factors, however, the World Vision per
curiam opinion carried forward a ``primarily'' inquiry in two of the
factors: The organization must be ``engaged primarily in carrying out
[its] religious purpose'' and must ``not engage primarily or
substantially in the exchange of goods or services for money beyond
nominal amounts.'' Id. at 724 (per curiam). Judge O'Scannlain's well-
reasoned concurrence used an alternative formulation that avoids the
``primarily'' questions. OFCCP believes the better choice is to adopt
the concurrence. The main problem with determining whether an
organization is ``primarily'' engaged in its religious purpose--as
opposed to substantially or materially or genuinely engaged in its
religious purpose--is not that it requires a determination that the
organization is engaged in significant religious activity, something
that can be ascertained easily enough, but rather that it requires
comparison between the amount of religious and secular activity at an
organization. In essence, the organization must engage in a greater
quantum of religious activity than secular activity, though without
specifying whether the ratio must be 51:49, 70:30, or 99:1. However,
any attempt to so compare religious and secular activity leads to
additional problems: Some activities do not clearly fall on one side of
the line or the other, and a court's or an agency's attempts to
determine on which side of the line those activities fall can lead to
constitutionally intrusive inquiries. See, e.g., Cathedral Acad., 434
U.S. at 133 (observing the ``excessive state involvement in religious
affairs'' that may result from litigation over ``what does or does not
have religious meaning''). Moreover, even when all activities are
properly categorized, it is unclear what weight each should have. See,
e.g., Univ. of Great Falls, 278 F.3d at 1343 (observing that a test
that requires ascertaining an entity's ``substantial religious
character'' or lack thereof ``boils down to `is it sufficiently
religious?'''). OFCCP avoids these problems by adopting Judge
O'Scannlain's formulation of this prong.
OFCCP agrees with commenters that some courts have nonetheless
undertaken the task of comparing secular and religious activity when
examining the religious exemption. See LeBoon, 503 F.3d 217; Kamehameha
Sch., 990 F.2d 458; Boydston v. Mercy Hosp. Ardmore, Inc., No. CIV-18-
444-G, 2020 WL 1448112 (W.D. Okla. Mar. 25, 2020). OFCCP disagrees that
it also must do so when Judge O'Scannlain's concurrence provides a
viable alternative. That alternative is especially attractive to OFCCP
as an enforcement agency and as a regulator of government contractors.
In both instances a factor that offers more clarity than another gives
better notice to contractors, better guidance to field staff, and
crisper lines to the bargain between the two parties.
e. The Third Factor: Holding Itself Out as Religious
Third, the contractor must hold itself out to the public as
carrying out a religious purpose. Again here, and as explained in the
NPRM, ``religious purpose'' ``must be measured with reference to the
particular religion identified by the contractor.'' World Vision, 633
F.3d at 736 (O'Scannlain, J., concurring). The NPRM proposed that a
contractor could satisfy this requirement in a variety of ways,
including by evidence of a religious purpose on its website,
publications, advertisements, letterhead, or other public-facing
[[Page 79337]]
materials, or by affirming a religious purpose in response to inquiries
from a member of the public or a government entity. See 84 FR at 41683.
Again, some commenters stated that this factor, as described in the
NRPM and summarized above, was too relaxed or that OFCCP was proposing
to accept insufficient evidence. Many of these commenters criticized
OFCCP's proposal for allowing a contractor to meet this requirement by
declaring its religious purpose in response to an inquiry from a
government entity such as OFCCP itself. Commenters asserted that, as a
result, almost any employer could designate itself a religious
organization. Commenters also stated that taxpayers, employees, and
applicants therefore would not necessarily have notice that the
religious exemption could be applied. Commenters stated that this
factor would thus not serve as the ``market check'' that Judge
O'Scannlain envisioned. World Vision, 633 F.3d at 735 (O'Scannlain, J.,
concurring) (quoting Univ. of Great Falls, 278 F.3d at 1344). A group
of state attorneys general, for example, criticized OFCCP's proposal
for purportedly relaxing Judge O'Scannlain's `` `market check' that
would come from requiring an organization to hold itself out to the
public as religious,'' which ``could come at a cost in terms of broader
public support.'' One contractor association remarked that, under the
proposed rule, a federal contractor could satisfy this factor simply by
responding to an OFCCP inquiry, whereas World Vision had always
identified itself as a Christian organization, requiring its descriptor
statement on all its communications. Another contractor association
commented: ``Making such a showing [for example, in response to an
inquiry] is very easy and may or may not actually align with actual
corporate purpose.''
OFCCP appreciates these comments and, here too, is clarifying its
approach in response. OFCCP agrees that a contractor could not satisfy
this factor simply by affirming a religious purpose in response to one
public or government inquiry, if that was all the contractor could put
forward as evidence. More would be needed to show that the public was
on notice of the organization's religious nature.
How much more is a factual question that cannot be defined with
complete specificity, but the case law provides some guideposts. World
Vision easily satisfied this requirement: Its logo was a stylized
cross; religious artwork and texts were displayed throughout its
campus; its communications guidelines required references to its
Christian identity in all external communications; and its employment
guidelines expressly required subscription to particular Christian
beliefs. See id. at 738-40. Very recently, a district court held that a
Catholic hospital and its affiliates satisfied the requirement when
they held ``themselves out to the public as sectarian through their
display of religious symbols in their facilities and through their
sectarian mission statement and values statements displayed on [their]
public website.'' Boydston, 2020 WL 1448112, at *5. In the analogous
NLRA context, a university satisfied the test when, ``in its course
catalogue, mission statement, student bulletin, and other public
documents, it unquestionably holds itself out to students, faculty, and
the broader community as providing an education that, although
primarily secular, is presented in an overtly religious, Catholic
environment.'' Univ. of Great Falls, 278 F.3d at 1345. The university
also filled its campus, classrooms, and offices ``with Catholic icons,
not merely as art, but it claims as an expression of faith.'' Id.
In short, a contractor satisfies this requirement when the
contractor makes it reasonably clear to the public that it has a
religious purpose. As noted in the NPRM, evidence of a religious
purpose can come from the contractor's website, publications,
advertisements, letterhead, or other public-facing materials, and in
statements to members of the public. Evidence can also include
religiously inspired logos, mottos, or the like; and religious art,
texts, music, or other displays of religion in the workplace.
Statements to the government in the ordinary course of business, such
as corporate documents or tax filings, can also be probative. Such
statements should be distinguished from statements to the government
made in the course of an investigation or litigation in which the
contractor's religious purpose is at issue. No one piece of evidence is
required or, most likely, sufficient. But together the evidence must
show that the contractor is presenting itself to the outside world as
religious.
f. The Fourth Factor: Operating on a Not-for-Profit Basis
OFCCP proposed not to adopt the fourth factor set out in World
Vision: That the entity seeking exemption ``not engage primarily or
substantially in the exchange of goods or services for money beyond
nominal amounts.'' 633 F.3d at 724 (per curiam). The NPRM proposed this
course for several reasons: Many religious entities may operate
discount retail stores or otherwise engage in the marketplace; \12\
religiously oriented hospitals, senior-living facilities, and hospices
may engage in substantial and frequent financial exchanges; \13\ the
religious exemption in E.O. 11246 pertains to government contracting,
an economic activity in which most participants are for-profit
entities; \14\ other courts have not considered dispositive an
organization's for-profit or nonprofit status, or the volume or amount
of its financial transactions; Amos left open the question of whether
for-profit organizations could qualify for the exemption; and the
Supreme Court's more recent decision in Hobby Lobby, which held that
for-profit organizations can exercise religion, counseled against an
absolute prohibition on allowing for-profit organizations to qualify
for the exemption.
---------------------------------------------------------------------------
\12\ See Brian J. Grim and Melissa E. Grim, ``The Socio-economic
Contribution of Religion to American Society: An Empirical
Analysis,'' Interdisciplinary Journal of Research on Religion, vol.
12 (2016), article 3, pp. 10, 24, http://www.religjournal.com/pdf/ijrr12003.pdf.
\13\ See id. at 7.
\14\ See General Service Administration, System for Award
Management, Advanced Search--Entity (listing 410,021 active for-
profit entities and 99,781 nonprofit and/or other-not-for-profit
entities), sam.gov/SAM/pages/public/searchRecords/advancedEMRSearch.jsf (last accessed Oct. 2, 2020).
---------------------------------------------------------------------------
OFCCP received a wide variety of comments on this aspect of the
NPRM. Some commenters agreed with OFCCP's reasons for declining to
require that a contractor ``not engage primarily or substantially in
the exchange of goods or services for money beyond nominal amounts.''
For example, a religious liberties organization commented that federal
contractors typically engage in substantial exchanges of goods and
services, and therefore religious organizations would be categorically
denied the section 204(c) exemption if they became federal contractors.
Other commenters opposed the exclusion of the requirement that a
contractor ``not engage primarily or substantially in the exchange of
goods or services for money beyond nominal amounts.'' A group of U.S.
Senators commented that the existence of a financial motive constitutes
strong evidence that the exercise of religion is not the objective of
the entity. Some of these commenters stated that OFCCP did not
persuasively explain why it was excluding this element from the
definition.
OFCCP declines to restrict the exemption to those religious
entities that charge little or nothing for their services. Contra World
Vision, 633 F.3d at 724 (per curiam); id. at 747 (Kleinfeld, J.,
concurring). First, E.O. 11246 governs federal contractors, not
grantees. Contractors by definition charge for
[[Page 79338]]
their goods and services, even if they are nonprofits. E.O. 11246's
religious exemption would be a virtual nullity were it restricted to
contractors that do not charge. Second, OFCCP agrees with Judge
O'Scannlain that nonprofit status is a sufficiently reliable proxy for
religious identity,\15\ without the need to restrict this factor
further to only those organizations that do not charge. Judge
O'Scannlain explained that nonprofit status, and its restrictions on
monetary gain, is reliable evidence that the organization has religious
aims rather than purely pecuniary ones, see id. at 734-35 (O'Scannlain,
J., concurring), and OFCCP agrees. Plus, the narrower formulation would
exclude many bona fide religious organizations, like certain hospitals
and care facilities, that engage in substantial and frequent market
transactions, including by charging sums to beneficiaries of their
goods and services. And while religious educational institutions have
their own particular exemption, it would seem odd to think that their
charging for books, tuitions, and dormitories would call into question
their religious status. Third, one of the reasons OFCCP is promulgating
this rule is to encourage broader participation in government
contracting and subcontracting. Restrictions that would unduly restrict
the exemption's availability could affect the size of the pool, to the
detriment of the government's interests in a competitive and diverse
field of potential contractors.
---------------------------------------------------------------------------
\15\ In the next few paragraphs, this preamble explains further
why and how OFCCP is limiting the exemption to nonprofit
organizations in most circumstances.
---------------------------------------------------------------------------
OFCCP also received many comments on its proposal to remove the
requirement that organizations be nonprofit to qualify for the
exemption. As mentioned above, OFCCP has substantially revised this
aspect of the rule in response to commenters' concerns. Some commenters
agreed with the proposal that it was not necessary for a contractor to
``be nonprofit.'' For example, a religious civil rights organization
commended the proposal for affirming that the owners of for-profit
entities do not have to forfeit their religious convictions. Those
commenters agreed with OFCCP's explanation that Hobby Lobby counsels
against a stark distinction between nonprofit and for-profit
corporations. For example, a religious legal organization commented:
``[A]s the Supreme Court noted in Hobby Lobby, a for-profit corporation
substantially engaged in an exchange of goods and services can exercise
religion.''
Other commenters opposed the proposal not to make nonprofit status
a determinative factor. For example, an anti-bigotry religious
organization emphasized that Judge O'Scannlain's concurrence in World
Vision focused on whether the employer's purpose is non-pecuniary,
while Judge Kleinfeld's analysis focused on whether the employer
provided services at no cost or for a nominal fee. The organization
criticized the proposed rule for rejecting both factors. Commenters
asserted that OFCCP's proposal not to make nonprofit status a
determinative factor would unacceptably broaden the exemption. A
religious organization asserted that the proposed rule would allow for-
profit corporations to exploit faith in order to justify
discrimination, and that the spirit of religious institutions would be
diminished if houses of worship were placed in the same category as
for-profit institutions.
Some commenters stated that the proposal would allow discrimination
by contractors that should not be entitled to the religious exemption.
A labor organization commented that even for-profit companies, whose
primary purpose is, by definition, to make a profit, could protect
themselves from discrimination claims by claiming to have a religious
purpose.
Some commenters stated that the proposed removal of the nonprofit
requirement was inconsistent with Title VII case law interpreting the
same term, including Judge O'Scannlain's own test. Many of these
commenters stated that OFCCP had not cited any Title VII cases in which
a court had found a for-profit entity to qualify for the religious
exemption. For example, a contractor association commented that Judge
O'Scannlain considered non-profit status to be an ``especially
significant'' consideration, which was consistent with the reasoning in
numerous Title VII cases. Some commenters stated that the proposed
removal of the nonprofit requirement was inconsistent with guidance
from the EEOC or was a reversal of OFCCP's previous position. Many of
these commenters stated that OFCCP gave inadequate reasons for the
deviation. For example, a group of state attorneys general commented
that the proposed reversal was not justified by the executive branch's
contracting authority, which ``must be exercised within the boundaries
of Title VII's prohibitions.'' A contractor association commented that
omitting a legal requirement because it could be difficult to apply
does not align with OFCCP's stated commitment to follow the rule of law
and to apply Title VII principles.
Some commenters specifically objected to OFCCP's reliance on Hobby
Lobby as justifying or requiring the proposed removal of the nonprofit
status factor. Most of these commenters stated that Hobby Lobby was
inapplicable because it centered not on the Title VII religious
exemption but on RFRA, specifically on that statute's definition of
``person.'' For example, a civil liberties organization commented that
the Supreme Court in Hobby Lobby focused its analysis on the definition
of the word ``person'' in RFRA and offered no insight into the
definition or scope of the phrase ``religious corporation'' in the
religious exemption context. A gender equality advocacy organization
commented that RFRA goes far beyond what is constitutionally required
by subjecting any laws burdening religious exercise to strict scrutiny
and, thus, the question of RFRA's application should not dictate a
company's eligibility for a Title VII religious exemption.
Some commenters also stated that Hobby Lobby has not been applied
in subsequent Title VII religious exemption cases. These commenters
typically cited Garcia v. Salvation Army, 918 F.3d 997 (9th Cir. 2019).
In that case, the Ninth Circuit found that the Salvation Army satisfied
the requirement that it ``not engage primarily or substantially in the
exchange of goods or services for money beyond nominal amounts'' both
because it is a nonprofit (Judge O'Scannlain's approach) and because it
gives away or charges only nominal fees for its services (Judge
Kleinfeld's approach). Id. at 1004.
In addition to distinguishing Hobby Lobby on the ground that it
addressed RFRA and not the Title VII religious exemption, commenters
also stated that key limitations present in Hobby Lobby were not
reflected in OFCCP's proposal. In particular, they stated, Hobby Lobby
held that only closely held for-profit corporations could invoke RFRA,
but OFCCP's proposal included no such limitation, and the Court in
Hobby Lobby considered harms an exemption would impose on third
parties, but OFCCP did not consider third-party harms the commenters
believed the proposal would cause. Commenters also stated that Hobby
Lobby did not address government contractors. For example, a women's
rights advocacy organization commented that, while Hobby Lobby dealt
with a general requirement on all non-grandfathered insurance plans,
the proposed rule deals with businesses that willingly enter contracts
with the federal government. According to the organization, ``[a]n
entity does not have
[[Page 79339]]
a right to a contract that it is unwilling to perform.''
In consideration of these comments, OFCCP is revising the
definition of Religious corporation, association, educational
institution, or society in the final rule. OFCCP recognizes that, as
Judge O'Scannlain observed, nonprofit status is ``strong evidence''
that an organization has a nonpecuniary purpose. World Vision, 633 F.3d
at 734-35 (O'Scannlain, J., concurring); see also Amos, 483 U.S. at 344
(1987) (Brennan, J., concurring). Nonprofit status also allows a
determination of religious purpose to be made objectively and without
engaging in a more searching inquiry. With that said, OFCCP recognizes
that, in certain rare circumstances, an organization might be for-
profit yet still be fairly considered a religious rather than secular
organization.
Thus the final rule adds a fourth requirement: That the contractor
either ``(A) operates on a not-for-profit basis; or (B) presents other
strong evidence that it possesses a substantial religious purpose.''
Paragraph (A) has been written in a manner that covers federal
contractors that do not have formal tax-exempt status under 26 U.S.C.
501(c)(3) but operate in substantial compliance with 501(c)(3)'s
requirements. See World Vision, 633 F.3d at 745 (Kleinfeld, J.,
concurring) (noting the need for a small adjustment to the test to
cover small groups that do not formally incorporate). Paragraph (A)
meets the goals of certainty and clarity in contracting for what OFCCP
believes will be the vast majority of contractors interested in the
exemption. Paragraph (B) is a helpful contingency for situations where
a contractor may not satisfy this prong of the test but in all fairness
should be considered a qualifying religious organization. This
alternative test is consistent with World Vision and the more recent
Ninth Circuit case highlighted by commenters, Salvation Army, 918 F.3d
997. World Vision's brief per curiam opinion stated that an
organization is eligible for the exemption ``at least'' when it meets
the four factors. 633 F.3d at 724 (per curiam) (emphasis added). Judge
O'Scannlain's opinion stated that other factors may be relevant in
other cases. See id. at 729-30 (O'Scannlain, J., concurring). In
Salvation Army, the court applied an ``all significant religious and
secular characteristics'' standard as well as noted that the Salvation
Army satisfied the World Vision test. See Salvation Army, 918 F.3d at
1003-04.
In his World Vision concurrence, Judge O'Scannlain described
nonprofit status as ``especially significant'' because of its
evidentiary value. He wrote that nonprofit status ``bolsters a claim
that [an organization's] purpose is nonpecuniary,'' ``provides strong
evidence that its purpose is purely nonpecuniary,'' ``makes colorable a
claim that it is not purely secular in orientation,'' and ``bolster[s]
a `contention that an entity is not operated simply in order to
generate revenues . . . , but that the activities themselves are
infused with a religious purpose.' '' World Vision, 633 F.3d at 734-35
(O'Scannlain, J., concurring) (quoting Amos, 483 U.S. at 344 (Brennan,
J., concurring)).\16\ OFCCP agrees with these observations, which is
why it has adopted nonprofit status as a sufficient means for
satisfying this factor of the test.
---------------------------------------------------------------------------
\16\ These varying statements span the range from ``not purely
secular'' to ``purely nonpecuniary.'' OFCCP's regulatory text
attempts to strike a balance down the middle, using the phrase
``possesses a substantial religious purpose.''
---------------------------------------------------------------------------
There may be rare situations, however, where an organization is
legally constituted as a for-profit enterprise yet infused with
religious purpose. In those situations, the organization would need to
come forward with strong evidence that its goals are religious rather
than pecuniary--evidence comparable in probative weight to nonprofit
status. OFCCP has added examples within the regulatory definition of
Religious corporation, association, educational institution, or society
to illustrate some of these rare instances, including a contractor that
provides chaplaincy services to the military and a kosher caterer that
supplies meals for federal events. OFCCP doubts that an entity that is
not closely held could ever satisfy this requirement, especially since
such an entity would have multiple and disparate shareholders. See
Hobby Lobby, 573 U.S. at 717 (``[T]he idea that unrelated
shareholders--including institutional investors with their own set of
stakeholders--would agree to run a corporation under the same religious
beliefs seems improbable.''). OFCCP likewise doubts that an entity
could qualify if it predominantly provides undifferentiated marketplace
goods or services that are not associated with an expressly religious
purpose or a charitable, educational, humanitarian, or other
eleemosynary purpose.
OFCCP has also modified the NPRM's definition of Religious
corporation, association, educational institution, or society to
reflect these considerations. Unlike the proposed rule, which stated
only that a religious organization need not be nonprofit, the final
rule now requires that the organization, if for-profit, present ``other
strong evidence that it possesses a substantial religious purpose.''
This formulation attempts to synthesize the various statements in World
Vision and Amos as to the quantum of religious purpose an organization
must have, and recognizes their reasoning that nonprofit status serves
as a valuable evidentiary proxy for religious purpose. Thus the final
rule requires a for-profit organization to put forward strong evidence
to demonstrate that it does indeed have a substantial religious
commitment rather than serve solely as a vehicle to facilitate profit-
making or other secular ends. This formulation recognizes that an
organization may have more than one purpose, but its religious one must
be substantial. It would not be enough, for instance, that an
organization feature a scriptural quote in marketing materials or make
a brief reference to religious values on its ``About Us'' web page. The
examples in the regulatory text may be instructive to readers on this
point.
This new regulatory text is also consistent with Hobby Lobby's
observation that a corporation need not choose absolutely between
financial objectives and other objectives:
While it is certainly true that a central objective of for-
profit corporations is to make money, modern corporate law does not
require for-profit corporations to pursue profit at the expense of
everything else, and many do not do so. . . . If for-profit
corporations may pursue such worthy objectives [as supporting
charitable causes, environmental measures, or working conditions
beyond those required by law], there is no apparent reason why they
may not further religious objectives as well.
Hobby Lobby Stores, 573 U.S. at 711. OFCCP believes that the
approach promulgated here, which has been modified from that in the
NPRM, is consistent with Title VII case law. Again, World Vision set
out a four-factor test that, if satisfied, is sufficient for
organizations to qualify for the exemption. But as Salvation Army and
other cases show, there are other ways to qualify for the exemption.
See Salvation Army, 918 F.3d 997; EEOC v. Townley Eng'g & Mfg. Co., 859
F.2d 610 (9th Cir. 1988). In these other cases, nonprofit or for-profit
status has been treated as an important factor, but not as dispositive.
That is similar to this final rule's approach.
For the same reason, OFCCP disagrees that its approach is an
unjustified change in agency position. Until this rulemaking, OFCCP had
not set forth the specific factors it would use to decide which
organizations qualify for E.O. 11246's religious exemption; rather, in
[[Page 79340]]
withdrawn subregulatory guidance OFCCP stated that it would follow EEOC
and court interpretations of Title VII and apply an all-facts-and-
circumstances test. To the extent that withdrawn statement could be
considered the position of the agency, for the reasons stated in this
preamble, OFCCP now believes such a test is too indeterminate and
involves potential legal infirmities, and that a more-defined test will
give better clarity to contractors and foster a broader pool of
potential contractors and subcontractors. It is certainly true, as
commenters asserted, that OFCCP's general position is to follow Title
VII principles when interpreting E.O. 11246. For the reasons stated in
this preamble OFCCP believes its approach is consistent with Title VII
principles and Supreme Court case law, and better furthers the goals of
this rulemaking. The minor differences between the EEOC's approach to
determining which organizations can claim the exemption and OFCCP's
definition of Religious corporation, association, educational
institution, or society are addressed later in this preamble.
OFCCP also disagrees with commenters who argued that Hobby Lobby is
irrelevant to this issue. Certainly Hobby Lobby was not a Title VII
case. But Hobby Lobby's holding that for-profit corporations qualify as
``persons'' who can exercise religion under RFRA is hard to square with
a rule that a for-profit entity can never be a religious organization
eligible for E.O. 11246's religious exemption. And much of its
reasoning has broader implications. The Supreme Court observed that
furthering the religious freedom of corporations, whether for-profit or
nonprofit, furthers individual religious freedom. See Hobby Lobby, 573
U.S. at 707. The Supreme Court found no reason to distinguish between
for-profit sole proprietorships--which had brought Free Exercise claims
before the Supreme Court in earlier cases--and for-profit closely held
corporations. See id. at 709-10. And as just stated, the Supreme Court
noted that every U.S. jurisdiction permits corporations to be formed
``for any lawful purpose or business,'' id. at 711 (internal quotation
marks omitted), including a religious one, see id. at 710-11.
OFCCP is required to give some consideration to that language in
formulating its own test here. If for-profit corporations can exercise
religion and further religious objectives as well as pecuniary ones,
then OFCCP should consider carefully whether they should be
categorically excluded from qualification as religious organizations
under the religious exemption. Hobby Lobby does not demand a result one
way or the other on that issue, but OFCCP has found the case to be an
important data point in support of its approach here.
Regarding commenters' concerns that a removal of the nonprofit
requirement would unacceptably broaden the exemption, OFCCP has revised
the regulatory text as described above. OFCCP does not anticipate many
for-profit organizations seeking to qualify for the exemption, and
those that do will need to satisfy the other three prongs--which
themselves contain significant evidentiary requirements--plus provide
strong evidence of their religious nature. OFCCP believes this test
will ensure that only bona fide religious organizations will qualify.
Finally, regarding comments about so-called third-party harms,
OFCCP recognizes that Cutter v. Wilkinson stated that government must
adequately account for accommodations' burdens on others. 544 U.S. 709,
720 (2005). OFCCP believes it has adequately accounted for any burdens
on others that this rule may cause, and on balance believes that the
vindication of the law's religious protections, the need for clarity in
this area of contracting, and the potential expansion of the
government's contracting pool justify any burdens on third parties. See
infra section III.B.5.
Further, under controlling Supreme Court precedent, the
Establishment Clause allows accommodations that remove a burden of
government rules from religious organizations, reduce the chilling on
religious conduct, or reduce government entanglement. See Amos, 483
U.S. at 334-39. Any third party burdens that might result from such
accommodations are attributable to the organization that benefits from
the accommodation, not to the government, and, as a result, do not
violate the Establishment Clause. Id. at 337 n.15. In the Sherbert line
of Free Exercise Clause cases that later became the basis of RFRA,
dissents and concurrences routinely pointed to such burdens on third
parties but did not persuade the majorities of any Establishment Clause
violation.\17\
---------------------------------------------------------------------------
\17\ See, e.g., Thomas, 450 U.S. at 723 n.1 (Rehnquist, J.,
dissenting) (citing several burdens on the system and other
beneficiaries, including that ``[w]e could surely expect the State's
limited funds allotted for unemployment insurance to be quickly
depleted''); Wisconsin v. Yoder, 406 U.S. 205, 240 (1972 (White, J.,
concurring) (outlining the state's legitimate interest in educating
Amish children, especially ones that leave their community but
finding the evidence of harm insufficient); Yoder, 406 U.S. at 245
(Douglas, J., dissenting) (arguing that the decision ``imperiled''
the ``future'' of the Amish children, not their parents).
---------------------------------------------------------------------------
The Supreme Court has applied this principle to allow
accommodations that litigants claimed caused significant third-party
harms. For example, the Supreme Court upheld the Title VII exemption
for religious employers--discussed in Section 8--despite the alleged
significant harms of expressly permitting discrimination against
employees on the basis of religion. See Tex. Monthly, 489 U.S. 1, 18
n.8 (1989) (citing Amos). This is consistent with Hobby Lobby, which
expressly held that a burden lawfully may be removed from a religious
organization even if it allows such a religious objector to withhold a
benefit from third parties. Hobby Lobby, 573 U.S. at 729 n.37
(``Nothing in the text of RFRA or its basic purposes supports giving
the Government an entirely free hand to impose burdens on religious
exercise so long as those burdens confer a benefit on other
individuals.''). Ultimately, government action that removes such a
benefit merely leaves the third party in the same position in which it
would have been had government not regulated the religious objector in
the first place. Otherwise, any accommodation could be framed as
burdening a third party. That would ``render[ ] RFRA meaningless.''
Hobby Lobby, 573 U.S. at 729 n.37. ``[F]or example, the Government
could decide that all supermarkets must sell alcohol for the
convenience of customers (and thereby exclude Muslims with religious
objections from owning supermarkets), or it could decide that all
restaurants must remain open on Saturdays to give employees an
opportunity to earn tips (and thereby exclude Jews with religious
objections from owning restaurants).'' Id.; see also Attorney General's
Memorandum, Principle 15, 82 FR at 49670.
Finally, OFCCP views these comments as addressed more to the
religious exemption itself, which is not at issue here, than to this
rule. Congress decided in enacting Title VII, and the President decided
in amending E.O. 11246, that preserving the integrity of religious
organizations merited an exemption from the religious-neutrality
requirements that would otherwise apply to their employees. OFCCP does
not and could not question those judgments. Further, insofar as
commenters argued that the test expands the number of contractors that
might qualify for the exemption, that fact alone does not show any
third-party harm. Indeed, among the rule's intended purposes is
expanding the pool of
[[Page 79341]]
contractors while avoiding religious entanglement. No contractor is
compelled to seek the exemption, and no contractor so exempted is
compelled by receipt of the exemption to take any particular employment
action. See Amos, 337 n.15. To the contrary, the Title VII case law
confirms that religious employers have flexibility to accommodate
employees' religious preferences if they so choose. See Kennedy, 657
F.3d at 194. Additionally, OFCCP discusses below, regarding the scope
of the exemption, how this rule interacts with other protected classes
and the proper balance between employers' and employees' freedoms and
rights. OFCCP believes it has provided an accommodation that reasonably
addresses these interests.
g. Other Features
The final rule retains two proposed non-determinative features in
the definition of Religious corporation, association, educational
institution, or society. Those are the statements that the organization
``may or may not'' ``have a mosque, church, synagogue, temple, or other
house of worship'' or ``be supported by, be affiliated with, identify
with, or be composed of individuals sharing, any single religion, sect,
denomination, or other religious tradition.'' With regard to these
features, some commenters expressed support, and other commenters
expressed opposition. For example, one religious education association
commented, in support of the absence of a requirement that the
contractor ``[h]ave a mosque, church, synagogue, temple, or other house
of worship'' that religious schools that are controlled by a body of
religious leaders directly connected to the school are no less
``controlled by a religious organization'' than are schools controlled
by hierarchical religious denominations. OFCCP continues to believe
that requiring these features could lead the agency to discriminate
among religions, which could violate the First Amendment's
Establishment Clause. See World Vision, 633 F.3d at 732 & n.9
(O'Scannlain, J., concurring). For these reasons and the reasons
described in the preamble to the proposed rule, see 84 FR at 41684,
OFCCP agrees with the commenters who stated that it is appropriate not
to require that contractors have these features to be deemed religious.
3. Definition of Exercise of Religion
OFCCP proposed to define Exercise of religion as the term is
defined for purposes of RFRA. RFRA, in 42 U.S.C. 2000bb-2(4), defines
``exercise of religion'' to mean ``religious exercise'' as defined in
the Religious Land Use and Institutionalized Persons Act (RLUIPA), 42
U.S.C. 2000cc-5(7). RLUIPA, in turn, defines ``religious exercise'' as
including ``any exercise of religion, whether or not compelled by, or
central to, a system of religious belief.'' This definition is well-
established and prevents problematic inquiries into the ``centrality''
of a religious practice, which are discussed later in this preamble.
However, the phrase ``exercise of religion'' in the proposed rule
appeared only as part of the proposed definition of Religious
corporation, association, educational institution, or society. That
definition has been changed to adhere more closely to Judge
O'Scannlain's concurrence in World Vision, and the words ``exercise of
religion'' no longer appear in that prong of the definition. Thus there
is no need for regulatory text to define them. With that said, OFCCP
will look to general principles of First Amendment law and the RFRA-
RLUIPA definition of ``exercise of religion'' when assessing whether an
organization is engaging ``in activity consistent with, and in
furtherance of,'' its religious purpose, and when assessing whether its
employment action has a religious basis. Therefore, OFCCP addresses
below the comments received on the proposed definition of Exercise of
religion.
Several commenters generally approved of the definition for the
reasons stated in the NPRM, while others generally opposed the proposed
definition. Those generally opposed asserted that RFRA was not a
relevant authority given that it is a different statute, that the
borrowed provision was vague and did not provide clarity but rather
represented an attempt to ``create new law,'' and that the breadth of
the definition did not provide ``guardrails for the manner in which
employers can require their employees to adhere to certain
principles.'' Others commenters raised more specific issues. A group of
state attorneys' general noted that the broad definition of religious
exercise in RFRA is moderated by its substantial burden requirement,
which the proposed definition did not include. Others noted issues with
the term in the context of the ``engages in'' language directly
preceding it; some believed the two in tandem were vague and overbroad,
while one commenter sought specific guidance in the final rule that
``religious speech'' could be an exercise of religion.
OFCCP has considered these comments and continues to believe that
the RFRA-RLUIPA definition of ``exercise of religion'' is relevant in
this context, although, for the reasons stated above, there is no need
for the final rule to define the term. RFRA and RLUIPA are well-
established laws regarding religious freedom that are broadly
applicable, and they provide a familiar framework that will assist
OFCCP in assessing both whether a contractor is engaging ``in activity
consistent with, and in furtherance of,'' its religious purpose and
whether its employment action has a religious basis.
4. Definition of Sincere
The principles discussed above with regard to the definition of
Exercise of religion are incorporated in the definition of Sincere that
OFCCP proposed. In line with court precedent and OFCCP's principles,
the critical inquiry for OFCCP is whether a particular employment
decision was in fact a sincere exercise of religion. Consistent with
that inquiry, and for the reasons explained above, the final rule's
definition of Particular religion specifies that the religious tenets
the contractor applies to its employees must be ``sincere.'' OFCCP,
like courts, ``merely asks whether a sincerely held religious belief
actually motivated the institution's actions.'' Geary v. Visitation of
Blessed Virgin Mary Parish Sch., 7 F.3d 324, 330 (3d Cir. 1993). The
religious organization's burden ``to explain is considerably lighter
than in a non-religious employer case,'' since the organization, ``at
most, is called upon to explain the application of its own doctrines.''
Id. ``Such an explanation is no more onerous than is the initial burden
of any institution in any First Amendment litigation to advance and
explain a sincerely held religious belief as the basis of a defense or
claim.'' Id.; see United States v. Seeger, 380 U.S. 163, 185 (1965)
(holding whether a belief is ``truly held'' is ``a question of fact'').
The sincerity of religious exercise is often undisputed or stipulated.
See, e.g., Hobby Lobby, 573 U.S. at 717 (``The companies in the cases
before us are closely held corporations, each owned and controlled by
members of a single family, and no one has disputed the sincerity of
their religious beliefs.''); Holt, 574 U.S. at 361 (``Here, the
religious exercise at issue is the growing of a beard, which petitioner
believes is a dictate of his religious faith, and the Department does
not dispute the sincerity of petitioner's belief.'').
Further, as the Supreme Court has repeatedly counseled, ``religious
beliefs need not be acceptable, logical, consistent, or comprehensible
to others in order to merit First Amendment protection.'' Church of the
Lukumi Babalu Aye, Inc. v. City of Hialeah, 508 U.S. 520, 531 (1993)
(quoting Thomas,
[[Page 79342]]
450 U.S. at 714) (internal quotation marks omitted); see also, e.g.,
United States v. Ballard, 322 U.S. 78, 86 (1944) (``[People] may
believe what they cannot prove. They may not be put to the proof of
their religious doctrines or beliefs.''). To merit protection,
religious beliefs must simply be ``sincerely held.'' E.g., Frazee v.
Ill. Dep't of Emp't Sec., 489 U.S. 829, 834 (1989); Seeger, 380 U.S. at
185. Courts have appropriately relied on the ``sincerely held''
standard when evaluating religious discrimination claims in the Title
VII context. See, e.g., Davis v. Fort Bend Cnty., 765 F.3d 480, 485
(5th Cir. 2014); Philbrook v. Ansonia Bd. of Educ., 757 F.2d 476, 481-
82 (2d Cir. 1985); Redmond v. GAF Corp., 574 F.2d 897, 901 n.12 (7th
Cir. 1978). In such cases, a court must ``vigilantly separate the issue
of sincerity from the factfinder's perception of the religious nature
of the [employee's] beliefs.'' EEOC v. Union Independiente de la
Autoridad de Acueductos y Alcantarillados, 279 F.3d 49, 57 (1st Cir.
2002) (alteration in original) (quoting Patrick v. LeFevre, 745 F.2d
153, 157 (2d Cir. 1984)) (internal quotation marks omitted).
Some commenters opposed requiring only that exercise of religion be
``sincere,'' which they characterized as broadening the exemption. They
warned that this expands exercise of religion beyond its current
meaning and that sincerity cannot be reasonably applied. For example, a
labor union stated that ``sincerity'' is not a concept that can
sensibly be applied to organizations, much less to for-profit
businesses that would be included in the scope of the religious
exemption under the Proposed Rule. A group of state attorneys general
commented that, by requiring only sincerity, OFCCP ``seeks to expand
RFRA's already broad definition of `exercise of religion.''' An
individual commenter wrote that the proposal would grant large for-
profit government contractors a hiring exemption as long as they could
articulate any strongly held belief.
Other commenters expressed support for a sincerity test. For
example, a religious liberties legal organization wrote: ``Attempts to
use religion to hide discriminatory intent are generally not
successful.'' OFCCP agrees with these commenters. Other commenters also
expressed general support for the proposed definition, stating that it
will help ensure that important protections against discrimination
remain in place while at the same time preventing government overreach
and protecting religious practice. For instance, the same religious
liberties legal organization commented that legal precedent regarding
sincerity and the compelling government interest in preventing
discrimination will survive without excessive government involvement.
Many other commenters opposed the proposed, arguing that it would
not require entities to be internally consistent in applying their
self-proclaimed religious tenets to various groups. For instance, a
group of U.S. Senators asserted that the proposed definition ``does not
require consistency in the application of policy based upon religious
tenets'' such that an entity opposed to body modification, for
instance, could ignore tenets regarding tattoos but fire a transgender
worker for seeking health care without triggering scrutiny. An LGBT
rights advocacy organization echoed this concern. Some commenters also
opposed OFCCP's statement that ``the sincerity of religious exercise is
often undisputed or stipulated'' because, they stated, it raised
concerns regarding the depth of OFCCP's inquiry under the proposed
definition. A state civil rights organization commented, for instance,
that this portion of the preamble seemed to signal that OFCCP will not
inquire about sincerity, despite the fact that whether a belief is
sincerely held can only be determined by weighing the strength of
evidence. Likewise, an organization that advocates separation of church
and state commented that the preamble's discussion, particularly its
``equivocal views'' on policies aimed at determining the sincerity of
an adverse employment action, creates uncertainty as to whether OFCCP
will actually weigh factors intended to determine sincerity. An LGBT
rights advocacy organization expressed substantially identical
concerns.
As noted in the NPRM, in assessing sincerity, OFCCP will take into
account all relevant facts, including whether the contractor had a
preexisting basis for its employment policy and whether the policy has
been applied consistently to comparable persons, although absolute
uniformity is not required. See Kennedy, 657 F.3d at 194 (noting that
the Title VII religious exemption permits religious organizations to
``consider some attempt at compromise''); LeBoon, 503 F.3d at 229
(``[R]eligious organizations need not adhere absolutely to the
strictest tenets of their faiths to qualify for Section 702
protection.''); see also Killinger v. Samford Univ., 113 F.3d 196, 199-
200 (11th Cir. 1997). But despite commenters' focus on the need for
``internal consistency'' in religious organizations' doctrine--such as
a rule that if tattoos are permitted, transgender medical procedures
must be as well--rather than consistency across similarly situated
employees, OFCCP cannot assess the ``relative severity of [religious]
offenses'' or otherwise weigh doctrinal matters, for that would
``violate the First Amendment.'' Curay-Cramer v. Ursuline Acad. of
Wilmington, Del., Inc., 450 F.3d 130, 139 (3d Cir. 2006).
OFCCP will also evaluate any evidence that indicates an insincere
sham, such as acting ``in a manner inconsistent with that belief'' or
``evidence that the adherent materially gains by fraudulently hiding
secular interests behind a veil of religious doctrine.'' Philbrook, 757
F.2d at 482 (quoting Int'l Soc'y for Krishna Consciousness, Inc. v.
Barber, 650 F.2d 430, 441 (2d Cir. 1981)) (internal quotation marks
omitted); cf., e.g., Hobby Lobby, 573 U.S. at 717 n.28 (``To qualify
for RFRA's protection, an asserted belief must be `sincere'; a
corporation's pretextual assertion of a religious belief in order to
obtain an exemption for financial reasons would fail.''); United States
v. Quaintance, 608 F.3d 717, 724 (10th Cir. 2010) (Gorsuch, J.)
(``[T]he record contains additional, overwhelming contrary evidence
that the [defendants] were running a commercial marijuana business with
a religious front . . . .''). OFCCP's application of the religious
exemption is described in more detail below.
Despite these assurances, several commenters who opposed the
proposed definition said that it is vague or unworkable in practice.
For instance, a group of state attorneys general expressed concern that
the definition may increase confusion among contractors seeking to
claim religious exemptions because the question of how a for-profit
organization can demonstrate the sincerity of its religious beliefs is
largely untested. Thus, according to the attorneys general, contractors
will have to contend with a high level of uncertainty in addition to
their obligations under Title VII. A religious legal organization that
otherwise supported the proposed rule highlighted the fact that the
proposed definition of sincere is ``simply what courts determine `when
ascertaining the sincerity of a party's religious exercise or
belief.''' The commenter expressed skepticism that courts could arrive
at a concise and uniform test for the meaning of the term without more
specific guidance from OFCCP.
OFCCP disagrees that ascertaining the sincerity of an
organization's religious exercise, even a for-profit one, will foster
confusion or that it presents insurmountable practical difficulties.
Religious sincerity is a familiar and
[[Page 79343]]
well-developed legal principle. It has been applied in regards to a
religious organization's decisions under the Title VII religious
exemption. See, e.g., Little v. Wuerl, 929 F.2d 944, 946 (3d Cir. 1991)
(``Little does not challenge the sincerity of the Parish's asserted
religious doctrine.''). And the Supreme Court rejected a similar
argument ``that Congress could not have wanted RFRA to apply to for-
profit corporations because it is difficult as a practical matter to
ascertain the sincere `beliefs' of a corporation.'' Hobby Lobby, 573
U.S. at 717. Here, as there, questions of corporate religious beliefs
are likely to arise only for closely held corporations, and ``[s]tate
corporate law provides a ready means for resolving any conflicts . . .
.'' Id. at 718.
OFCCP also acknowledges the constitutional and prudential
limitations on its inquiry that may come into play when religious
matters are involved. OFCCP will not compare religious doctrines or
practices in evaluating sincerity. See, e.g., Curay-Cramer, 450 F.3d at
139 (``[A]ssess[ing] the relative severity of [religious] offenses . .
. would violate the First Amendment.''); Hall v. Baptist Mem'l Health
Care Corp., 215 F.3d 618, 626 (6th Cir. 2000) (``[T]he First Amendment
does not permit federal courts to dictate to religious institutions how
to carry out their religious missions or how to enforce their religious
practices.''). Nor will OFCCP require contractors to adhere to strict,
uniform procedures to demonstrate sincerity. See Kennedy, 657 F.3d at
194; LeBoon, 503 F.3d at 229. And where ``it is impossible to avoid
inquiry into a religious employer's religious mission or the
plausibility of its religious justification for an employment
decision,'' then OFCCP will apply the E.O. 11246 religious exemption.
Curay-Cramer, 450 F.3d at 141.
Some commenters objected to OFCCP's stated commitment to applying
the ministerial exception. For instance, a city public advocate
observed that OFCCP's claim that it will evaluate any factors that
indicate insincerity is undermined by the proposed rule's commitment to
the ministerial exception. Nevertheless, OFCCP respects and must apply
the ministerial exception. The ministerial exception is an application
of the Establishment and Free Exercise clauses of the First Amendment.
See Our Lady of Guadalupe, 140 S. Ct. at 2060; Hosanna-Tabor, 565 U.S.
at 189-90 (finding that the ministerial exception bars ``an employment
discrimination suit brought on behalf of a minister'' and observing
that the exception ``is not limited to the head of a religious
congregation,'' nor subject to ``a rigid formula for deciding when an
employee qualifies as a minister'').
For the reasons described above and in the NPRM, and considering
the comments received, OFCCP finalizes the proposed definition without
modification.
5. Definition of Particular Religion
In the NPRM, OFCCP proposed to define Particular religion to
clarify that the religious exemption allows religious contractors not
only to prefer in employment individuals who share their religion, but
also to condition employment on acceptance of or adherence to religious
tenets as understood by the employing contractor. The NPRM explained
that this definition flows directly from the broad definition of
Religion, discussed above, to include all aspects of religious belief,
observance, and practice as understood by the employer, which would
clarify past statements from OFCCP suggesting that the exemption was
restricted solely to hiring coreligionists. The NPRM stated that the
proposed definition was consistent with Title VII case law as well as
Supreme Court case law holding that the government burdens religious
exercise when it conditions benefits on the surrender of religious
identity.
The NPRM noted that the religious exemption does not permit
religious employers to discriminate on other protected bases. The NPRM
described how courts have used a variety of approaches and doctrines to
distinguish claims of religious discrimination from other claims of
discrimination while avoiding entangling inquiries under the First
Amendment, and that OFCCP proposed to do the same. See 84 FR at 41679-
81.
In a later part of the NPRM describing the proposed terms Exercise
of religion and Sincere, OFCCP gave additional detail on its proposed
approach for applying the religious exemption. The NPRM noted that
sincerity is the ``touchstone'' of religious exercise and that OFCCP
would take into account all relevant facts when determining whether a
sincere religious belief actually motivated an employment decision. The
NRPM also proposed applying a but-for standard of causation when
evaluating claims of discrimination by religious organizations based on
protected characteristics other than religion. See 84 FR at 41684-85.
OFCCP received comments on all these aspects of its proposal. In
response to the comments, the agency has made some adjustments in its
explanation regarding how it views and will apply this definition.
These include changing to a motivating factor standard of causation and
providing additional clarification, particularly on the interaction of
the religious exemption with other protected categories, including the
importance of RFRA. As to the regulatory text, the word ``sincere'' has
been inserted into the phrase ``acceptance of or adherence to sincere
religious tenets as understood by the employer as a condition of
employment,'' to make clear both the requirement of sincerity and, by
reference to the definition of Sincere, how sincerity is tested.
Otherwise the definition is being finalized as proposed.
Insofar as OFCCP's view expressed here and in the proposed rule is
a change from its prior position as to the definition of Particular
religion under the exemption and the permissible practices of
contractors and subcontractors who qualify as religious organizations,
OFCCP believes the change is justified for all the reasons stated in
the proposed rule and directly below. A broader view of the religious
exemption is also consistent with one of OFCCP's primary goals in this
rulemaking, which is to increase economy and efficiency in government
contracting by providing for a broader pool of government contractors
and subcontractors. Issues specific to the EEOC's view on this matter
are discussed further in a separate part of this preamble.
a. Burdens on Religious Organizations in Contracting
As described in the NPRM, OFCCP's approach here is consistent with
Supreme Court decisions emphasizing that ``condition[ing] the
availability of benefits upon a recipient's willingness to surrender
his religiously impelled status effectively penalizes the free exercise
of his constitutional liberties.'' Trinity Lutheran, 137 S. Ct. at 2022
(alterations omitted) (quoting McDaniel v. Paty, 435 U.S. 618, 626
(1978) (plurality opinion)). These decisions naturally extend to
include the right to compete on a level playing field for federal
government contracts. See id. (holding the government burdens religious
exercise when it so conditions ``a benefit or privilege,''
``eligibility for office,'' ``a gratuitous benefit,'' or the ability
``to compete with secular organizations for a grant'' (quoted sources
omitted)); accord E.O. 13831 Sec. 1 (``The executive branch wants
faith-based and community organizations, to the fullest opportunity
permitted by
[[Page 79344]]
law, to compete on a level playing field for . . . contracts . . . and
other Federal funding opportunities.'').
A few commenters praised OFCCP's reliance on Trinity Lutheran to
establish the principle that benefits cannot be conditioned on
surrendering religious status. For example, a religious public policy
women's organization stated that no one should be forced to abandon
their faith when operating their business or participating in
government programs. Similarly, a religious liberty legal organization
commented that religious contractors should be allowed to serve on
equal terms as all other contractors, without having to compromise
their faith-based identities.
A few commenters stated that Trinity Lutheran and other Supreme
Court cases discussed in the preamble to the NPRM do not support or
require the proposed definition. For example, an organization that
advocates separation of church and state commented that religious
organizations are already eligible to compete for government contracts,
which is all that is required by Trinity Lutheran. In addition, a
religious organization commented that ``the rule violates the
Establishment Clause of the First Amendment by funding positions which
require specific religious beliefs and customs.'' OFCCP believes,
however, that its interpretation of the scope of the religious
exemption is consistent with the principles of religious freedom
articulated in Trinity Lutheran and other Supreme Court cases.
First, restricting religious organizations' ability to employ those
aligned with their mission burdens their religious exercise, even when
those employees do not engage in expressly religious activity. As the
Supreme Court recognized in Amos, the religious exemption's protection
for all activities of religious organizations alleviates the burden of
government interference with those religious organizations' missions.
See Amos, 483 U.S. at 336. And as the Department of Justice's Office of
Legal Counsel has concluded:
[T]he Court's opinion in Amos, together with Justice Brennan's
concurring opinion in the case, indicates that prohibiting religious
organizations from hiring only coreligionists can ` ``impose a
significant burden on their exercise of religion, even as applied to
employees in programs that must, by law, refrain from specifically
religious activities.' '' The .'' Mem. for Brett Kavanaugh, Assoc.
Counsel to the Pres., from Sheldon T. Bradshaw, Deputy Ass't Att'y
Gen., Office of Legal Counsel further explained:, Re: Section 1994A
(Charitable Choice) of H.R. 7, The Community Solutions Act at 4
(June 25, 2001) . . . . Many religious organizations and
associations engage in extensive social welfare and charitable
activities, such as operating soup kitchens and day care centers or
providing aid to the poor and the homeless. Even where the content
of such activities is secular--in the sense that it does not include
religious teaching, proselytizing, prayer or ritual--the religious
organization's performance of such functions is likely to be
``infused with a religious purpose.'' Amos, 483 U.S. at 342
(Brennan, J., concurring). And churches and other religious entities
``often regard the provision of such services as a means of
fulfilling religious duty and of providing an example of the way of
life a church seeks to foster.'' Id. at 344 (footnote omitted). In
other words, the provision of ``secular'' social services and
charitable works that do not involve ``explicitly religious
content'' and are not ``designed to inculcate the views of a
particular religious faith,'' Bowen v. Kendrick, 487 U.S. 589, 621
(1988), nevertheless may well be ``religiously inspired,'' id., and
play an important part in the ``furtherance of an organization's
religious mission.'' Amos, 483 U.S. at 342 (Brennan, J.,
concurring).
31 O.L.C. 162, 172 172-73 (2007)
Second, this burden exists even when not imposed directly. The
Office of Legal Counsel, in the same opinion, further recognized that a
burden on religious organizations' free exercise of religion can occur
not only through direct imposition of requirements but through
conditions on grants or other benefits, citing many of the same cases
cited in Trinity Lutheran for that proposition. See 31 O.L.C. at 174-
75; Trinity Lutheran, 137 S. Ct. at 2022. Those concerns about
burdening religious exercise through conditions naturally extend to
conditions on contracts as well. See Office of the Att'y Gen.,
Memorandum for All Executive Departments and Agencies: Federal Law
Protections for Religious Liberty at 2, 6, 8, 14a-16a (Oct. 6, 2017),
available at www.justice.gov/opa/press-release/file/1001891/download.
Third, the definition of Particular religion promulgated here attempts
to alleviate that burden by permissibly accommodating religious
organizations. ``[T]he government may (and sometimes must) accommodate
religious practices and . . . may do so without violating the
Establishment Clause. . . . There is ample room under the Establishment
Clause for `benevolent neutrality which will permit religious exercise
to exist without sponsorship and without interference.' '' Amos, 483
U.S. at 344 (quoting Walz v. Tax Comm'n, 397 U.S. 664, 673 (1970)). See
also E.O. 13279 Sec. 4; 68 FR at 56393 (codified at 41 CFR 60-
1.5(a)(5)). This rule relieves religious organizations of government
interference by permitting them to take into account their employees'
particular religion--including acceptance of or adherence to religious
tenets--to ensure their employees are committed to the religious
organization. In some instances, as described below, RFRA may also come
into play to require accommodations.
Regarding the comment that the rule violates the Establishment
Clause by funding positions that require specific religious beliefs or
customs, that is a criticism of the E.O. 11246 religious exemption
itself, which has been part of federal law for nearly twenty years and
is not at issue in this rulemaking. This is addressed more below.
b. The Exemption's Scope: Coreligionists
As explained in the NPRM, the religious exemption is not restricted
to a purely denominational preference. The religious exemption allows
religious contractors not only to prefer in employment individuals who
share their religion, but also to condition employment on acceptance of
or adherence to religious tenets as understood by the employing
contractor. This definition flows directly from the broad definition of
Religion, discussed above, to include all aspects of religious belief,
observance, and practice as understood by the employer. It is also
consistent with Title VII case law holding that ``the permission to
employ persons `of a particular religion' includes permission to employ
only persons whose beliefs and conduct are consistent with the
employer's religious precepts.'' Little, 929 F.2d at 951; see also,
e.g., Kennedy, 657 F.3d at 194 (``Congress intended the explicit
exemptions to Title VII to enable religious organizations to create and
maintain communities composed solely of individuals faithful to their
doctrinal practices, whether or not every individual plays a direct
role in the organization's `religious activities.' '' (quoting Little,
929 F.2d at 951)); Hall, 215 F.3d at 624 (``The decision to employ
individuals `of a particular religion' under [42 U.S.C.] Sec. 2000e-
1(a) and Sec. 2000e-2(e)(2) has been interpreted to include the
decision to terminate an employee whose conduct or religious beliefs
are inconsistent with those of its employer.'' (citing, inter alia,
Little, 929 F.2d at 951)); Killinger, 113 F.3d at 200 (``[T]he
exemption [in 42 U.S.C. 2000e-1(a)] allows religious institutions to
employ only persons whose beliefs are consistent with the employer's
when the work is connected with carrying out the institution's
activities.'').
This approach is also consistent with Supreme Court decisions
emphasizing that ``condition[ing] the availability of benefits upon a
recipient's willingness
[[Page 79345]]
to surrender his religiously impelled status effectively penalizes the
free exercise of his constitutional liberties.'' Trinity Lutheran, 137
S. Ct. at 2022 (alterations omitted) (quoting McDaniel, 435 U.S. at 626
(plurality opinion)). These decisions naturally extend to include the
right to compete on a level playing field for federal government
contracts. See id. (holding the government burdens religious exercise
when it so conditions ``a benefit or privilege,'' ``eligibility for
office,'' ``a gratuitous benefit,'' or the ability ``to compete with
secular organizations for a grant'' (quoted sources omitted)); accord
E.O. 13831 Sec. 1 (``The executive branch wants faith-based and
community organizations, to the fullest opportunity permitted by law,
to compete on a level playing field for . . . contracts . . . and other
Federal funding opportunities.'').
OFCCP believes this clarification will assist contractors that have
looked for guidance on the religious exemption in OFCCP's past
statements. These past statements may have suggested that the exemption
permits qualifying organizations only to prefer members of their own
faith in their employment practices. See, e.g., OFCCP, Compliance
Webinar (Mar. 25, 2015), available at https://www.dol.gov/ofccp/LGBT/FTS_TranscriptEO13672_PublicWebinar_ES_QA_508c.pdf (``This exemption
allows religious organizations to hire only members of their own
faith.''). OFCCP based such statements on guidance from the EEOC, the
agency primarily responsible for enforcing Title VII. See, e.g., EEOC,
EEOC Compliance Manual Sec. 12-I.C.1 (July 22, 2008) (``Under Title
VII, religious organizations are permitted to give employment
preference to members of their own religion.''). However, with this
final rule, OFCCP is clarifying that it applies the principles
discussed above, permitting qualifying employers to take religion--
defined more broadly than simply preferring coreligionists--into
account in their employment decisions. The case law makes clear that
qualifying employers ``need not enforce an across-the-board policy of
hiring only coreligionists.'' LeBoon, 503 F.3d at 230; Killinger, 113
F.3d at 199-200 (``We are also aware of no requirement that a religious
educational institution engage in a strict policy of religious
discrimination--such as always preferring Baptists in employment
decisions--to be entitled to the exemption.'').
Some commenters expressed support for OFCCP's proposal to extend
the definition beyond preferring coreligionists, which they viewed as
overly narrow, to include acceptance of or adherence to religious
tenets as a condition of employment. Many of these commenters agreed
with OFCCP that the definition as proposed was necessary to ensure that
religious organizations could carry out their missions without losing
their identities. For example, a religious school association commented
that being able to ensure that applicants and employees concur with its
schools' religion-based conduct expectations is essential to fulfilling
the schools' religious mission. Similarly, a religious civil rights
organization commented that the entire ``raison d'[ecirc]tre'' of
religious non-profits would be undermined if employees could subvert
their religious missions. Other commenters, including a religious
medical organization, a religious liberty coalition, and a state
religious public policy organization, echoed these sentiments in
support of the proposal. A private religious university further
asserted that the proposed definition would increase religious
diversity, because its protections are not limited to hiring decisions
based on co-religiosity but also allow organizations to hire based on
applicants' support for their religious missions.
Many commenters asserted that the proposed definition conflicts
with the EEOC's interpretation, OFCCP's previous interpretation, or
both. For example, a civil liberties organization commented that the
EEOC interprets the text of the Title VII religious exemption to mean
that religious organizations may give employment preference to members
of their own religion. Several commenters referred to OFCCP's previous
interpretation as reflected in its 2015 answers to FAQs regarding the
E.O. 13672 Final Rule.\18\ For example, a legal think tank noted that
in 2015, OFCCP issued guidance mirroring the EEOC's interpretation of
the Title VII religious exemption and confirming that the plain text of
section 204(c) is limited to religious organizations with hiring
preferences for coreligionists and to the ministerial exemption. Other
commenters, including an LGBT legal services organization, a
reproductive rights organization, and a public policy research and
advocacy organization, made similar points.
---------------------------------------------------------------------------
\18\ These 2015 FAQs are archived at https://web.archive.org/web/20150709220056/http:/www.dol.gov/ofccp/LGBT/LGBT_FAQs.html.
---------------------------------------------------------------------------
OFCCP appreciates the various comments received on this topic.
After careful consideration, OFCCP disagrees with the comments arguing
that the religious exemption should extend no further than a
coreligionist preference for several reasons.
First, a coreligionist preference could be construed narrowly, as
some commenters seemed to urge, as allowing religious organizations to
prefer those who share a religious identity in name but nothing more.
OFCCP disagrees that the exemption should be construed to permit
religious employers to prefer fellow members of their faith--or people
who profess to be members of their faith--but forbid requiring their
adherence to that faith's tenets in word and deed. Religious employers
can require more than nominal membership from their employees, as shown
by Amos, where the plaintiffs were discharged for failing to qualify
for a certificate showing that they were members of the employer's
church and met certain standards of religious conduct. See 483 U.S. at
330 n.4; Amos v. Corp. of Presiding Bishop of Church of Jesus Christ of
Latter-Day Saints, 594 F. Supp. 791, 796 (D. Utah 1984) (describing
plaintiffs' failure to meet church worthiness requirements), rev'd, 483
U.S. 327; see also Killinger, 113 F.3d at 198-200 (holding despite
plaintiff's claim that he subscribed to university's ``legitimate
religious requirements,'' including the requirement to ``subscribe to
the 1963 Baptist Statement of Faith and Message,'' he was permissibly
removed from a teaching post in the divinity school ``because he did
not adhere to and sometime[s] questioned the fundamentalist theology
advanced by the [school's] leadership'' (first alteration in
original)). Any other course would entangle OFCCP in deciding between
competing views of a religion's requirements--in essence, deciding for
example, ``who is and who is not a good Catholic.'' Maguire v.
Marquette Univ., 627 F. Supp. 1499, 1500 (E.D. Wis. 1986) (holding
despite plaintiff's claim to be Catholic, a Catholic religious
university permissibly declined to hire her ``because of her perceived
hostility to the institutional church and its teachings''), aff'd in
part, vacated in part, 814 F.2d 1213 (7th Cir. 1987). OFCCP is not
permitted to make such determinations. See Our Lady of Guadalupe, 140
S. Ct. at 2068-69 (``[D]etermining whether a person is a `co-
religionist' will not always be easy. See Reply Brief 14 (`Are Orthodox
Jews and non-Orthodox Jews coreligionists? . . . Would Presbyterians
and Baptists be similar enough? Southern Baptists and Primitive
Baptists?'). Deciding such questions would risk judicial entanglement
in religious issues.''); Hall, 215 F.3d at 626-27 (``If a particular
[[Page 79346]]
religious community wishes to differentiate between the severity of
violating two tenets of its faith, it is not the province of the
federal courts to say that such differentiation is discriminatory and
therefore warrants Title VII liability.'' (quoted source omitted));
Presbyterian Church in U.S. v. Mary Elizabeth Blue Hull Mem'l
Presbyterian Church, 393 U.S. 440, 449-50 (1969) (``Plainly, the First
Amendment forbids civil courts from playing such a role [in
interpreting particular church doctrines and their importance to the
religion].'').
In addition, some commenters argued that the religious exemption
might allow religious employers to require faithfulness of a
coreligionist employee, but the exemption does not permit them to
impose religious requirements on their other employees. OFCCP declines
to so narrow its interpretation of the exemption. The exemption was
expanded decades ago to include employees engaged not just in the
organization's religious activities, but in any of its activities. And
the purpose of the religious exemption is to preserve ``the ability of
religious organizations to define and carry out their religious
missions.'' Amos, 483 U.S. at 335. As other commenters stated, some
religious organizations hire employees outside their faith tradition
yet require those employees to follow at least some religious standards
in order to preserve the organization's integrity Courts have
recognized the legitimacy of that view. See Kennedy, 657 F.3d at 190-91
(holding a religious nursing-care facility affiliated with the Roman
Catholic Church was protected by the religious exemption when it took
action against an employee of a different faith who refused to change
her own religiously inspired garb); Little, 929 F.2d at 951 (``[I]t
does not violate Title VII's prohibition of religious discrimination
for a parochial school to discharge a Catholic or a non-Catholic
teacher who has publicly engaged in conduct regarded by the school as
inconsistent with its religious principles.'' (emphasis added)). This
view is also consistent with guidance from the U.S. Department of
Justice. See Office of the Att'y Gen., Memorandum for All Executive
Departments and Agencies: Federal Law Protections for Religious Liberty
(Oct. 6, 2017), www.justice.gov/opa/press-release/file/1001891/download
(stating that, under the Title VII religious exemption, ``a Lutheran
secondary school may choose to employ only practicing Lutherans, only
practicing Christians, or only those willing to adhere to a code of
conduct consistent with the precepts of the Lutheran community
sponsoring the school'').
Beyond compromising the integrity of religious organizations, OFCCP
would be wary of drawing a line here between coreligionist employees
and other employees for other reasons. As illustrated by the cases
declining to decide ``who is and who is not a good Catholic,'' OFCCP
does not believe it should or could in disputed cases decide who is a
coreligionist. This would be especially difficult when the employer has
no particular denomination, as there would be no simple denominational
match between the employer and employee. Cases like World Vision and
Little v. Wuerl show that a religious organization may require that its
employees subscribe to certain precepts regardless of their particular
religious affiliation, if they have any affiliation at all. OFCCP must,
and should, treat these religious organizations equally with those that
have a defined denominational membership. See World Vision, 633 F.3d at
731 (O'Scannlain, J., concurring).
OFCCP also views an artificial line between coreligionists and non-
coreligionists as presenting an unwelcome either-or dilemma for
religious organizations. By declining to draw such a line, a religious
organization would be permitted to require certain religious practices
or conduct from its coreligionist employees, but not from its non-
coreligionist employees; yet the religious organization would also be
permitted to, for instance, decline to hire or promote that same non-
coreligionist altogether. In other words, a religious organization
could discriminate against a non-coreligionist altogether in hiring or
promotion, but could not instead offer a job or promotion contingent on
adherence to certain mission-oriented religious criteria. Religious
organizations should be, and under this rule continue to be, permitted
to use this middle ground. See Kennedy, 657 F.3d at 194.
c. The Exemption's Scope: Employment Practices
In a related vein, commenters also shared their views on not only
which employees should be covered by the exemption, but also which
employment practices of religious organizations should be protected by
the exemption. Some of these commenters asserted that the proposed
definition was too broad. For example, a transgender civil rights
organization commented that, because the proposed definition
encompasses ``all aspects of religious belief, observance and practice
as understood by the employer,'' it would permit the subjective
viewpoint of the employer to determine what constitutes religion.
Similarly, a reproductive rights organization claimed that the proposed
rule would expand the scope of the exemption in violation of federal
law.
As explained above in the discussion of the definition of Religion,
OFCCP has chosen a definition that is well-established in federal law,
including in the text of Title VII. See 42 U.S.C. 2000e(j). And as
explained above in the discussion of the definition of Religious
corporation, association, educational institution, or society, OFCCP
has significant constitutional and practical concerns about
substituting its own judgment for a contractor's view--found to be
sincere--that a particular activity, purpose, or belief has religious
meaning. It bears repeating: Any other course would risk ``[t]he
prospect of church and state litigating in court about what does or
does not have religious meaning [, which] touches the very core of the
constitutional guarantee against religious establishment.'' Cathedral
Acad., 434 U.S. at 133. OFCCP will refrain from resolving disputes
between employers and employees as to what has religious meaning or
not, when the employer proves its sincere belief that something does
have religious meaning. However, as explained in more detail below,
just because an employment practice is religiously motivated does not
mean that it is always protected by the exemption.
This leads to a separate set of issues raised by commenters. Many
commenters who opposed the proposed definition stated that it is
inconsistent with Title VII in one or more respects. For example, a
group of state attorneys general stated that the proposed definition is
contrary to the text of Title VII and congressional intent.
Specifically, the group pointed out that the plain language of the
exemption covers only employer preferences based on a ``particular
religion,'' meaning that religious employers cannot broadly
discriminate on the basis of religion by, for instance, adopting
policies such as ``Jews and Muslims Need Not Apply.'' Some commenters
stated that the proposed definition is unsupported by Title VII case
law. For example, a civil liberties organization criticized OFCCP for
not citing to court decisions holding that the Title VII exemption is
intended to shield employers from all religiously motivated
discrimination, as opposed to discrimination that is ``on the basis of
[[Page 79347]]
religion alone.'' \19\ A city commented that OFCCP's reliance on
Little, 929 F.2d 944; Kennedy, 657 F.3d 189; Hall, 215 F.3d 618; and
Killinger, 113 F.3d 196, is misplaced and misleading because, in each
of those cases, the courts found that a religious institution with a
substantiated religious purpose could discriminate against an employee
performing work connected in some manner to the institution's religious
mission.
---------------------------------------------------------------------------
\19\ This point is addressed more fulsomely in the next section
regarding E.O. 11246's other protected bases.
---------------------------------------------------------------------------
The NPRM did not suggest that the religious exemption would permit
religious organizations to single out other religions for disfavor. No
employer OFCCP is aware of holds such an exclusionary policy; no
commenter identified such an employer; and such a policy would run
contrary to the country's experience under the Title VII religious
exemption, where no litigant to OFCCP's knowledge has asserted such a
policy. Instead, the mine run of cases have involved a church,
religious educational institution, or religious nonprofit raising the
defense that it is only requiring employees or applicants--whether
strictly defined as coreligionists or not \20\--to follow its own
religiously inspired standards of belief or conduct. The exemption
historically has been a shield, not a sword, and it remains so under
this rule.
---------------------------------------------------------------------------
\20\ For the reasons discussed earlier, OFCCP does not believe
restricting the exemption to a purely coreligionist preference is
required or the most reasonable approach.
---------------------------------------------------------------------------
OFCCP also believes it has relied properly on cases like Little and
Kennedy. As stated in the NPRM, these cases hold that the religious
exemption ``includes permission to employ only persons whose beliefs
and conduct are consistent with the employer's religious precepts.''
Little, 929 F.2d at 951; see also, e.g., Kennedy, 657 F.3d at 194
(``Congress intended the explicit exemptions to Title VII to enable
religious organizations to create and maintain communities composed
solely of individuals faithful to their doctrinal practices, whether or
not every individual plays a direct role in the organization's
`religious activities.' '') (quoting Little, 929 F.2d at 951); Hall,
215 F.3d at 624 (``The decision to employ individuals `of a particular
religion' under [42 U.S.C.] Sec. 2000e-1(a) and Sec. 2000e-2(e)(2)
has been interpreted to include the decision to terminate an employee
whose conduct or religious beliefs are inconsistent with those of its
employer.'' (citing, inter alia, Little, 929 F.2d at 951)); Killinger,
113 F.3d at 200 (``[T]he exemption [in 42 U.S.C. 2000e-1(a)] allows
religious institutions to employ only persons whose beliefs are
consistent with the employer's when the work is connected with carrying
out the institution's activities.''); accord Att'y Gen., Memorandum for
All Executive Departments and Agencies: Federal Law Protections for
Religious Liberty (Oct. 6, 2017), www.justice.gov/opa/press-release/file/1001891/download (``[R]eligious organizations may choose to employ
only persons whose beliefs and conduct are consistent with the
organizations' religious precepts.'').
These cases were grounded in the basic principle that these
religious employment criteria are permitted because they are necessary
for the religious organization's integrity. See Little, 929 F.2d at 950
(``[T]he legislative history . . . suggests that the sponsors of the
broadened exception were solicitous of religious organizations' desire
to create communities faithful to their religious principles.'');
Kennedy, 657 F.3d at 193 (finding the religious organization exemption
`` `reflect[s] a decision by Congress that the government interest in
eliminating religious discrimination by religious organizations is
outweighed by the rights of those organizations to be free from
government intervention.' '' (alteration in original) (quoting Little,
929 F.2d at 951)); Killinger, 113 F.3d at 201 (``[F]ederal court[s]
must give disputes about what particulars should or should not be
taught in theology schools a wide-berth. Congress, as we understand it,
has told us to do so for purposes of Title VII.''); Hall, 215 F.3d at
623 (``In recognition of the constitutionally-protected interest of
religious organizations in making religiously-motivated employment
decisions . . . Title VII has expressly exempted religious
organizations from the prohibition against discrimination on the basis
of religion . . . .''). That means that the religious employer must
explain how its sincere religious beliefs translate into particular
religious requirements for its employees and applicants. Cf. Geary, 7
F.3d at 330 (``The institution, at most, is called upon to explain the
application of its own doctrines.''). But the exemption does not
require the religious employer to further prove that a particular
employee or applicant's adherence to those religious requirements is
necessary, in any contested instance, to further the religious
organization's mission. That added burden would be contrary to the 1972
amendment of the Title VII religious exemption, which expanded the
exemption from employees who perform work connected to the
organization's religious activities to employees who perform work
connected to any of the organization's activities. As the Supreme Court
observed, this expansion was aimed toward relieving religious
organizations of the kind of burden sought by the commenters:
[I]t is a significant burden on a religious organization to require
it, on pain of substantial liability, to predict which of its
activities a secular court will consider religious. The line is
hardly a bright one, and an organization might understandably be
concerned that a judge would not understand its religious tenets and
sense of mission.
Amos, 483 U.S. at 336
OFCCP shares the same concerns about requiring contractors to
justify otherwise-protected employment decisions as additionally
furthering the organization's mission. Difficulties could arise were
OFCCP to draw distinctions between religiously motivated employment
decisions that further an employer's religious mission and those that
do not. Amos observed that difficulty, in which the district court had
drawn an at-least questionable distinction between the termination of a
truck driver at a church-affiliated workshop (protected) with the
termination of a building engineer at a church-affiliated gymnasium
(not protected). See id. at 330, 333 n.13, 336 n.14. The exemption does
not require such hair-splitting--indeed, it appears to forbid it--and
OFCCP sees no useful reason to attempt drawing such distinctions. See
also Little, 929 F.2d at 951 (``Congress intended the explicit
exemptions to Title VII to enable religious organizations to create and
maintain communities composed solely of individuals faithful to their
doctrinal practices, whether or not every individual plays a direct
role in the organization's `religious activities.' '').
d. The Exemption's Scope: Other Protected Bases
i. Comments
As is made clear by the text of section 204(c) of E.O. 11246 and
the corresponding regulation at 41 CFR 60-1.5(a)(5), the religious
exemption itself does not exempt or excuse a contractor from complying
with other applicable requirements. See E.O. 11246 Sec. 204(c) (``Such
[religious] contractors and subcontractors are not exempted or excused
from complying with other requirements contained in this Order.''); 41
CFR 60-1.5(a)(5) (same). Thus, religious employers are not exempted
from E.O. 11246's requirements regarding antidiscrimination and
affirmative action, generally speaking;
[[Page 79348]]
notices to applicants, employees, and labor unions; compliance with
OFCCP's implementing regulations; the furnishing of reports and records
to the government; and flow-down clauses to subcontractors. See E.O.
11246 Sec. Sec. 202-203.
Although Title VII does not contain a corresponding proviso, courts
have generally interpreted the Title VII religious exemption to be
similarly precise, so that religious employers are not exempted from
Title VII's other provisions protecting employees. See, e.g., Kennedy,
657 F.3d at 192; Rayburn v. Gen. Conference of Seventh-Day Adventists,
772 F.2d 1164, 1166 (4th Cir. 1985); cf. Hobby Lobby, 573 U.S. at 733
(rejecting ``the possibility that discrimination in hiring, for example
on the basis of race, might be cloaked as religious practice to escape
legal sanction''); Bob Jones Univ. v. United States, 461 U.S. 574, 604
(1983) (``[T]he Government has a fundamental, overriding interest in
eradicating racial discrimination in education . . . .'').
Many commenters nevertheless assumed that OFCCP would apply the
proposed definition to allow religious contractors to discriminate on
bases other than religion. Most of these commenters stated that doing
so would be contrary to E.O. 11246, and they argued that OFCCP lacks
authority to expand the existing exemption or grant any new exemption.
For example, a civil liberties organization commented that the preamble
indicates that OFCCP intends to authorize discrimination based even on
other protected bases like sex or race, contrary to the text of E.O.
11246. Similarly, a group of U.S. Senators commented that the proposed
rule would allow employers to discriminate against employees on bases
other than religion by, for instance, permitting employers to justify
sex discrimination based on their religious tenets.
These commenters pointed to the second sentence of section 204(c)
of E.O. 11246 as supporting their criticism. For example, a legal think
tank commented that it was unclear how the proposed rule's ``expansive
definition of `particular religion' '' could be reconciled with its
insistence that ``an employer may not . . . invoke religion to
discriminate on other bases protected by law.''
Other commenters also stated that it would be inconsistent with
Title VII case law to allow religious contractors to discriminate on
bases other than religion. These commenters, including a legal think
tank, a group of state attorneys general, a labor union, a civil
liberties organization, and a reproductive rights organization, cited
cases in which, they asserted, courts prohibited religious employers
from discriminating on bases other than religion. For example, the
civil liberties organization commented that courts have consistently
prohibited religious organizations from discriminating on other bases,
including sex, even where that discrimination is motivated by the
organization's sincere religious beliefs (citing Rayburn, 772 F.2d at
1166; Kennedy, 657 F.3d at 192; EEOC v. Pac. Press Publ'g Ass'n, 676
F.2d 1272, 1277 (9th Cir. 1982), abrogated on other grounds by Alcazar
v. Corp. of Catholic Archbishop of Seattle, 598 F.3d 668 (9th Cir.
2010); Elbaz v. Congregation Beth Judea, Inc., 812 F. Supp. 802, 807
(N.D. Ill. 1992); Dolter v. Wahlert High Sch., 483 F. Supp. 266, 269
(N.D. Iowa 1980); accord McClure v. Salvation Army, 460 F.2d 553, 558
(5th Cir. 1972)).
Some commenters argued that religion has long been used as a way to
justify discrimination. For example, an affirmative action
professionals association asserted that religious freedom has
historically been invoked to defend slavery, the denial of women's
suffrage, Jim Crow laws, and segregation. That commenter cited a recent
news story in which a mixed-race couple was allegedly denied the use of
a hall for a wedding because of the owner's religious beliefs.
Several commenters expressed concern specifically about the effect
of the proposal on E.O. 11246's protections from discrimination based
on sexual orientation and gender identity. For example, an LGBT rights
advocacy organization commented that it was troubled by the fact that
OFCCP failed to cite sexual orientation and gender identity in the
proposed rule as the protected characteristics most likely to be
impacted by the rule. And a legal professional organization expressed
concern that OFCCP may interpret E.O. 11246 to allow federal
contractors to discriminate based on sexual orientation as long as they
cite sincere religious reasons for doing so.
On the other hand, as noted above, other commenters expressed
support for the proposal because they believed it would exempt
religious organizations from the prohibitions on discrimination based
on sexual orientation and gender identify, which would provide them
protection to staff their organizations consistent with their sincere
religious beliefs.
Some commenters requested guidance to resolve the perceived
conflict. For example, an individual commenter asked whether protection
for a client's religion or protection for an applicant or employee's
sexual orientation and/or gender identity would prevail under the
proposed regulations. A pastoral membership organization stated that if
the terms ``sexual orientation'' and ``gender identity'' include
conduct, it is difficult to determine whether the prohibition on
discrimination based on sexual orientation and gender identity or the
protection for religiously-motivated conduct applies.
Many of these commenters criticized the proposal for not clearly
stating how OFCCP would resolve the perceived contradiction between its
assertion that religious contractors would not be permitted to
discriminate on other protected bases and its inclusion in the proposed
definition of ``acceptance of or adherence to religious tenets as
understood by the employer as a condition of employment.'' For example,
the legal think tank asserted that OFCCP does not explain how it will
apply these two provisions in cases in which they appear to conflict,
and observed that the proposed regulatory text does not limit its
definition of ``religious tenets'' to tenets defined without reference
to race, color, sex, sexual orientation, gender identity, or national
origin. A state's attorney general asserted that, because the proposed
rule fails to define or limit the type of ``conduct'' that can form the
basis of permissible discrimination by religious entities, it allows
contractors to discriminate based on any arbitrary characteristic.
Many supportive commenters recommended that OFCCP resolve the
perceived conflict by clarifying that the non-discrimination
requirements of Title VII and E.O. 11246 do not apply under the
corresponding religious exemptions. For example, an anonymous commenter
suggested that OFCCP clarify that religious organizations are permitted
to discriminate on the bases of sexual orientation and gender identity
because, in the commenter's view, an action that falls within the
religious exemption would be outside the bounds of Title VII and E.O.
11246, ``regardless of whether it would otherwise be prohibited by
other provisions.'' Other supportive commenters offered a similar view,
stating that the proposed definition provided helpful clarification.
For example, a religious liberties legal organization criticized ``the
suggestion from the Obama administration'' that the exemption should be
limited to ``religious people cannot be discriminatory for hiring only
members of their own religion'' rather than ``non-discrimination law
does not apply in religious contexts'' as provided under
[[Page 79349]]
the Civil Rights Act, and praised the proposed rule for affirming that
requiring adherence to an employer's religious tenets does not
constitute discrimination. Similarly, a U.S. Senator commented that the
proposed helpfully clarifies that religious employers that contract
with the federal government retain the right to hire employees that
support their religious mission, consistent with Title VII. Some
supportive commenters also noted that the proposed definition was
consistent with the First Amendment and Title VII case law. For
example, a religious legal association and an association of
evangelical churches and schools commented that the principle that
religious employers should be allowed to require their employees to
conduct themselves in accordance with the employers' code of moral
conduct has been ``almost universally'' accepted by courts, who have
relied alternatively on Section 702(a) of Title VII, the First
Amendment's Religion Clauses, and other considerations recognizing that
``religious organizations may have legitimate, nondiscriminatory
reasons'' for practicing their religious beliefs through employment
decisions.
In a joint comment, a religious legal association and an
association of evangelical churches and schools commented that Section
204(c) of E.O. 11246 should be construed to exempt religious
organizations from the nondiscrimination mandates of Section 202,
except to the extent that a religious organization's employment
decision is based on race.
To address these comments, OFCCP here first discusses the
applicable Title VII principles established by case law, including how
those principles may apply where religious organizations maintain
sincerely held beliefs regarding matters such as marriage and intimacy,
which may implicate protected classes under E.O. 11246. OFCCP then
discusses its recognition that religious organizations in appropriate
circumstances will be entitled to relief under the Religious Freedom
Restoration Act.
The public should bear in mind that this discussion is restricted
solely to these difficult and sensitive questions raised by commenters.
This rule does not affect the overwhelming majority of federal
contractors and subcontractors, which are not religious, and OFCCP
remains fully committed to enforcing all E.O. 11246 nondiscrimination
requirements, including those protecting employees from discrimination
on the bases of sexual orientation and gender identity. Even for
religious organizations that serve as government contractors or
subcontractors, they too must comply with all of E.O. 11246's
nondiscrimination requirements except in some narrow respects under
some reasonable circumstances recognized by law. This rule provides
clarity on those circumstances, consistent with OFCCP's obligations and
desire to also respect and accommodate the free exercise of religion.
ii. Legal Principles
OFCCP acknowledges first and foremost the United States' deeply
rooted tradition of respect for religion and religious institutions.
Religious individuals and organizations operate within and contribute
to civil society and do not relinquish their religious freedom
protections when they participate in the public square.\21\
---------------------------------------------------------------------------
\21\ See Office of the Att'y Gen., Memorandum for All Executive
Departments and Agencies: Federal Law Protections for Religious
Liberty 1-2 (Oct. 6, 2017).
---------------------------------------------------------------------------
With respect to commenters' concerns and questions here, many
relate to the interaction of two well-established Title VII principles:
First, that religious organizations can take religion into account when
making employment decisions; and second, that religious organizations
cannot discriminate on other protected bases. Each of those two
principles taken by itself has clear answers. Where an employment
decision made on the basis of religion also implicates another
protected basis, however, the law is less clear.
As to the first principle, virtually all commenters agreed with
what the plain text of the exemption provides: That religious
organizations can consider an employee's particular religion when
taking employment action. As discussed elsewhere in this rule's
preamble, commenters disagreed as to the scope of that exemption--which
employees it applies to, and which employer actions--but the basic
principle was not disputed.
As to the second principle, as many commenters recognized, E.O.
11246's other employment protections apply to religious organizations.
Protections on the basis of race, color, sex, sexual orientation,
gender identity, and national origin do not categorically disappear
when the employer is a religious organization. Thus the religious
exemption does not permit religious organizations to engage in
prohibited discrimination when there is no religious basis for the
action. For instance, a religious organization that declined to promote
a non-ministerial employee not for religious reasons, but because of
animus borne of the employee's country of birth or skin color, would
violate E.O. 11246. Courts in the Title VII context have engaged in
careful, fact-bound inquiries to determine whether a religious
organization's action was based on religion or instead on a prohibited
basis.\22\ For instance, courts may inquire whether a plaintiff was
subjected to adverse employment action because of his or her sex or
because of a violation of religious tenets. See, e.g., Cline v.
Catholic Diocese of Toledo, 206 F.3d 651, 655-56, 658 (6th Cir. 2000);
cf. EEOC v. Miss. Coll., 626 F.2d 477, 485-86 (5th Cir. 1980) (holding
if religious organization shows that its decision was based on
religion, the religious exemption prohibits a further inquiry into
pretext). To that extent, courts are virtually uniform in the view that
the religious exemption does not permit discrimination on bases other
than religion.\23\
---------------------------------------------------------------------------
\22\ See below for a more fulsome discussion of how courts have
determined the applicability of the religious exemption.
\23\ This is separate from the question of whether application
of Title VII in any particular instance is tolerable under the First
Amendment or other law, such as where the employee is a minister,
see Our Lady of Guadalupe, 140 S. Ct. 2049, or where the employment
relationship is otherwise ``so pervasively religious'' that it
raises First Amendment concerns, see DeMarco v. Holy Cross High
Sch., 4 F.3d 166, 172 (2d Cir. 1993).
---------------------------------------------------------------------------
The question posed here, however, is the interaction of those two
principles: Specifically, the outcome when a religion organization's
action is based on and motivated by the employee's adherence to
religious tenets yet implicates another category protected by E.O.
11246. OFCCP concludes, as explained in detail below, that the
religious exemption itself, as interpreted by the courts, has left the
question open, but that such activity would also give rise to an
inquiry under RFRA, which must be assessed based on applicable case law
and the specific facts presented.
At the federal appellate court level, the question of the religious
exemption's interaction with other protected bases was left open in,
for instance, EEOC v. Mississippi College, where an EEOC subpoena did
``not clearly implicate any religious practices of the College.'' 626
F.2d at 487. The court noted that the college had a scripturally rooted
policy of hiring only men to teach courses in religion, but stated that
``[b]efore the EEOC could require the College to alter that practice,
the College would have an opportunity to litigate in a federal forum
whether [the religious exemption] exempts or the first amendment
protects that particular
[[Page 79350]]
practice.'' Id. The Seventh Circuit has similarly characterized the
question of whether ``the religious-employer exemptions in Title VII
[are] applicable only to claims of religious discrimination'' as ``a
question of first impression in this circuit.'' Herx v. Diocese of Fort
Wayne-South Bend, Inc., 772 F.3d 1085, 1087 (7th Cir. 2014). Other
courts have indicated that the religious exemption may be preeminent in
such a situation. See Little, 929 F.2d at 951 (``[T]he permission to
employ persons `of a particular religion' includes permission to employ
only persons whose beliefs and conduct are consistent with the
employer's religious precepts.''); see also Kennedy, 657 F.3d at 194
(``Congress intended the explicit exemptions to Title VII to enable
religious organizations to create and maintain communities composed
solely of individuals faithful to their doctrinal practices.'' (quoting
Little, 929 F.2d at 951)).
The only two federal appellate-level cases with fact patterns
involving the precise issue are a pair of Ninth Circuit cases from the
1980s. The first, EEOC v. Pacific Press Publishing Association, held as
a statutory matter that Title VII's prohibitions on sex discrimination
and on retaliation applied to a religious organization. See 676 F.2d
1272, 1277 (9th Cir. 1982). But the court determined that the practice
at issue that resulted in sex discrimination ``does not and could not
conflict with [the employer's] religious doctrines, nor does it
prohibit an activity rooted in religious belief.'' Id. at 1279.
Regarding retaliation, the court held as a constitutional matter that
Title VII's anti-retaliation provision should apply to the religious
organization even when the employee was dismissed for violating church
doctrine that prohibited members from bringing lawsuits against the
church. See id. at 1280.
The second decision, EEOC v. Fremont Christian School, 781 F.2d
1362 (9th Cir. 1986), is less instructive. It held in relevant part
that Title VII could be applied to prohibit a religiously grounded
health benefits program that benefited one sex more than the other.
However, as a statutory matter, the court held that the religious
exemption was not implicated because the employment practice did not
concern the selection of employees based on their religion--the text of
the exemption refers to ``employment of individuals of a particular
religion'' \24\--and as a constitutional matter noted that
``[e]liminating the employment policy involved here would not interfere
with religious belief and only minimally, if at all, with the practice
of religion.'' Id. at 1366, 1368.
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\24\ As explained elsewhere in this preamble, the religious
exemption is more than a mere hiring preference for coreligionists.
OFCCP nonetheless agrees that the policy in Fremont would not be
covered by the religious exemption because it did not pertain to the
employee's particular religion. Nothing about the employee's
religious beliefs or conduct would affect the policy--only his or
her sex.
---------------------------------------------------------------------------
The Supreme Court also has not answered whether an employment
action motivated by religion but implicating a protected classification
violates Title VII. The Court's cases offer no clear conclusion whether
the religious exemption should be read so narrowly that its protections
are overcome by the rest of E.O. 11246's (or Title VII's) protections
when they are both at issue. For example, in Bostock v. Clayton County,
140 S. Ct. 1731 (2020), the Court held that Title VII's prohibition on
discrimination because of sex includes discrimination on the basis of
sexual orientation and transgender status. That holding itself is not
particularly germane to OFCCP's enforcement of E.O. 11246, which has
expressly protected sexual orientation and gender identity since 2015.
What is certainly germane is the Court's recognition of the ``fear that
complying with Title VII's requirement in cases like [Bostock] may
require some employers to violate their religious convictions'' and its
assurance that it, too, was ``deeply concerned with preserving the
promise of the free exercise of religion enshrined in our Constitution;
that guarantee lies at the heart of our pluralistic society.'' Id. at
1753-54. The Court then noted that Title VII contains ``an express
statutory exception for religious organizations,'' but did not explain
whether an employment action motivated by religion that implicates a
protected classification violates Title VII. Id. at 1754.
Regardless, OFCCP ultimately does not need to answer this open
question on the proper interpretation of the religious exemption in
E.O. 11246, and declines to do so, because RFRA can guide the agency's
determination if and when a particular case presents a situation where
a religiously motivated employment action implicates a classification
protected under the Executive Order. As noted in Bostock, RFRA
``prohibits the federal government from substantially burdening a
person's exercise of religion unless it demonstrates that doing so both
furthers a compelling governmental interest and represents the least
restrictive means of furthering that interest. [42 U.S.C.] Sec.
2000bb-1.'' Id. Moreover, ``[b]ecause RFRA operates as a kind of super
statute, displacing the normal operation of other federal laws, it
might supersede Title VII's commands in appropriate cases. [42 U.S.C.]
Sec. 2000bb-3.'' Id.\25\ Concerns raised by supportive commenters in
this rulemaking have alerted the agency that application of E.O. 11246
may substantially burden their religious exercise, especially if the
religious exemption does not clearly protect their ability to maintain
employees faithful to their practices and beliefs. The ministerial
exception offers religious organizations broad freedom in the selection
of ministers, but that is only a subset of their employees. See
generally Our Lady of Guadalupe, 140 S. Ct. 2049. In contrast, the
religious exemption applies to all of a religious organization's
employees, but the scope of its protections is not settled when
religious tenets implicate other protected classes. Thus, the
Department should consider RFRA, since in some circumstances neither
the ministerial exception nor the religious exemption may alleviate
E.O. 11246's burden on religious exercise. See Little Sisters of the
Poor, 140 S. Ct. at 2383-84 (holding agencies should consider RFRA when
it is an important aspect of the problem involved in the rulemaking).
---------------------------------------------------------------------------
\25\ RFRA was not raised before the Court in Bostock. Thus, the
Court left that ``question[ ] for future cases.'' 140 S. Ct. at
1754.
---------------------------------------------------------------------------
The discussion below addresses in general terms how OFCCP views its
obligations under RFRA in the specific situation raised by commenters
and addressed here: Where the religious organization takes employment
action regarding an applicant or an employee, the employment action is
motivated solely on the employee's adherence to a sincere religious
tenet, yet that tenet also implicates an E.O. 11246 protected category
other than race (which is discussed separately). RFRA requires a fact-
specific analysis, so the discussion here of necessity can speak only
to OFCCP's general approach; specific situations involving specific
parties will require consideration of any additional, unique facts. And
of course the contractor or subcontractor involved will need to
demonstrate its religious sincerity and burden so that it falls within
this rubric. Nonetheless, OFCCP believes its RFRA analysis here will
provide clarity for religious contractors and subcontractors,
regardless of how future cases may interpret the interplay of the
religious exemption in and of itself with other protected classes under
Title VII or E.O. 11246.
[[Page 79351]]
iii. Application of the Religious Freedom Restoration Act
``Congress enacted RFRA in 1993 in order to provide very broad
protection of religious liberty.'' Hobby Lobby, 573 U.S. at 693. RFRA
responded to ``Employment Division v. Smith, 494 U.S. 872 (1990) [in
which] the Supreme Court virtually eliminated the requirement that the
government justify burdens on religious exercise imposed by laws
neutral toward religion'' under the First Amendment, and restored by
statute ``the compelling interest test as set forth in Sherbert v.
Verner, 374 U.S. 398 (1963) and Wisconsin v. Yoder, 406 U.S. 205
(1972).'' 42 U.S.C. 2000bb(a)(4), (b)(1); see Hobby Lobby, 573 U.S. at
693-95.
Under RFRA, the federal government may not ``substantially burden a
person's exercise of religion.'' 42 U.S.C. 2000bb-1(a). Government is
excepted from this requirement only if it ``demonstrates that
application of the burden to the person--(1) is in furtherance of a
compelling governmental interest; and (2) is the least restrictive
means of furthering that compelling government interest.'' Id. 2000bb-
1(b).
RFRA ``applies to all Federal law, and the implementation of that
law, whether statutory or otherwise, and whether adopted before or
after November 16, 1993,'' Id. 2000bb-3(a), including agency
regulations, see Little Sisters of the Poor, 140 S. Ct. at 2383. As
``Federal law, and the implementation of that law,'' E.O. 11246 fits
within that scope as well.
(1) Substantial Burden
The question of whether government action substantially burdens an
employer's exercise of religion can be separated into two parts. See
Hobby Lobby, 573 U.S. at 720-26; Little Sisters of the Poor, 140 S. Ct.
at 2389 (Alito, J., concurring). First, the government must ask whether
the consequences of noncompliance put substantial pressure on the
objecting party to comply. See Hobby Lobby, 573 U.S. at 720-23. Second,
the government must ask whether compliance with the regulation would
violate or modify the objecting party's sincerely-held religious
exercise (as the objecting party understands that exercise and any
underlying beliefs), including the party's ``ability . . . to conduct
business in accordance with [its] religious beliefs.'' Hobby Lobby, 573
U.S. at 724; see also Sherbert, 374 U.S. at 405-06.\26\ If the answer
to both questions is yes, then the regulation substantially burdens the
exercise of religion.
---------------------------------------------------------------------------
\26\ Case law is clear that RFRA's substantial burden test does
not insist that a challenged government action require an objecting
party to violate its religious beliefs. Instead, substantial
pressure on a party to modify its religiously motivated practice is
also sufficient to establish a substantial burden. See, e.g.,
Archdiocese of Wash. v. Wash. Metro. Area Transit Auth., 897 F.3d
314, 333 (D.C. Cir. 2018) (defining ``substantial burden'' under
RFRA as ``substantial pressure on an adherent to modify his behavior
and to violate his beliefs'') (quoting Thomas v. Review Bd., 450
U.S. 707, 718 (1981)); EEOC v. Catholic Univ. of Am., 83 F.3d 455,
467 (D.C. Cir. 1996) (finding that government's interest in
eliminating employment discrimination at Catholic university was
outweighed by university's right of autonomy in its own domain);
Jolly v. Coughlin, 76 F.3d 468, 477 (2d Cir. 1996) (finding that
right to free exercise of religion is ``substantially burdened''
within meaning of RFRA where state puts substantial pressure on
adherent to modify his behavior and to violate his beliefs); In re
Young, 82 F.3d 1407, 1418 (8th Cir. 1996) (``[D]efining substantial
burden broadly to include religiously motivated as well as
religiously compelled conduct is consistent with the RFRA's purpose
to restore pre-Smith free exercise case law.'').
---------------------------------------------------------------------------
On the first question, noncompliance with the nondiscrimination
requirements of E.O. 11246 could have substantial adverse consequences
on religious organizations that participate in government contracting.
One private religious university supportive of the proposed rule stated
that it is ``a large research university with dozens of active federal
contracts at any given time,'' while another stated that ``religious
organizations have long been significant participants in federal
procurement programs.'' Noncompliance with E.O. 11246 can result in
awards of back pay and other make-whole relief to affected employees
and applicants, cancellation or suspension of the contract, and even
suspension or debarment. See E.O. 11246 Sec. 202(7); 41 CFR 60-1.26.
That is substantial pressure. Indeed, it is a substantial burden for
the government to compel someone ``to choose between the exercise of a
First Amendment right and participation in an otherwise available
public program.'' Thomas, 450 U.S. at 716; Sherbert, 374 U.S. at 404
(``It is too late in the day to doubt that the liberties of religion
and expression may be infringed by the denial of or placing of
conditions upon a benefit or privilege.''). ``Governmental imposition
of such a choice puts the same kind of burden upon the free exercise of
religion as would a fine imposed'' for engaging in religious action.
Sherbert, 374 U.S. at 404. ``Where the state conditions receipt of an
important benefit upon conduct proscribed by a religious faith, or
where it denies such a benefit because of conduct mandated by religious
belief, thereby putting substantial pressure on an adherent to modify
his behavior and to violate his beliefs, a burden upon religion exists.
While the compulsion may be indirect, the infringement upon free
exercise is nonetheless substantial.''). Thomas, 450 U.S. at 717-18.
On the second question, the Supreme Court emphasized in Hobby Lobby
that, in determining whether compliance with a particular mandate would
substantially burden the objecting party's ability to operate in
accordance with its religious beliefs, the federal government must
``not presume to determine the plausibility of a religious claim.''
Hobby Lobby, 573 U.S. at 724 (quoting Smith, 494 U.S. at 887). It is
not for a court, or for OFCCP, to say whether a particular set of
religious beliefs is ``mistaken or insubstantial.'' Hobby Lobby, 573
U.S. at 725. Furthermore, religious exercise means more than being able
to express particular views--a right to freedom of religion requires
the right to act in conformance with that religion. See Espinoza, 140
S. Ct. at 2277 (Gorsuch, J., concurring) (``The right to be religious
without the right to do religious things would hardly amount to a right
at all.''). It is this right to engage in conduct consistent with
sincerely held belief--and a right to be free of demands to engage in
conduct conflicting with those sincerely held beliefs--that RFRA
protects. See Little Sisters of the Poor, 140 S. Ct. at 2390.
Compliance with the nondiscrimination provisions in E.O. 11246, if
interpreted to apply when an employment action is motivated by religion
yet also implicates a protected classification, could force religious
organizations to violate their sincerely held religious beliefs or to
compromise their religious integrity or mission by placing substantial
pressure on them to violate or modify their religious tenets related to
their employees and their religious communities. The comments on the
proposed rule made this clear. For example, a private religious
university noted the importance for religious employers to be able to
``employ[ ] persons whose beliefs and conduct are consistent with
[their] religious precepts.'' Similarly, a nationwide ecclesiastical
organization stated in its comment that faith-based organizations
should be able to ``lawfully prefer for employment those who, by word
and conduct, accept and adhere to that faith as the organization
understands it, regardless of the applicant's or employee's religious
affiliation.'' An association of religious universities echoed these
sentiments, stating that ``[o]ur schools are committed to upholding
their religion-based standards by aligning
[[Page 79352]]
employment expectations exclusively with applicants and employees who
concur with these expectations. These expectations are essential to
fulfilling our religious mission.'' While the commenter explained that
generally its associated ``schools do not accept direct government
funding,'' it highlighted the importance for its members that ``no
organization should be excluded by the government from competing for
contracts or other funds simply because the religious organization is
serious about maintaining its religious identity and religious
practices.''
The case law also indicates that certain E.O. 11246 obligations may
impose a burden on religious organizations. Bostock expressly
acknowledged that enforcing certain nondiscrimination provisions could
pose challenges for religious employers under RFRA. See 140 S. Ct. at
1754. And many cases show instances of religious employers seeking to
apply religiously inspired codes of conduct that pertain to matters of
marriage and sexual intimacy. See Little, 929 F.2d at 946 (upholding
termination of employee for violations of ``Cardinal's Clause,'' which
included ``entry by the teacher into a marriage which is not recognized
by the Catholic Church'' (emphasis in original)); Cline, 206 F.3d at
666 (holding fact issue remained as to whether plaintiff was terminated
for pregnancy or for whether she had ``violated her clear duties as a
teacher by engaging in premarital sex''); Boyd v. Harding Acad. of
Memphis, Inc., 88 F.3d 410, 414 (6th Cir. 1996) (upholding district
court's determination that the defendant ``articulated a legitimate,
non-discriminatory reason for plaintiff's termination when it stated
that plaintiff was fired not for being pregnant, but for having sex
outside of marriage in violation of Harding's code of conduct'' and
rejecting claim of pretext when school's president ``had terminated at
least four individuals, both male and female, who had engaged in
extramarital sexual relationships that did not result in pregnancy'');
Gosche v. Calvert High Sch., 997 F. Supp. 867, 872 (N.D. Ohio 1998)
(dismissing Title VII claim of plaintiff fired for having affair and
concluding that ``[w]hatever Plaintiff's own post-hoc claims may be
regarding the relevance of her sexual conduct to her employment at a
Catholic school, it is clear that the Diocese and Parish considered her
sexual conduct to be relevant to her employment''); Ganzy v. Allen
Christian Sch., 995 F. Supp. 340, 359-60 (E.D.N.Y. 1998) (noting in
case with similar facts and holding as Cline that ``[r]eligious
institutions . . . are provided leeway under federal constitutional and
statutory law in regulating the sexual conduct of those in their employ
in keeping with their religious views''); Dolter v. Wahlert High Sch.,
483 F. Supp. 266, 270 (N.D. Iowa 1980) (``Nor does the court quarrel
with defendant's contention that it can define moral precepts and
prescribe a code of moral conduct that its teachers . . . must
follow.'').\27\
---------------------------------------------------------------------------
\27\ Amos also implicated such facts. The appellee had been
discharged for failing to ``qualify for a temple recommend, that is,
a certificate that he is a member of the Church and eligible to
attend its temples,'' which ``are issued only to individuals who
observe the Church's standards in such matters as regular church
attendance, tithing, and abstinence from coffee, tea, alcohol, and
tobacco.'' Amos, 483 U.S. at 330 & n.4. The plaintiffs below had
alleged that those standards necessitated employer inquiries into
their ``sexual activities'' and ``moral cleanliness and purity.''
Amos, 594 F. Supp. at 830.
---------------------------------------------------------------------------
Of particular concern here as well is that ``[f]ear of potential
liability might affect the way an organization carried out what it
understood to be its religious mission.'' Amos, 483 U.S. at 336; cf.
Hosanna-Tabor, 565 U.S. at 197 (Thomas, J., concurring)
(``[U]ncertainty about whether its ministerial designation will be
rejected, and a corresponding fear of liability, may cause a religious
group to conform its beliefs and practices regarding `ministers' to the
prevailing secular understanding.''). Here, out of fear of violating
E.O. 11246's requirements, a religious organization might simply choose
to forsake certain of its religious tenets related to employment. That
is a religious burden in itself. And that change could in turn result
in the organization hiring and retaining employees who, by word or
deed, undermine the religious organization's character and purpose--but
which the organization would feel compelled to accept rather than risk
liability. That is a second religious burden, which in particular may
pose a risk to smaller or nontraditional religious groups. Cf. Hosanna-
Tabor, 565 U.S. at 197 (Thomas, J., concurring) (noting that a bright-
line test or multifactor analysis for the definition of ``minister''
``risk[s] disadvantaging those religious groups whose beliefs,
practices, and membership are outside of the `mainstream' or
unpalatable to some,'' including by ``caus[ing] a religious group to
conform its beliefs and practices regarding `ministers' to the
prevailing secular understanding'').
Alternatively, to avoid this problem, the religious organization
might consider drawing stricter lines around those it considers
``coreligionists,'' for even the narrowest reading of the religious
exemption permits religious organizations to prefer ``coreligionists''
in employment decisions. In that case, religious organizations would
draw strict lines by stating that certain behaviors, beliefs, or
statements are anathema to the religion and take one outside the
religious community. That way, employment action would be more readily
identified as resting solely on religious grounds as a preference
against a non-coreligionist. See Mississippi College, 626 F.2d at 484-
85; cf. Amos, 483 U.S. at 343 (Brennan, J., concurring) (``A religious
organization therefore would have an incentive to characterize as
religious only those activities about which there likely would be no
dispute, even if it genuinely believe that religious commitment was
important in performing other tasks as well.''). Here, the religious
burden would be government pressure on how the religious organization
defines who is and who is not a member of its religious community.
Demonstrating burden is necessarily fact-dependent. There may be
instances where the organization sincerely believes as a religious
matter that it can tolerate some kinds of religious noncompliance from
some of its employees without seriously compromising its religious
mission or identity. That may be the case especially for employees in
less prominent roles or who have little interaction with students or
the public. But there may be other instances where, in the sincere view
of the organization, a non-ministerial employee must adhere to the
organization's religious tenets as an important part of furthering the
organization's religious mission and maintaining its religious
identity, and where strict enforcement of certain E.O. 11246
requirements would substantially burden those aims.
(2) Compelling Interest
Many courts have recognized the importance of the government's
interest in enforcing Title VII's nondiscrimination provisions. See,
e.g., Rayburn, 772 F.2d at 1169; Pacific Press, 676 F.2d at 1280. The
following RFRA analysis does not address OFCCP's enforcement program
broadly, including the context of a religious organization's
discriminating on the basis of a protected characteristic other than
religion for non-religious reasons. OFCCP will continue to fully
enforce E.O. 11246's requirements in those contexts. Rather, the
compelling-interest analysis here focuses solely on the questions
raised by commenters regarding a situation in which a religious
organization takes employment
[[Page 79353]]
action based solely on sincerely held religious tenets that also
implicate a protected classification.
To satisfy RFRA, OFCCP must do more than assert a generalized
compelling interest on a ``categorical'' basis. O Centro, 546 U.S. at
431. Instead, ``RFRA requires the Government to demonstrate that the
compelling interest test is satisfied through application of the
challenged law `to the person'--the particular claimant whose sincere
exercise of religion is being substantially burdened.'' Id. at 430-31
(quoting 42 U.S.C. 2000bb-1(b)). This requires ``look[ing] beyond
broadly formulated interests justifying the general applicability of
government mandates and scrutiniz[ing] the asserted harm of granting
specific exemptions to particular religious claimants.'' Id. at 431.
Thus OFCCP must demonstrate that it has a compelling governmental
interest in enforcing a nondiscrimination requirement against
``particular religious claimants'' (e.g., particular contractors who
qualify for the religious exemption) when doing so places a substantial
burden on the ability of those particular contractors to freely
exercise their religion. Id. This statutory requirement is reflected in
OFCCP's current RFRA policy, under which ``OFCCP will consider'' a
contractor's request for ``an exemption to E.O. 11246 pursuant to RFRA
. . . based on the facts of the particular case.'' OFCCP, Religious
Employers and Religious Exemption, www.dol.gov/agencies/ofccp/faqs/religious-employers-exemption. As explained below, OFCCP has determined
on the basis of several independent reasons that it has less than a
compelling interest in enforcing nondiscrimination requirements--except
for protections on the basis of race--when enforcement would seriously
infringe the religious mission or identity of a religious organization.
Exceptions provided other contractors. OFCCP's general interest in
enforcing E.O. 11246 is less than compelling in the religious context
addressed here, given the numerous exceptions from its
nondiscrimination requirements it has authority to grant, and has
granted, in nonreligious contexts. Granting accommodations in
nonreligious contexts strongly suggests that OFCCP does not have a
compelling interest in disfavoring religious contractors by refusing to
grant accommodations in religious contexts. See O Centro, 546 U.S. at
436 (``RFRA operates by mandating consideration, under the compelling
interest test, of exceptions to `rule[s] of general applicability.' ''
(quoting 42 U.S.C. 2000bb-1(a))). When ``[t]he proffered objectives are
not pursued with respect to analogous nonreligious conduct,'' those
exceptions suggest that ``those interests could be achieved by narrower
ordinances that burdened religion to a far lesser degree.'' Holt, 574
U.S. at 367.
The President has granted OFCCP broad authority and discretion to
exempt contracts from the requirements of E.O. 11246. Most prominent is
section 204(a) of E.O. 11246, which authorizes the Secretary of Labor
to grant exemptions from any or all of the equal opportunity clause's
requirements ``when the Secretary deems that special circumstances in
the national interest so require.'' This is not the kind of language
government typically uses when it seeks a policy of absolute
enforcement. Rather, it is the kind of language government uses when
granting highly discretionary power. Cf. Webster v. Doe, 486 U.S. 592,
600 (1988) (removing an employee ``whenever the Director `shall deem
such termination necessary or advisable in the interests of the United
States' '' is a standard that ``fairly exudes deference to the
Director'' (quoting National Security Act Sec. 102(c)). The Executive
Order contains many other exceptions as well. Section 204(b) authorizes
the Secretary to exempt contracts that are to be performed outside the
United States, contracts that are for standard commercial supplies or
raw materials, contracts that do not meet certain thresholds (dollar
amounts or numbers of employees), and subcontracts below a specified
tier. Section 204(d) authorizes the Secretary to exempt a contractor's
facilities that are separate and distinct from activities related to
the performance of the contract, as long as ``such an exemption will
not interfere with or impede the effectuation of the purposes of this
Order.'' OFCCP's implementing regulations contain exemptions as well.
OFCCP has implemented section 204(b) to the maximum extent possible by
exempting all contracts and subcontracts for work performed outside the
United States by employees not recruited in the United States. See 41
CFR 60-1.5(3). OFCCP's regulations also contain a religious exemption
for religious educational institutions and permit a preference for
``Indians living on or near an Indian reservation in connection with
employment opportunities on or near an Indian reservation.'' 41 CFR 60-
1.5(6)-(7).
On several occasions OFCCP has used its power to exempt contracts
``in the national interest.'' ``Prior administrations granted [national
interest exemptions] for Hurricanes Sandy and Katrina,'' \28\ and OFCCP
has granted temporary exemptions from some E.O. 11246 requirements in
response to more recent national disasters. OFCCP has similarly granted
an exemption during the COVID-19 pandemic. See OFCCP, National Interest
Exemptions, https://www.dol.gov/agencies/ofccp/national-interest-exemption. And the National Interest Exemptions that OFCCP has granted
can be quite broad, applying, for example, to all new contracts
providing coronavirus relief during the applicable time period. See
OFCCP, Coronavirus National Interest Exemption Frequently Asked
Questions, https://www.dol.gov/agencies/ofccp/faqs/covid-19#Q1.
---------------------------------------------------------------------------
\28\ OFCCP, ``Coronavirus National Interest Exemption Frequently
Asked Questions,'' Question #12, https://www.dol.gov/agencies/ofccp/faqs/covid-19#Q12.
---------------------------------------------------------------------------
OFCCP has also issued a final rule effecting a permanent exemption
from all OFCCP authority for healthcare providers that participate in
the TRICARE program and have no otherwise covered contracts. The final
rule expressed OFCCP's view that a 2011 statute removed whatever
authority OFCCP may have had over TRICARE providers and did not replace
it with a separate nondiscrimination provision; Congress' action
indicates that OFCCP's interest is less than compelling interest. See
85 FR 39834, 39837-39 (July 2, 2020). Additionally, the final rule
exempted TRICARE providers on the alternative ground of a national
interest exemption, citing its concern that ``the prospect of
exercising authority over TRICARE providers is affecting or will affect
the government's ability to provide health care to uniformed service
members, veterans, and their families,'' a determination that
``pursuing enforcement efforts against TRICARE providers is not the
best use of its resources'' given a history of litigation and legal
uncertainty in the area, and the need to ``provide uniformity and
certainty in the health care community with regard to legal obligations
concerning participation in TRICARE.'' Id. at 39839.
The various exemptions that OFCCP can and does provide in secular
settings show that its interest in enforcing E.O. 11246's requirements
can give way to other considerations. Many of those same considerations
exist here, so OFCCP's enforcement interest should similarly give way
to religious accommodation. For example, many of the same reasons
underlying OFCCP's exemption for TRICARE providers apply here as well:
Conservation of resources in an area that could lead to protracted
[[Page 79354]]
litigation; the need to bring clarity to a group of potential
contractors under a cloud of legal uncertainty; and a goal of improving
the government's access to certain services. In the TRICARE rule, the
goal was to foster access to care for veterans and their families. In
this rule, it is the goal of fostering the equal participation of
religious organizations in government contracting and subcontracting in
order to increase the contracting pool's competition and diversity and
thus improve economy and efficiency in procurement. Likewise OFCCP's
limited exemptions during emergencies and the pandemic demonstrate the
agency's judgment that securing services for the government can
override aspects of E.O. 11246's obligations. Here, too, a limited
religious accommodation may encourage religious organizations to begin
or continue participating in government contracting and subcontracting.
And like those other exemptions, a religious accommodation here would
be limited. It would be limited to employment action grounded in a
sincere religious belief with respect to the employee's religion. It
would not excuse religious organizations from their antidiscrimination
obligations otherwise and never on the basis of race, nor from their
affirmative-action obligations, reporting requirements, or other
requirements under E.O. 11246.
E.O. 11246's many available exemptions, and OFCCP's history of
recognizing exemptions, also undercuts the idea that individualized
religious exemptions would undermine the agency's overall enforcement
of E.O. 11246 or that their denial would be equitable to religious
organizations. See Holt, 574 U.S. at 368 (``At bottom, this argument is
but another formulation of the `classic rejoinder . . . : If I make an
exception for you, I'll have to make one for everybody, so no
exceptions.' We have rejected a similar argument in analogous contexts,
and we reject it again today.'') (internal citations omitted) (quoting
O Centro, 546 U.S. at 436); Fraternal Order of Police Newark Lodge No.
12 v. City of Newark, 170 F.3d 359, 365 (3d Cir. 1999) (``[W]e conclude
that the Department's decision to provide medical exemptions while
refusing religious exemptions is sufficiently suggestive of
discriminatory intent so as to trigger heightened scrutiny.'').
Recognizing the value that religious contractors provide, OFCCP has
determined that it has less than a compelling interest in enforcing
E.O. 11246 when a religious organization takes employment action solely
on the basis of sincerely held religious tenets that also implicate a
protected classification, other than race. OFCCP has determined that,
in these circumstances, it should instead appropriately accommodate
religion, especially when doing so (as with national interest
exemptions) would foster a more competitive pool of government
contractors. See Boyle v. United Techs. Corp., 487 U.S. 500, 506 (1988)
(noting that ``the Federal Government's interest in the procurement of
equipment is implicated'' where ``[t]he imposition of liability on
Government contractors'' will cause the contractors to ``decline to
manufacture'' a good or to ``raise its price'').
Establishment Clause concerns. OFCCP's interest in enforcing E.O.
11246 is attenuated when doing so seriously risks violating the
Establishment Clause. But as noted earlier, strict application of all
E.O. 11246 requirements to religious organizations could, in some
instances, chill their protected religiously based requirements for
employment out of fear of liability. It could also chill religious
organizations from taking employment action despite an employee, by
word or deed, undermining the religious organization's tenets and
purposes.
Alternatively, it could incentivize religious organizations,
because of the risk that the government might misunderstand the
organization's motivations, to draw stricter lines around who it
considers a coreligionist. In this situation, the religious
organization would first take some form of purely religious action
against an employee to designate the employee as no longer a part of
the religious community, and then take employment action, so that
employment action would be more readily identified as resting solely on
grounds of religious preference. And it poses a risk to smaller or
nontraditional religious groups, whose membership practices may not be
as readily understood by the government. Cf. Hosanna-Tabor, 565 U.S. at
197 (Thomas, J., concurring).
Such government pressure on religious organizations' membership and
doctrinal decisions would raise serious concerns under not only the
Free Exercise Clause, but the Establishment Clause as well. ``[T]he
Religion Clauses protect the right of churches and other religious
institutions to decide matters `of faith and doctrine' without
government intrusion. . . . [A]ny attempt by government to dictate or
even to influence such matters would constitute one of the central
attributes of an establishment of religion.'' Our Lady of Guadalupe,
140 S. Ct. at 2060 (emphasis added) (quoting Hosanna-Tabor, 565 U.S. at
186 (opinion for the court)); see also Hosanna-Tabor, 565 U.S. at 197
(Thomas, J., concurring) (``These are certainly dangers that the First
Amendment was designed to guard against.''). In essence, such an
approach could have the unfortunate consequence of pushing religious
organizations to extremes to avoid liability. Religious organizations
could do so either by forsaking their religiously based requirements
for employment, or by engaging in more definitive religious actions to
demonstrate their religious disassociation from someone who breaches a
religiously based requirement for employment. OFCCP also has concerns
about inter-religious discrimination, since some bona fide religious
organizations require adherence to a common set of beliefs or tenets
but do not have a formal membership structure, see World Vision, 633
F.3d at 728 (O'Scannlain, J., concurring), so they may have more
difficulty than traditional churches in showing that an employee or
applicant is not (or is no longer) a coreligionist.
OFCCP cannot avoid this Establishment Clause problem by attempting
to determine whether a religious organization's decision to deem
someone a non-coreligionist was motivated by discriminatory animus
rather than a sincere application of religious tenets. Unlike the fact-
finding to determine the reason for an employment decision, which does
not always raise Establishment Clause concerns, this would be fact-
finding to determine the reason for a religious decision on community
membership. Testing the basis of that decision would most likely
violate the First Amendment. It would violate the religious
organization's right to choose its membership free of government
influence, and the process of inquiry alone into such a sensitive area
``would risk judicial entanglement in religious issues.'' Our Lady of
Guadalupe, 140 S. Ct. at 2069; see Catholic Bishop, 440 U.S. at 502.
The absence of a clear command. Finally, a compelling interest
ought to be one that is clearly spelled out by the government. For
instance, in his concurrence in Little Sisters of the Poor, Justice
Alito observed that it was highly significant that Congress itself had
not treated free access to contraception as a compelling government
interest. See Little Sisters of the Poor, 140 S. Ct. at 2392-93 (Alito,
J., concurring). Here, however, the scope of the religious exemption is
unsettled. As discussed above, courts have consistently interpreted the
religious exemption to
[[Page 79355]]
prohibit religious organizations from discriminating on bases other
than religion. But Bostock left open the scope of the exemption's
protection for religious discrimination, and only two federal court of
appeal decisions have addressed a fact pattern in which a religious
organization's religious tenets conflicted with a non-religious Title
VII protection. See Fremont, 781 F.2d at 1368 (finding challenged
religious practice outside the scope of the religious exemption and
changing the practice would pose little interference with the
organization's religious belief and practice); Pacific Press, 676 F.2d
at 1279 (determining that the EEOC's action ``does not and could not
conflict with [the employer's] religious doctrines, nor does it
prohibit an activity rooted in religious belief''). Without stronger
legal evidence that the religious exemption's protections are cabined
by E.O. 11246's other protections (and thus may seriously infringe
religious freedom), OFCCP is hesitant to describe that theory as
furthering a compelling government interest.
(3) Least Restrictive Means
In the third step of the RFRA analysis, OFCCP assesses whether its
application of the religious burden to the person ``is the least
restrictive means of furthering that compelling government interest.''
42 U.S.C. 2000bb-1(b)(2). Because OFCCP believes that it has less than
a compelling interest in enforcing E.O. 11246 in the circumstances
contemplated for purposes of this general RFRA analysis it need not
consider whether that foreclosed enforcement would be by the least
restrictive means. When the Supreme Court has found a regulation
violated RFRA, the Court has permitted the regulatory agency to
determine the correct remedy. See, e.g., Hobby Lobby, 573 U.S. at 726,
731, 736; 79 FR 51118 (Aug. 27, 2014) (proposed modification in light
of Hobby Lobby). As a result, OFCCP has discretion to determine an
appropriate accommodation without having to also determine the least
restrictive alternative. As Justice Alito recently explained, RFRA
``does not require . . . that an accommodation of religious belief be
narrowly tailored to further a compelling interest. . . . Nothing in
RFRA requires that a violation be remedied by the narrowest permissible
corrective.'' Little Sisters of the Poor, 140 S. Ct. at 2396 (Alito,
J., concurring). OFCCP further believes the RFRA approach outlined here
is an appropriate accommodation, which applies only to bona fide
religious employers and which permits only employment actions based on
sincere religious tenets; employees remain protected from
discrimination motivated by animus or any other non-religious reason,
and employment actions based on race always remain prohibited.
(4) The Harris Case
OFCCP does not view the Sixth Circuit's opinion in EEOC v. R.G. &.
G.R. Harris Funeral Homes, Inc., 884 F.3d 560 (6th Cir. 2018), aff'd,
Bostock v. Clayton Cnty., 140 S. Ct. 1731 (2020), as requiring a
different analysis here. In that case (one of three consolidated in
Bostock), an employee of a funeral home informed the funeral home's
owner of the employee's intention to present as a member of the
opposite sex while at work. The owner stated that he would violate his
religious beliefs were he to permit the employee to do so and
terminated the employee. See id. at 568-69. In the ensuing litigation,
the funeral home raised a RFRA defense. The Sixth Circuit held that
Title VII discrimination claims ``will necessarily defeat'' RFRA
defenses to such discrimination. Id. at 595. The court addressed each
element of RFRA. Regarding substantial burden, the court held in
relevant part that the employer's mere toleration of the employee's
conduct to comply with Title VII is not an endorsement of it, so it was
not a substantial burden. Regarding the furtherance of a compelling
interest, the court held that failure to enforce Title VII would result
in the employee suffering discrimination, ``an outcome directly
contrary to the EEOC's compelling interest in combating discrimination
in the workforce.'' Id. at 592. Regarding least-restrictive means, the
court held that enforcement of Title VII is itself the least-
restrictive means for eradicating employment discrimination on the
basis of sex. See id. at 593-97.
The defendant in Harris did not raise the RFRA issue to the Supreme
Court, but the Court in Bostock nonetheless observed that, ``[b]ecause
RFRA operates as a kind of super statute . . . it might supersede Title
VII's commands in appropriate cases.'' \29\ Bostock, 140 S. Ct. at
1754. To the extent Harris remains good law, OFCCP does not view the
Sixth Circuit's RFRA analysis as applicable here, as the facts of the
case are readily distinguishable from this rule's protections for
religious organizations. The funeral home at the center of the Harris
case was not a religious organization. See 884 F.3d at 581. Unlike the
religious employers that are OFCCP's focus here, the funeral home had
``virtually no religious characteristics,'' id. at 582: No religiously
inspired code of conduct, no doctrinal statement, and no other
religious requirement for employees. Nor did the funeral home through
its work seek to advance the values of a particular religion. See id.
Indeed, the funeral home was clearly outside the scope of OFCCP's
religious exemption--which exists to prevent E.O. 11246's
nondiscrimination provisions from interfering with a religious
organization's freedom to employ ``individuals of a particular
religion''--and furthermore the funeral home's own testimony indicated
that its conduct was motivated by commercial rather than religious
concerns. See id. at 576 n.5, 586, 589 n.10.
---------------------------------------------------------------------------
\29\ The Court also observed that ``other employers in other
cases may raise free exercise arguments that merit careful
consideration.'' Bostock, 140 S. Ct. at 1754.
---------------------------------------------------------------------------
Bearing those key factual differences in mind, OFCCP disagrees
that, at least as applied to religious organizations regulated by
OFCCP, ``tolerating'' employee conduct that is contrary to the
organization's sincerely held religious tenets can never constitute a
substantial burden under RFRA, as the court held in Harris. Id. at 588.
That holding is, at the very least, in tension with Little Sisters of
the Poor, Hobby Lobby, and the Free Exercise Clause precedents they
rested on. See Hobby Lobby, 573 U.S. at 723-25; see also Little Sisters
of the Poor, 140 S. Ct. at 2383 (``[In Hobby Lobby,] we made it
abundantly clear that, under RFRA, the Departments must accept the
sincerely held complicity-based objections of religious entities.'');
id. at 2390 (Alito, J., concurring) (observing that ``federal courts
have no business addressing whether the religious belief asserted in a
RFRA case is reasonable,'' including religious beliefs underlying
complicity-based objections). When government requires conduct
proscribed by religious faith on pain of substantial penalty, there is
a burden upon religious exercise. See Sherbert, 374 U.S. at 404.
Additionally, the burden is even clearer for an objecting religious
organization than it was for the funeral home in Harris. Unlike a
secular employer, a religious organization has a religious foundation
and purpose and may select its employees on the basis of their
religious adherence. Requiring religious employers to maintain
employees who disregard the organization's religious tenets thus more
seriously threatens to undermine the organization's mission and
integrity. This gives even more credence to a claim that forcing a
religious employer
[[Page 79356]]
to maintain such an employee would substantially burden its religious
exercise.
OFCCP also does not view Harris's treatment of the compelling-
interest prong of RFRA as persuasive when applied to religious
organizations regulated by OFCCP. First, because the defendant was not
a religious organization, the Harris court did not consider the
antecedent question of whether the government has a compelling interest
in applying nondiscrimination laws to a religious organization when
doing so would threaten to compromise the organization's integrity or
mission, with its attendant more-severe infringements on religious free
exercise and establishment problems. As discussed above, there are
instances where that could occur, so accordingly in that situation the
RFRA analysis is different. Additionally, E.O. 11246 contains
additional and discretionary exceptions that Title VII does not have,
which further alter the compelling-interest balance.
(5) OFCCP's Compelling Interest in Prohibiting Racial Discrimination
In response to commenters who raised the issue, OFCCP reiterates
here that it has a compelling interest in eradicating racial
discrimination, even as against religious organizations. To be sure,
OFCCP is currently unaware of any contractor contending that its
religious beliefs required it to take employment actions that implicate
race, and commenters supplied no evidence of that occurring.
Nonetheless, in response to commenters' broader concerns, OFCCP makes
clear here that its overwhelming interest in eradicating racial
discrimination would defeat RFRA claims in the context addressed in
this section of the rule's preamble. OFCCP will enforce E.O. 11246
against any contractor or subcontractor that takes employment actions
on the basis of race, even if religiously motivated. At least one
commenter that strongly supported the proposed rule likewise recognized
that the religious exemption should not protect ``a religious
organization's employment decision . . . based on racial status.''
OFCCP treats racial discrimination as unique because the
Constitution does as well. The Supreme Court recognizes that ``[r]acial
bias is distinct.'' Pena-Rodriguez v. Colorado, 137 S. Ct. 855, 868
(2017). Indeed, a long history of the Court's ``decisions demonstrate
that racial bias implicates unique historical, constitutional, and
institutional concerns.'' Id. (emphasis added). Although this final
rule recognizes that religious accommodations may be necessary in
certain other contexts regarding considerations of sex,
``discrimination on the basis of race, `odious in all aspects, is
especially pernicious in the administration of justice.' '' Id.
(quoting Rose v. Mitchell, 443 U.S. 545, 555 (1979)).
The Supreme Court has elsewhere recognized the government's unique
interest in eradicating racial discrimination. In Hobby Lobby, the
Court considered ``the possibility that discrimination in hiring, for
example on the basis of race, might be cloaked as religious practice to
escape legal sanction,'' but explained that ``[t]he Government has a
compelling interest in providing an equal opportunity to participate in
the workforce without regard to race, and prohibitions on racial
discrimination are precisely tailored to achieve that critical goal.''
573 U.S. at 733. In Bob Jones University, the Court similarly concluded
that the government had a ``compelling'' interest--described as ``a
fundamental overriding interest''--``in eradicating racial
discrimination,'' and further explained the ``governmental interest''
in eradicating racial discrimination ``substantially outweighs whatever
burden'' the government action in that case ``place[d] on petitioners'
exercise of their religious beliefs.'' Bob Jones, 461 U.S. at 604; see
also Newman v. Piggie Park Enters., Inc., 390 U.S. 400, 402 n.5 (1968)
(describing as ``patently frivolous'' the argument that a prohibition
on racial discrimination ``was invalid because it contravenes the will
of God and constitutes an interference with the free exercise of the
Defendant's religion'') (internal quotation marks omitted).
The government's heightened interest in eradicating racial
discrimination is further exhibited by the Supreme Court's
jurisprudence regarding the Equal Protection Clause of the Fourteenth
Amendment. In Equal Protection Clause cases, the Court applies ``strict
scrutiny'' to instances of race-based classifications, meaning that
``all racial classifications, imposed by whatever federal, state, or
local governmental actor . . . are constitutional only if they are
narrowly tailored measures that further compelling governmental
interests.'' Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 227
(1995). Strict scrutiny presents a more pressing standard than the
``intermediate scrutiny'' that the Court applies in Equal Protection
Clause cases to instances of sex-based classifications, see, e.g.,
Craig v. Boren, 429 U.S. 190, 197 (1976)) (``[C]lassifications by
gender must serve important governmental objectives and must be
substantially related to achievement of those objectives.''); id. at
218 (Rehnquist, J., dissenting) (referring to the majority approach as
``intermediate'' scrutiny), and the ``rational-basis scrutiny'' that
the Court has sometimes applied to classifications based on sexual
orientation, see Lawrence v. Texas, 539 U.S. 558, 578 (2003); Romer v.
Evans, 517 U.S. 620, 631-32 (1996). The Supreme Court has further
recognized that traditional views on marriage do not suggest bigotry or
invidious discrimination but instead are held ``in good faith by
reasonable and sincere people here and throughout the world.''
Obergefell v. Hodges, 576 U.S. 644, 657 (2015).\30\ The Constitution,
as interpreted by the Supreme Court, is more protective of race than
other protected classifications. Thus, the Court's long-established
Equal Protection jurisprudence supports the conclusion that although
the government has an interest in eradicating discrimination on the
bases of all protected classes, the governmental interest in
eradicating racial discrimination is particularly strong. This final
rule is consistent with that framework.
---------------------------------------------------------------------------
\30\ Cf. Masterpiece Cakeshop, 138 S. Ct. at 1727 (stating that
a clergy member's refusal to perform a gay marriage ``would be well
understood in our constitutional order as an exercise of religion,
an exercise that gay persons could recognize and accept without
serious diminishment to their own dignity and worth'').
---------------------------------------------------------------------------
e. Application of the Religious Exemption
As explained in the proposed rule, when evaluating allegations of
discrimination on bases other than religion against employers that are
entitled to the Title VII religious exemption, courts carefully
evaluate whether the employment action was permissibly based on the
``particular religion'' of the employee. The particulars vary. In the
absence of direct evidence of discrimination on a protected basis other
than religion, courts generally invoke the burden-shifting framework of
McDonnell Douglas Corp. v. Green, 411 U.S. 792 (1973), to determine
whether a religious employer's invocation of religion (or a religiously
motivated policy) in making an employment decision was genuine or,
instead, was merely a pretext for discrimination prohibited under Title
VII. See Cline, 206 F.3d 651; Boyd, 88 F.3d 410; cf. Geary, 7 F.3d 324
(applying McDonnell Douglas in assessing religious-exemption defense to
claim under the Age Discrimination in Employment Act). At least one
other
[[Page 79357]]
case has noted that ``[o]ne way'' to show discriminatory intent using
circumstantial evidence ``is through the burden-shifting framework set
out in McDonnell Douglas,'' but another way is to ``show enough non-
comparison circumstantial evidence to raise a reasonable inference of
intentional discrimination.'' Hamilton v. Southland Christian Sch.,
Inc., 680 F.3d 1316, 1320 (11th Cir. 2012).
In undertaking this evaluation, OFCCP, like courts, ``merely asks
whether a sincerely held religious belief actually motivated the
institution's actions.'' Geary, 7 F.3d at 330. The religious
organization's burden ``to explain is considerably lighter than in a
non-religious employer case,'' since the organization, ``at most, is
called upon to explain the application of its own doctrines.'' Id.
``Such an explanation is no more onerous than is the initial burden of
any institution in any First Amendment litigation to advance and
explain a sincerely held religious belief as the basis of a defense or
claim.'' Id.; see Seeger, 380 U.S. at 185 (holding whether a belief is
``truly held'' is ``a question of fact''). The sincerity of religious
exercise is often undisputed or stipulated. See, e.g., Hobby Lobby, 573
U.S. at 717 (``The companies in the case before us are closely held
corporations, each owned and controlled by a single family, and no one
has disputed the sincerity of their religious beliefs.''); Holt, 574
U.S. at 361 (``Here, the religious exercise at issue is the growing of
a beard, which petitioner believes is a dictate of his religious faith,
and the Department does not dispute the sincerity of petitioner's
belief.''). In assessing sincerity, OFCCP takes into account all
relevant facts, including whether the contractor had a preexisting
basis for its employment policy and whether the policy has been applied
consistently to comparable persons, although absolute uniformity is not
required. See Kennedy, 657 F.3d at 194 (noting that the Title VII
religious exemption permits religious organizations to ``consider some
attempt at compromise''); LeBoon, 503 F.3d at 229 (``[R]eligious
organizations need not adhere absolutely to the strictest tenets of
their faiths to qualify for Section 702 protection.''); see also
Killinger, 113 F.3d at 199-200. OFCCP will also evaluate any factors
that indicate an insincere sham, such as acting ``in a manner
inconsistent with that belief'' or ``evidence that the adherent
materially gains by fraudulently hiding secular interests behind a veil
of religious doctrine.'' Philbrook, 757 F.2d at 482 (quoting Barber,
650 F.2d at 441) (internal quotation mark omitted); cf., e.g., Hobby
Lobby, 573 U.S. at 117 n.28 (``To qualify for RFRA's protection, an
asserted belief must be `sincere'; a corporation's pretextual assertion
of a religious belief in order to obtain an exemption for financial
reasons would fail.''); Quaintance, 608 F.3d at 724 (Gorsuch, J.)
(``[T]he record contains additional, overwhelming contrary evidence
that the [defendants] were running a commercial marijuana business with
a religious front.'').
Other decisions have not used the McDonnell Douglas framework,
particularly when an inquiry into purported pretext would risk
entangling the court in the internal affairs of a religious
organization or require a court or jury to assess religious doctrine or
the relative weight of religious considerations. See Geary, 7 F.3d at
330-31 (discussing cases). Depending on the circumstances, such an
inquiry by a court or an agency could impermissibly infringe on the
First Amendment rights of the employer. This arises most prominently in
the context of the ministerial exception, a judicially recognized
exemption grounded in the First Amendment from employment-
discrimination laws for decisions regarding employees who ``minister to
the faithful.'' Hosanna-Tabor, 565 U.S. at 189; see also Our Lady of
Guadalupe, 140 S. Ct. at 2060. The exemption ``is not limited to the
head of a religious congregation,'' nor subject to ``a rigid formula
for deciding when an employee qualifies as a minister.'' Hosanna-Tabor,
565 U.S. at 190; see also Our Lady of Guadalupe, 140 S. Ct. at 2067.
``The interest of society in the enforcement of employment
discrimination statutes is undoubtedly important. But so too is the
interest of religious groups in choosing who will preach their beliefs,
teach their faith, and carry out their mission.'' Hosanna-Tabor, 565
U.S. at 189. The ministerial exception thus bars ``an employment
discrimination suit brought on behalf of a minister.'' Id.; see also
Our Lady of Guadalupe, 140 S. Ct. at 2073. In such a situation, it is
dispositive that the employee is a minister; there is no further
inquiry into the employer's motive. See Hosanna-Tabor, 565 U.S. at 706
(``By imposing an unwanted minister, the state infringes the Free
Exercise Clause . . . and the Establishment Clause''); see, e.g.,
Rayburn, 772 F.2d at 1169 (``In `quintessentially religious' matters,
the free exercise clause of the First Amendment protects the act of
decision rather than a motivation behind it.'' (quoting Serbian E.
Orthodox Diocese v. Milivojevich, 426 U.S. 696, 720 (1976))).
Some commenters, such as a religious legal association and an
association of evangelical churches and schools, agreed with OFCCP that
governmental inquiry into religious employers' practices could violate
the First Amendment. A religious legal organization commended OFCCP for
deferring to religious organizations on matters of doctrine and
religious observance, and commented that doing otherwise could lead to
unconstitutional entanglement with religion. These are the
constitutional concerns that likewise constrain courts' analyses when
an employer makes an employment decision based on religious criteria,
yet the employee disputes the religious criteria. In those situations,
courts have stated that ``if a religious institution . . . presents
convincing evidence that the challenged employment practice resulted
from discrimination on the basis of religion, Sec. 702 deprives the
EEOC of jurisdiction to investigate further to determine whether the
religious discrimination was a pretext for some other form of
discrimination.'' Little, 929 F.2d at 948 (quoting Mississippi College,
626 F.2d at 485). Courts have noted the constitutional dangers of
``choos[ing] between parties' competing religious visions'' and
entangling themselves in deciding whether the employer or the employee
has the better reading of doctrine, or which tenets an employee must
follow or believe to remain in employment. Geary, 7 F.3d at 330; see
Curay-Cramer, 450 F.3d at 141 (``While it is true that the plaintiff in
Little styled her allegation as one of religious discrimination whereas
[this plaintiff] alleges gender discrimination, we do not believe the
difference is significant in terms of whether serious constitutional
questions are raised by applying Title VII. Comparing [plaintiff] to
other Ursuline employees who have committed `offenses' against Catholic
doctrine would require us to engage in just the type of analysis
specifically foreclosed by Little.''); Little, 929 F.2d at 949 (``In
this case, the inquiry into the employer's religious mission is not
only likely, but inevitable, because the specific claim is that the
employee's beliefs or practices make her unfit to advance that mission.
It is difficult to imagine an area of the employment relationship less
fit for scrutiny by secular courts.''); Maguire, 627 F. Supp. at 1507
(``Despite [plaintiff's] protests that she is a Catholic, `of a
particular religion,' the determination of who fits into that category
is for religious
[[Page 79358]]
authorities and not for the government to decide.'').
Some commenters criticized OFCCP's description of the extent to
which it would be permissible to inquire into whether a religious
employer's adverse employment action was based on religion or on
another protected characteristic. Many of these commenters believed
OFCCP's proposed approach is inconsistent with courts' inquiry in Title
VII cases. For example, a group of state attorneys general asserted
that, unlike the definition in the proposed rule, Title VII
jurisprudence and case law has required nuanced and fact-dependent
inquiry into whether a religious employer discriminated against a
worker based on his or her ``particular religion'' or on another
protected basis. An LGBT rights advocacy organization criticized OFCCP
for rejecting the traditional burden-shifting framework set forth in
McDonnell Douglas and instead placing the burden on workers. Some of
these commenters stated that OFCCP's proposed inquiry would not be
adequately rigorous. For example, a civil liberties and human rights
legal advocacy organization asserted that OFCCP's approach as described
in the preamble ``allows religion to serve as a pretext for
discrimination, and creates roadblocks for individuals seeking to bring
claims of discrimination against federal contractors.'' An organization
that advocates separation of church and state asserted that a more
rigorous inquiry would not violate the First Amendment and stated that
OFCCP's concerns about impermissible entanglement are overblown and
cannot justify its refusal to engage in any investigation of religious
employers at all. An anti-bigotry religious organization similarly
asserted that a more rigorous inquiry would not violate RFRA, citing
Hobby Lobby, 573 U.S. at 733.
Some commenters believed the proposal did not clearly describe the
inquiry that OFCCP would undertake to determine whether an adverse
action was based on religion or another protected characteristic. For
example, a legal think tank commented that OFCCP's failure to
meaningfully address various cases discussing the issue of pretext on
the basis that they ``turn on their individual facts'' contravenes
OFCCP's stated goal of ``bringing clarity and certainty to federal
contractors.'' OFCCP disagrees with these commenters' characterization
of the NPRM, but reiterates--and to the extent necessary, clarifies for
their benefit--that OFCCP intends to apply the religious exemption as
it has been applied in the mine run of Title VII cases. In line with
those cases, there are indeed aspects of the discrimination inquiry
that are necessarily and rightly nuanced and fact-dependent, and there
are aspects where inquiry can infringe upon religious organizations'
autonomy and are either prohibited or must be performed with care. The
principles set out in those cases are reiterated below.
First, if a contractor raises the defense that an employee or
applicant is covered by the ministerial exception, OFCCP can inquire
whether that is in fact so. But if so, then that is the end of the
inquiry. OFCCP will not apply the executive order in those
circumstances. See Our Lady of Guadalupe, 140 S. Ct. at 2060-61;
Hosanna-Tabor, 565 U.S. at 194-95.
Second, when the ministerial exception does not apply and the
employee or applicant suffers adverse employment action by a contractor
that is entitled to the religious exemption, OFCCP will apply
traditional Title VII tools to ascertain whether the action was
impermissible discrimination. In the absence of direct evidence of
discrimination on a protected basis other than religion, this will
typically involve application of the familiar McDonnell Douglas
framework, in which (1) OFCCP must establish a prima facie case of
discrimination on a protected basis other than religion; (2) the
employer can respond with a nondiscriminatory reason, such as an
explanation that its action was permitted under the religious exemption
as pertaining to the individual's particular religion; and (3) OFCCP,
to find a violation, must rebut that explanation as a mere pretext. See
McDonnell Douglas, 411 U.S. 792.
Third, ascertaining whether unlawful discrimination motivated an
employer's action requires consideration of all relevant facts and
circumstances. OFCCP will consider all available evidence as to whether
a religious organization's employment action was in fact sincerely
motivated by the applicant's or employee's particular religion--such
as, for instance, their adherence to the organization's religious
tenets--or whether that was a mere pretext for impermissible
discrimination.
Fourth, while OFCCP can inquire into the sincerity of the
employer's religious belief, it is constitutionally prohibited from
refereeing internal religious matters of contractors that are entitled
to the religious exemption. Thus OFCCP cannot decide, when the matter
is disputed, whether the employer or the employee has the better
reading of religious doctrine; whether an employee should be considered
a faithful member of a religious organization's community; whether some
religious offenses or requirements are more important than others and
should merit particular employment responses; whether the employer's
sincerely held religious view is internally consistent or logically
appealing; and similar issues.
Fifth, OFCCP believes these principles will cover the vast majority
of scenarios, but there may be rare instances where an inquiry by a
court or an agency into employment practices otherwise threatens First
Amendment rights. See DeMarco v. Holy Cross High Sch., 4 F.3d 166, 172
(2d Cir. 1993) (``There may be cases involving lay employees in which
the relationship between employee and employer is so pervasively
religious that it is impossible to engage in an age-discrimination
inquiry without serious risk of offending the Establishment Clause.'').
Commenters argued that this final caveat detracted from the clarity of
the proposed rule. OFCCP disagrees. This observation merely notes, as
have courts, that there may be instances outside the ministerial
exception where a discrimination case might involve the kinds of
questions prohibited by the First Amendment. See id. (finding
employee's failed religious duties were ``easily isolated and
defined,'' so a trial could be conducted ``without putting into issue
the validity or truthfulness of Catholic religious teaching'').
Instructive here are the sorts of questions found constitutionally
offensive by the Supreme Court in Catholic Bishop, in which a hearing
officer tested a witness's memory and knowledge of Catholic liturgies
and masses. See Catholic Bishop, 440 U.S. at 502 & n.10; id. at 507-08
(appendix); see also Great Falls, 278 F.3d at 1343. OFCCP believes
these cases provide sufficient principles for the agency to properly
guide its inquiry if and when needful.
f. Causation
OFCCP proposed to apply a but-for standard of causation when
evaluating claims of discrimination by religious organizations based on
protected characteristics other than religion. Specifically, where a
contractor that is entitled to the religious exemption claims that its
challenged employment action was based on religion, OFCCP proposed
finding a violation of E.O. 11246 only if it could prove by a
preponderance of the evidence that a protected characteristic other
than religion was a but-for cause of the adverse action. See Univ. of
Tex. Sw. Med. Ctr. v. Nassar, 570 U.S. 338, 362-63 (2013); Gross v. FBL
Fin. Servs., Inc., 557 U.S. 167, 180 (2009). OFCCP stated
[[Page 79359]]
that this approach was necessary in situations where a religious
organization, acting on a sincerely held belief, took adverse action
against an employee on the basis of the employee's religion. OFCCP
believed that application of the motivating factor framework in such
cases might result in inappropriate encroachment upon the
organization's religious integrity. However, the NPRM recognized that
in prior notice-and-comment rulemaking implementing Executive Order
13665, 79 FR 20749 (Apr. 11, 2014) (amending E.O. 11246 to include pay
transparency nondiscrimination), OFCCP rejected comments stating that a
but-for causation standard was required and instead adopted the
motivating factor framework as expressed in the Title VII post-1991
Civil Rights Act for analyzing causation. See 80 FR 54934, 54944-46
(Sept. 11, 2015).
A few commenters encouraged OFCCP to adopt the proposed but-for
causation standard because they felt it would reduce government
encroachment on religious autonomy. For instance, a private religious
university commented that the proposed but-for standard is in line with
statutory and First Amendment jurisprudence requiring the use of the
least restrictive means to achieve government objectives that impinge
on the exercise of religion. Another private religious university
echoed this sentiment and added that the proposed but-for standard
would enable religious entities to make employment decisions consistent
with their sincerely held religious beliefs while still participating
fully in the marketplace.
However, the majority of commenters who addressed the proposed but-
for standard opposed it, and many recommended that OFCCP instead
continue to apply the motivating-factor standard of causation to all
claims of discrimination under E.O. 11246. These commenters cited a
wide variety of concerns related to the proposed but-for standard.
Several commenters stated that the proposed standard would be too
deferential to employers and/or impose too heavy a burden on employees.
For instance, a national interfaith organization commented that, as
long as an employer can cite another plausible reason for its actions,
an employee cannot prove that discrimination occurred. The organization
noted that under this standard, employees are far less likely to
prevail.
Other commenters expressed skepticism at OFCCP's proffered
rationale for departing from its established policy and practice of
interpreting the nondiscrimination requirements of E.O. 11246 in a
manner consistent with Title VII principles. For instance, a national
reproductive rights organization commented that, for decades, courts
have resolved claims of employment discrimination by religious
organizations without implicating the concerns OFCCP cites. The
organization added that OFCCP's concerns about impermissible
entanglement are overblown and unsupported by case law. A transgender
legal professional organization expressed similar concerns.
Relatedly, a number of commenters opposed the proposed but-for
standard on the basis that it conflicts with Title VII and related case
law. Several of these commenters criticized OFCCP's reliance on Nassar,
570 U.S. at 362-63, and Gross, 557 U.S. at 180, and argued that these
cases do not bridge the gap between the proposed but-for standard and
Title VII principles. For instance, a contractor association commented:
``The Supreme Court has adopted the `but for' standard for retaliation
claims under Title VII (Nassar) and for ADEA claims (Gross); it has not
done so for discrimination claims under Title VII.'' Similarly, an LGBT
rights advocacy organization commented the two cases cited by OFCCP did
not adopt a but-for causation requirement for Title VII or E.O. 11246
cases.
Additionally, multiple commenters expressed concern that the
proposed but-for standard would run contrary to E.O. 11246's
prohibition on discrimination and/or OFCCP's core mission of enforcing
the Executive Order. For instance, a group of state attorneys general
commented that the proposed but-for standard is contrary to law and
exceeds OFCCP's authority because it impermissibly interprets the
Executive Order's anti-discrimination provisions. And a national health
policy organization commented: ``The new proposed rule threatens to
jeopardize the very mission of OFCCP and the original intent of the
E.O. 11246 to protect workers from discrimination . . . .''
Finally, several commenters raised practical objections to the
proposed but-for standard. For instance, an atheist civil liberties
organization commented that applying different causation standards to
cases involving similarly situated employers would ``make it
challenging for contractors seeking to comply with federal law,
resulting in extra expense and legal confusion for workers and
employers.'' An organization that advocates separation of church and
state expressed similar concerns, arguing that ``status-based
discrimination claims based on identical conduct would be evaluated
according to different standards of proof.''
Considering the comments received, OFCCP will apply the motivating-
factor analysis to all claims of discrimination, including
discrimination by religious organizations based on protected
characteristics other than religion. OFCCP agrees that it can avoid
impermissible entanglement while applying a motivating-factor standard
of causation. See, e.g., Curay-Cramer, 450 F.3d at 139 (``[A]s long as
the plaintiff did not challenge the validity or plausibility of the
religious doctrine said to support her dismissal, but only questioned
whether it was the actual motivation, excessive entanglement questions
were not raised.'') (citing Geary, 7 F.3d at 330); DeMarco, 4 F.3d at
170-71)). Where there is a dispute as to whether an employment action
was motivated by the employee's adherence to religious tenets, or
instead was motivated by impermissible discrimination--a ``one or the
other'' scenario--OFCCP will apply the principles just discussed in
subsection II.A.5.e, ``Application of the Religious Exemption.'' Where
instead an employment action is motivated by the employee's adherence
or non-adherence to religious tenets that implicate another protected
category, OFCCP will assess the action on a case-by-case basis in
accordance with the general RFRA analysis discussed earlier. The
approach adopted in this final rule is consistent with OFCCP's
longstanding policy and practice as well as Title VII principles and
case law.
f. Conclusion
For the reasons described above and in the NPRM, and considering
the comments received, OFCCP finalizes the proposed definition of
Particular religion without modification.
B. Section 60-1.5 Exemptions
This rule proposed to add paragraph (e) to 41 CFR 60-1.5 to
establish a rule of construction for subpart A of 41 CFR part 60-1 that
provides for the broadest protection of religious exercise permitted by
the Constitution and laws, including RFRA. This rule of construction is
adapted from RLUIPA, 42 U.S.C. 2000cc-3(g). Significantly, RFRA applies
to all government conduct, not just to legislation or regulation. 42
U.S.C. 2000bb-1. Paragraph (e) is clarifying, since the Constitution
and federal law, including RFRA, already bind OFCCP.
Some commenters expressed general support for the proposed rule of
[[Page 79360]]
construction based on the importance of protecting religious freedom,
including constitutional protections. For example, a religious
leadership and policy organization approved of the fact that the
proposal gives religious freedom due deference by advocating for a
broad and robust interpretation of its protections. In a joint comment,
a religious legal association and an association of evangelical
churches and schools commented that the proposed rule of construction
reflects longstanding religious freedom principles recognized by
Congress and protected by the First Amendment. A pastoral membership
organization commented that the proposed rule of construction gives
religious exercise the special protection required by the
constitutional text and history. A religious professional education
association commented that the proposed rule of construction provided
clarity regarding the meaning, scope, and application of the religious
exemption. Additional supportive commenters, including an evangelical
chaplains' advocacy organization, stated that the rule of construction
is consistent with executive orders and the Attorney General's
memorandum on religious liberty.
Other commenters opposed the proposed rule of construction for a
variety of reasons, including arguing that its application in this
context would actually be inconsistent with the U.S. Constitution and
federal laws. For example, a labor organization commented that the
interpretation goes beyond the Constitution and law, including RFRA. An
anti-bigotry religious organization further noted, with regard to RFRA,
the Supreme Court's holding in Hobby Lobby that ``anti-discrimination
prohibitions are the least restrictive means of achieving the
government's compelling interest in providing equality in the
workplace,'' and commented that this principle applied with greater
force to employment by federal contractors. Other commenters, including
a group of state attorneys general and a transgender advocacy
organization, cautioned that construing the religious exemption broadly
would ``exceed[ ] statutory and judicial limits'' and conflict with the
purpose and text of federal equal employment laws to provide maximum
nondiscrimination protections for workers. A talent management
assessment company commented that the ``maximum extent permitted by
law'' standard was vague and left too much discretion to the agency
charged with enforcement.
OFCCP did not intend, in proposing the rule of construction at
Sec. 60-1.5(e), to create any new legal obligation or proscription on
the rights of workers, but rather sought only to reaffirm existing
protections found in federal law that already apply to OFCCP. The
parallel rule of construction in RLUIPA has been in place for nearly 20
years and has proved to be a workable legal standard. OFCCP emphasizes
that this rule of construction provides for broad protection of both
employers' and employees' religious exercise. Moreover, by its terms,
the provision limits the agency's interpretation of this protection to
what is permitted under the U.S. Constitution, RFRA, and other
applicable laws. It thus reflects the Supreme Court's recognition that,
within the religion clauses of the First Amendment, there is ``room for
play in the joints productive of a benevolent neutrality which will
permit religious exercise to exist without sponsorship and without
interference.'' Walz, 397 U.S. at 669. Accordingly, for the reasons
described above and in the NPRM, considering the comments received,
OFCCP finalizes the proposed rule of construction without modification.
C. Severability
The Department has decided to include severability provisions as
part of this final rule. To the extent that any provision of this final
rule is declared invalid by a court of competent jurisdiction, the
Department intends for all other provisions that are capable of
operating in the absence of the specific provision that has been
invalidated to remain in effect. Severability clauses have been added
at the end of 41 CFR 60-1.3 and as a new paragraph, 41 CFR 60-1.5(f).
III. Other Comments
Numerous commenters raised a variety of other general points about
the proposed rule.
A. Religious Liberty for Employees
Several commenters opposed the proposed rule as undermining or
failing to promote religious liberty. For instance, a group of U.S.
Senators commented that the proposed rule will allow employers to
refuse to interview even highly qualified candidates simply because
they do not regularly attend religious services in their employer's
faith. According to the Senators, this could create a situation in
which religious employers are allowed to discriminate against workers
``who practice their faith differently--a fundamental right guaranteed
by the Constitution.'' A religious women's organization echoed this
concern and also stated that the proposed rule would promote one
interpretation of one religion--namely, evangelical Christianity--at
the expense of religious liberty more broadly. Some commenters stated
that the proposal would allow contractors to compel employees to follow
their religious practices, which they argued directly violates Title
VII and even the Constitution. A group of state attorneys general
commented that, under the proposed rule, employers' religious freedom
would come at the cost of the loss of the religious freedom of
employees forced to abide by their employers' religious beliefs. A
legal professional organization commented that the proposed rule would
protect for-profit or nominally religious employers' right to require
employees to participate in prayer or other religious practices. A
religious organization commented that employers could invoke the
religious exemption to coerce their workers into participating in
certain religious practices under the threat of termination. Several
other commenters, including a legal professional association, an
organization that advocates separation of church and state, an anti-
bigotry religious organization, and a migrants' rights organization,
expressed general concern that the proposed rule would weaken religious
liberty.
OFCCP believes that the final rule's overall effect will be to
promote religious liberty. See, e.g., Hobby Lobby, 573 U.S. at 707
(``[P]rotecting the free-exercise rights of corporations like Hobby
Lobby, Conestoga, and Mardel protects the religious liberty of the
humans who own and control those companies.''). The Supreme Court has
described the expansion of the Title VII religious exemption as
``lifting a regulation that burdens the exercise of religion.'' Amos,
483 U.S. 327, 338 (1987). As described above, the proposed definitions
have been altered in the final rule to respond to commenters' concerns
that nominally religious employers might qualify for the exemption, as
well as to clarify the steps OFCCP will take in analyzing claims of
discrimination by religious contractors. To the extent that commenters
believe that the religious exemption itself increases employers'
religious liberty at the expense of employees' religious liberty, OFCCP
reiterates that it is required to administer the religious exemption as
part of E.O. 11246. The President, following Congress's lead, has
already decided how to balance the religious liberty of religious
employers and their employees, and OFCCP cannot modify that.
Additionally, claiming the
[[Page 79361]]
religious exemption and taking employment action under its protections
is purely optional for employers; the government does not require any
employment action that may be protected by the exemption.
B. Establishment Clause and Other Constitutional Questions
Several commenters stated that the proposal violates constitutional
prohibitions on aiding private actors that discriminate. This concern
was shared by an affirmative action professionals association, a civil
liberties organization, a professional organization of educators, and
an organization that advocates separation of church and state, among
others. The civil liberties organization commented, for instance, that
the proposed rule would permit contractors to discriminate with federal
funds, thus putting the government's imprimatur on discrimination in
violation of the Equal Protection and Establishment Clauses.
A variety of commenters opposed the proposed rule on the basis that
it violates the Establishment Clause and/or general church-state
separation principles. For instance, an atheist civil liberties
organization commented that the proposed rule will violate the
Constitution's religion clauses by involving the government in
religious practice, promoting dominant religious practices, burdening
unpopular religious practices, and harming third parties. Similarly, a
labor union raised concerns that the rule crosses into territory
proscribed by the Establishment Clause by authorizing federal
contractors to advance their religious preferences and practices
through the receipt of federal funds and the performance of public
functions.
Other commenters stated that the proposed rule violates separation
of powers. For instance, an LGBT rights advocacy organization stated
that since 2001, Congress has repeatedly rejected efforts to extend the
Title VII exemption to government-funded entities. Likewise, a
consortium of federal contractors and subcontractors asserted that it
would be inappropriate for OFCCP to regulate the religious exemption
without direct and actual legislative or constitutional guidance.
Finally, several commenters, including an anti-bigotry religious
organization and a civil liberties and human rights legal advocacy
organization, raised concerns that the proposal violates a variety of
other constitutional principles, including the no-religious-tests
clause, the free speech clause, and the constitutional right of
privacy.
Other commenters supported the proposed rule as consistent with
constitutional principles. These commenters stated, among other things,
that the proposal appropriately respects freedom of religion, helpfully
clarifies that religious hiring protections apply even when federal
funding is involved, and is consistent with the Establishment Clause. A
religious liberties legal organization commented, for instance, that
the proposed rule adheres to the traditional understanding that ``the
Constitution [does not] require complete separation of church and
state; it affirmatively mandates accommodation, not merely tolerance,
of all religions, and forbids hostility toward any'' (quoting Lynch v.
Donnelly, 465 U.S. 668, 668 (1984)). A religious leadership and policy
organization commented that the proposal reflects an accurate
understanding of the free exercise of religion and ``its place in our
society.''
OFCCP agrees with the commenters who stated that the proposal is
consistent with constitutional principles. As noted in the NPRM and
above, OFCCP believes that the final rule is supported by recent
Supreme Court decisions that protect religion-exercising organizations
and individuals under the U.S. Constitution and federal law. See, e.g.,
Little Sisters of the Poor, 140 S. Ct. 2367; Espinoza, 140 S. Ct. 2246;
Our Lady of Guadalupe, 140 S. Ct. 2049; Masterpiece Cakeshop, 138 S.
Ct. 1719; Trinity Lutheran, 137 S. Ct. 2012; Hobby Lobby, 573 U.S. 682;
Hosanna-Tabor, 565 U.S. 171. These decisions make clear, among other
constitutional principles, that ``condition[ing] the availability of
benefits upon a recipient's willingness to surrender his religiously
impelled status effectively penalizes the free exercise of his
constitutional liberties.'' Trinity Lutheran, 137 S. Ct. at 2022
(alterations omitted) (quoting McDaniel, 435 U.S. at 626 (plurality
opinion)); see also Espinoza, 140 S. Ct. at 2256. OFCCP believes that
the final rule achieves consistency with these landmark Supreme Court
decisions and is constitutionally valid. Moreover, the definitions and
rule of construction adopted in the final rule will help OFCCP avoid
the ``constitutional minefield'' into which some courts have fallen
when adjudicating Title VII claims against religious organizations.
World Vision, 633 F.3d at 730 (O'Scannlain, J., concurring). The final
rule will enable OFCCP to apply the religious exemption without
engaging in an analysis that would be inherently subjective and
indeterminate, outside its competence, susceptible to discrimination
among religions, or prone to entanglement with religious activity. See,
e.g., Mitchell v. Helms, 530 U.S. 793, 828 (2000) (plurality opinion);
Colo. Christian Univ. v. Weaver, 534 F.3d 1245, 1261-62 (10th Cir.
2008); Great Falls, 278 F.3d at 1342-43. We address these points in
more detail next.
1. Neutrality Toward Religion
The rule does not impermissibly favor religion. In Bowen v.
Kendrick, 487 U.S. 589 (1988), the Supreme Court held that a religious
organization is not disqualified from government programs that fund
religious and nonreligious entities alike on a neutral basis. A
``neutral basis'' means that the criteria are neutral and secular, with
no preference for religious institutions because of their religious
character. Id.; see also Rosenberger v. Rector & Visitors of Univ. of
Va., 515 U.S. 819 (1995) (``A central lesson of our decisions is that a
significant factor in upholding governmental programs in the face of
Establishment Clause attack is their neutrality towards religion.'');
U.S. Dep't of Justice, Office of Legal Counsel, Religious Restrictions
on Capital Financing for Historically Black Colleges and Universities,
2019 WL 4565486 (Aug. 15, 2019) (``Religious Restrictions'') (``The
neutrality principle runs throughout the Court's decisions, and is
broadly consistent with a tradition of federal support for religious
institutions that dates from the time of the Founding.'').
This rule is motivated by legitimate secular purposes: To expand
the eligible pool of federal contractors to include religious
organizations, so that the federal government may choose from among
competing vendors the best combination of price, quality, reliability,
and other purely secular criteria; to clarify the law for religious
organizations and thus reduce compliance burdens; to correct any
misperception that religious organizations are disfavored in government
contracting; and ``to alleviate significant governmental interference
with the ability of religious organizations to define and carry out
their religious missions,'' Amos, 483 U.S. at 336, by appropriately
protecting their autonomy to hire employees who will further their
religious missions. The final rule also has a religion-neutral effect.
Under the final rule, both religious and secular organizations will
retain the ability to bid on government contracts. Proposed vendors
will have to compete solely on the basis of secular criteria. The use
of sectarian criteria remains forbidden; nothing in the
[[Page 79362]]
proposed rule sanctions the use of sectarian criteria for contract
awards.
2. Secular and Sectarian Activities
Nothing in the final rule sanctions direct federal funding of
religious activities. In Kendrick, the Court forbade such direct
funding of religious activity but upheld a statute authorizing payments
to religious organizations that sought to eliminate or reduce the
social and economic problems caused by teenage sexuality because the
services to be provided under the statute were ``not religious in
character.'' Kendrick, 487 U.S. at 605; see also U.S. Dep't of Justice,
Office of Legal Counsel, Department of Housing and Urban Development
Restrictions on Grants to Religious Organizations that Provide Secular
Social Services, 12 Op. O.L.C. 190, 199 (1998) (concluding that the
government can fund a religious organization's secular activities if
they can be meaningfully and reasonably separated from the sectarian
activities). Likewise here, in the relatively rare circumstances in
which a proposed vendor both qualifies as a religious organization and
receives a federal contract, the federal funds will pay the
organization to fulfill the terms of the secular contract, not to pray
or to proselytize.
Moreover, the Establishment Clause does not forbid the federal
government from contracting with religious organizations for a secular
purpose, even if the receipt of the contract incidentally helps the
religious organization advance its sectarian purpose. As Kendrick
explained, ``Nothing in our previous cases prevents Congress from . . .
recognizing the important part that religion or religious organizations
may play in resolving certain secular problems. . . . To the extent
that this congressional recognition has any effect of advancing
religion, the effect is at most `incidental and remote.' '' 487 U.S. at
607; see, e.g., Roemer v. Bd. of Pub. Works of Md., 426 U.S. 736 (1976)
(``[R]eligious institutions need not be quarantined from public
benefits that are neutrally available to all.''); Barnes-Wallace v.
City of San Diego, 704 F.3d 1067 (9th Cir. 2012) (finding no
Establishment Clause violation where city leased land to both secular
and sectarian organizations). Here, as in Kendrick, nothing in the
final rule ``indicates that a significant proportion of the federal
funds will be disbursed to `pervasively sectarian' institutions.''
Kendrick, 487 U.S. at 610. There are also no concerns that funds will
be used for an ``essentially religious endeavor''; rather, funds will
be used to fulfill the government' secular contracting requirements.
Espinoza, 140 S. Ct. at 225. The rule simply allows religious
organizations to compete with secular organizations on the basis of
secular criteria without being forced to compromise their religious
purpose. Commenters objecting on this basis are dissatisfied with the
existence of the exemption.
3. Respecting the First Amendment
Of great significance to OFCCP, the rule's clarifications and
accommodations better comport with the Free Exercise Clause by
affording religious organizations an appropriate level of autonomy in
their hiring decisions while still permitting them to engage in federal
contracting. As the Court explained in Trinity Lutheran, 137 S. Ct. at
2022, the government violates the Free Exercise Clause when it
conditions a generally available public benefit on an entity's giving
up its religious character, unless that condition withstands the
strictest scrutiny. ``[D]enying a generally available benefit solely on
account of religious identity imposes a penalty on the free exercise of
religion that can be justified only by a state interest of the highest
order.'' Id.; see also Locke v. Davey, 540 U.S. 712 (2004) (holding
government may not deny generally available funding to a sectarian
institution because of its religious character); Trinity Lutheran, 137
S. Ct. at 2021 (``The Department's policy expressly discriminates
against otherwise eligible recipients by disqualifying them from a
public benefit solely because of their religious character. . . .
[S]uch a policy imposes a penalty on the free exercise of religion that
triggers the most exacting scrutiny.'' (citing Lukumi, 508 U.S. at
546)). When the government conditions a program in this way, the
government ``has punished the free exercise of religion. ``To condition
the availability of benefits . . . upon [a recipient's] willingness to
. . . surrender[] his religiously impelled [status] effectively
penalizes the free exercise of his constitutional liberties.'' Id. at
2022 (quoting McDaniel, 435 U.S. at 626 (plurality opinion)); cf.
Trinity Lutheran, 137 S. Ct. at 2022 (citing Ne. Fla. Chapter,
Associated Gen. Contractors of Am. v. Jacksonville, 508 U.S. 656, 666
(1993) (``[T]he `injury in fact' is the inability to compete on an
equal footing in the bidding process, not the loss of a contract.'')).
In a recent opinion, the Department of Justice's Office of Legal
Counsel concluded that the government violates the Free Exercise Clause
by denying sectarian organizations an opportunity to compete on equal
footing for federal dollars. See Religious Restrictions, 2019 WL
4565486. As an initial matter, OLC explained that ``[t]he Establishment
Clause permits the government to include religious institutions, along
with secular ones, in a generally available aid program that is secular
in content. There is nothing inherently religious in character about
loans for capital improvement projects; this is not a program in which
the government is `dol[ing] out crosses or Torahs to [its] citizens.'
'' Id. at *6 (citing Am. Atheists, Inc. v. City of Detroit Downtown
Dev. Auth., 567 F.3d 278, 292 (6th Cir. 2009)). Because the capital-
financing program at issue was a secular, neutral aid program, it did
not violate the Establishment Clause. On the other hand, the government
would violate the Free Exercise Clause by denying loans to an
institution ``in which a substantial portion of its functions is
subsumed in a religious mission,'' because such a restriction
``discriminates based on the religious character of an institution.''
OLC concluded that the appropriate balance was to deny loans under the
program only for facilities that are predominantly used for devotional
religious activity, or for facilities that offer only programs of
instruction devoted to vocational religious education.
Here, some commenters made clear that the federal government's
current practice presented religious organizations with a dubious
choice: They may participate in the government contracting process or
retain their religious integrity, but not both. As one commenter noted,
``If the best service provider or subcontractor happens to be a
religious entity, they are often unwilling to comply with the federal
anti-discrimination laws for fear that they will no longer be able to
preserve the integrity of their organizations. This is a direct result
of the uncertainty in the applicability of the religious exemption
under the current law.'' Similarly, another commenter, an association
of medical professionals, recently surveyed health professional members
working in faith-based organizations overseas and found that almost
half, 49%, feel that the U.S. government is not inclined to work with
faith-based organizations. The final rule thus removes any such
concerns raised by contractors and instead provides appropriate
religious accommodation.
4. Use of Federal Funds
Some commenters expressed concern that the rule would allow
employers to use federal funds to discriminate against job applicants
and employees on the
[[Page 79363]]
basis of religion. That is a critique of the E.O. 11246 religious
exemption itself, not this rule. OFCCP cannot and does not by this rule
reopen that determination by the President. Additionally, as noted
earlier, claiming the religious exemption and taking employment action
under its protections is purely optional for employers; the government
does not require any employment action that may be protected by the
exemption.
Regardless, as the Department of Justice's Office of Legal Counsel
has pointed out, the federal government has repeatedly permitted
religious organizations to receive federal funds while also maintaining
autonomy over their hiring practices. See 31 O.L.C. 162, 185-86 (2007);
accord Office of the Att'y Gen., Memorandum for All Executive
Departments and Agencies: Federal Law Protections for Religious Liberty
at 6 (Oct. 6, 2017), available at www.justice.gov/opa/press-release/file/1001891/download. Likewise, the proposed rule does not run afoul
of the Establishment Clause merely because of the possibility that, in
some rare instance, a court may determine that a particular contract
award to a religious organization impermissibly endorses religion.
``[W]hile religious discrimination in employment might be germane to
the question whether an organization's secular and religious activities
are separable in a government-funded program, that factor is not
legally dispositive.'' U.S. Dep't of Justice, Office of Legal Counsel,
Memorandum for William P. Marshall from Randolph D. Moss at 20 (Oct.
12, 2000), available at justice.gov/olc/page/file/936211/download. To
the contrary, if the government ``is generally indifferent to the
criteria by which a private organization chooses its employees and to
the identity and characteristics of those employees, there would be
less likelihood that the government could reasonably be perceived to
endorse the organization's use of religious criteria in employment
decisions.'' Id. at 25. And in some situations, the religious exemption
``might be a permissible religious accommodation that alleviates
special burdens rather than an impermissible religious preference.''
Id. at 30. For instance, the Office of Legal Counsel concluded that
RFRA in one instance required the Department's grant-making arm to
exempt a religious organization from the religious nondiscrimination
provisions of Title VII. See id.; see also 31 O.L.C. 162, 190 (2007).
Here, several religious organizations commented that the current
contracting rules erect a barrier to participation by eroding their
ability to hire members of their particular faith. Generally speaking,
then, OFCCP, in line with case law from Amos to Trinity Lutheran, views
this rule as merely providing permissible accommodation rather than
impermissibly establishing religion.
5. Effects on Applicants and Employees
Finally, several commenters opposed the proposed rule on the basis
that it would increase discrimination against contractors' employees
and applicants. Some cited historical discrimination against
disadvantaged groups, warning that the proposal would cause a
regression in civil rights protections, and stated that religion has
often been used as a way to justify discrimination. For example, an
affirmative action professionals association asserted that employment
discrimination permitted by the proposed rule could eliminate the civil
rights protections that minorities and women have enjoyed for decades.
Commenters also gave examples of how potential discrimination could
play out. For example, an organization advocating for the separation of
church and state commented that, for instance, an evangelical Christian
might refuse to hire a gay man, but agree to hire a twice-divorced,
thrice-married man, even though both homosexuality and divorce are
prohibited by evangelical Christianity. An LGBT civil rights
organization argued that even a construction company, janitorial
service, or low-level healthcare provider could claim a religious
mission and refuse to hire or provide services to single parents or
individuals who become pregnant outside marriage or within a same-sex
relationship.
Many commenters warned that adoption of the proposed rule would
increase discrimination against lesbian, gay, bisexual, transgender,
and queer (LGBTQ) individuals, specifically. Some commenters alleged
that the proposed rule was part of a concerted effort to roll back the
rights of LGBTQ individuals and other disadvantaged groups. Several
commenters stated that transgender employees in particular already face
high rates of discrimination and poverty, and that this proposal would
leave them even more vulnerable. A transgender civil rights and
advocacy organization commented specifically that transgender people
are already far more likely to be unemployed, and that approximately 1
in 4 earn less than $24,000 per year. A women and family rights
advocacy organization wrote that, currently, almost half of LGBTQ
workers report actively concealing their identity out of fear of
discrimination, and that the proposal would exacerbate this issue.
Commenters wrote that effects might include LGBTQ individuals being
less inclined to seek HIV care and services for the aging, as well as
facing increased vulnerability to trafficking. Others stated that the
proposal would permit contractors to discriminate against people in
same-sex relationships, including refusing to hire applicants,
terminating employees when they marry someone of the same sex, or
denying spousal benefits. Several commenters stated that even LGBTQ
people of faith would be discriminated against.
Commenters also asserted that the proposed rule could increase
discrimination against women and pregnant people based on religious
beliefs about work, family roles, and reproduction. This included the
possibility of discrimination against women for becoming pregnant
outside of marriage, using contraception, using in vitro fertilization,
seeking abortions, or getting divorced. An organization combatting
hunger wrote that even facially neutral practices may
``disproportionately'' harm women, because when an employer opposes
``sexual practices out of wedlock, those who bear the physical
evidence--pregnancy--are going to be the ones that get fired.'' Several
commenters also stated that employers may discriminate against women
based on religious beliefs that women should not work outside the home.
For example, a women and family rights advocacy organization commented
that some employers may refuse to hire women altogether, and that women
may also be denied health insurance, professional growth opportunities,
or other benefits because of an employer's belief that women are not
the ``head of the household'' and therefore do not need such benefits.
Additionally, an interfaith policy and advocacy organization commented
that an employer could cite a belief that women should not be alone
with men they are not married to in order to deny female employees
access to mentorship, training opportunities, and senior leadership
positions in the workplace.
Commenters also asserted that the proposal would increase
discrimination against religious minorities and/or atheists. Many
stated that federal contractors should not be permitted to
categorically exclude applicants of a particular religion. A
transgender civil rights and advocacy organization commented that the
proposed rule would promote sectarianism by allowing people of
different faiths to
[[Page 79364]]
discriminate against one another. A number of commenters, including a
civil liberties advocacy group and an interfaith policy and advocacy
organization, commented: ``Federal contractors should not be allowed to
hang a sign that says `Jews, Sikhs, Catholics, Latter-day Saints need
not apply.' ''
Many commenters asserted that the proposal could allow racial
discrimination as well. An organization combatting hunger claimed that
discrimination would occur by citing a 2014 study in their comment
which found that only 10% of Americans were comfortable permitting a
small business to refuse service to African-Americans based on a
religious reason. Commenters including an LGBTQ wellness organization
also warned that, under the proposal, a religious contractor will be
permitted to discriminate against interracial couples if it believes
that marriage should be between a man and a woman of the same race. A
legal think tank commented that employers could require employees to
join a majority- or exclusively-white church, for instance, or to share
particular religious beliefs that have racial implications and/or are
more common among white Christians.
Some commenters argued that federal funds should not be used by
contractors who may commit hiring discrimination. For example, a
transgender advocacy organization commented that people should not be
legally compelled to financially support entities that would refuse to
employ them because of their identities, and noted that religious
employers who seek to employ only ``their own kind'' should seek out
non-federal funding. Other commenters stated that U.S. federal
government contracting serves as a model for the private sector or
foreign nations, which may emulate discriminatory practices permitted
by this proposal.
As explained above, the religious exemption generally speaking does
not excuse a contractor from complying with E.O. 11246's requirements
regarding antidiscrimination and affirmative action; notices to
applicants, employees, and labor unions; compliance with OFCCP's
implementing regulations; the furnishing of reports and records to the
government; and flow-down clauses to subcontractors. See E.O. 11246
Sec. Sec. 202-203. Religious organizations that serve as government
contractors must comply with all of E.O. 11246's nondiscrimination
requirements except in some narrow respects, under some narrow and
reasonable circumstances recognized under law, where religious
organizations maintain, for instance, sincerely held religious tenets
regarding matters such as marriage and intimacy which may implicate
certain protected classes under E.O. 11246.
Some commenters argued that the proposed rule would violate the
Establishment Clause specifically because of the increased
discrimination they believed it would permit. Most of these commenters
argued that potential discrimination will unconstitutionally burden
third parties, including employees, applicants, and beneficiaries of
contracting services. A labor union wrote that granting employers a
broad religious exemption would harm employees and applicants based on
their own religious beliefs and practices (or lack thereof), in
violation of the Establishment Clause.
As noted above, the Supreme Court upheld Title VII's religious
exemption, on which E.O. 11246's exemption is modeled, against an
Establishment Clause challenge. Amos, 483 U.S. at 330. It did so in
spite of the fact that the application of the exemption ``had some
adverse effect on those holding or seeking employment with those
organizations.'' Tex. Monthly, Inc. v. Bullock, 489 U.S. 1, 18 n.8
(1989); cf. Amos, 483 U.S. at 338-39 (rejecting the claim that the
religious exemption ``offends equal protection principles by giving
less protection to the employees of religious employers than to the
employees of secular employers'' in part because the exemption had ``a
permissible purpose of limiting governmental interference with the
exercise of religion''). If the E.O. 11246 religious exemption
similarly affects some third parties, it does so to ``prevent[ ]
potentially serious encroachments on protected religious freedoms.''
Texas Monthly, 489 U.S. at 18 n.8.
Some commenters stated that what they viewed as the proposal's
failure to consider the effects of increased discrimination made the
proposed rule inconsistent with OFCCP's previous rulemakings. Multiple
commenters stated that previous rulemakings identified discrimination
as wasteful of taxpayers' money, and that this proposal failed to
address this issue. For example, a state civil liberties organization
commented that, in prior rules, OFCCP has consistently stated that
discrimination in government contracting wastes taxpayer funds by
preventing the hiring of the best talent, increasing turnover, and
decreasing productivity. In addition, several commenters, including a
women and family rights advocacy organization, referred to the rule as
an ``abrupt departure'' from OFCCP's previous EEO enforcement. A civil
liberties organization commented that the ``Department itself has
previously acknowledged the harms of discrimination to the country as a
whole, but ignores them entirely in the Proposed Rule.'' An LGBT legal
services organization commented that the proposed rule indicates that
OFCCP will not enforce the relevant protections sufficiently.
Some commenters noted more specifically that they believe the
proposal is inconsistent with the agency's rule implementing E.O.
13672, which added sexual orientation and gender identity to the bases
protected by E.O. 11246. For example, a legal think tank commented
that, in its rule on sexual orientation and gender identity, OFCCP took
into account the benefits of nondiscrimination--meaning that it would
be arbitrary and capricious for OFCCP to ignore these benefits of non-
discrimination ``in the present rulemaking.'' A watchdog organization
wrote that ``undoing these protections could have adverse long-term
effects on the federal contracting system, including lower-quality
goods and services, and impaired federal programs and missions.''
Commenters also criticized the proposal as purportedly inconsistent
with OFCCP's 2016 sex discrimination rule. A civil liberties
organization commented that, in that rule, the agency cited social
science research supporting the need for effective nondiscrimination
enforcement. Similarly, a legal think tank wrote that, in its sex
discrimination rulemaking, OFCCP specifically cited research indicating
that employment discrimination against transgender workers is
pervasive. These commenters asserted that OFCCP ignored such statistics
in proposing the current rule.
OFCCP continues to believe that discrimination by federal
contractors generally has a negative impact on the economy and
efficiency of government contracting. Indeed, that is one of the
primary justifications for E.O. 11246. However, it has long been
recognized that a religious exemption in the Executive Order is also
warranted, Congress has determined that accommodations under RFRA are
sometimes required, and OFCCP's policy is to respect the religious
dignity of employers and employees to the maximum extent permissible by
law. Further, OFCCP believes that this rule will have a net benefit to
the economy and efficiency of government contracting. For those current
and potential federal contractors and subcontractors interested in the
[[Page 79365]]
exemption, this rule will help them understand its scope and
requirements and may encourage a broader pool of organizations to
compete for government contracts and more of them, which will inure to
the government's benefit.
Commenters' concerns here are also exaggerated. As explained above,
OFCCP does not anticipate this rule will affect the vast majority of
contractors or the agency's regulation of them, since they do not and
would not seek to qualify for the religious exemption. As commenters
noted, religious organizations do not appear to be a large portion of
federal contractors. And even for them, adherence to E.O. 11246's
nondiscrimination provisions is required except in those circumstances
well-established under law, including the religious exemption, the
ministerial exception, and RFRA. OFCCP also reemphasizes that the
proposed definitions have been altered in the final rule to respond to
commenters' concerns that nominally religious employers might qualify
for the exemption, as well as to clarify the steps OFCCP will take in
analyzing claims of discrimination by religious contractors. As
explained in more detail in the Regulatory Procedures section below,
OFCCP has considered the possible adverse effects of the rule and
believes they will be minimal and will be outweighed by the benefits.
C. The Equal Employment Opportunity Commission
Some commenters raised concerns about this rule's compatibility
with the positions of the EEOC. Different aspects of this concern have
been described and addressed in earlier parts of this preamble. OFCCP
consolidates those concerns and addresses them here as well. Those
concerns included general concerns that the proposed rule would
undermine the EEOC's efforts by taking positions contrary to the EEOC
or that the proposed rule would introduce confusion by subjecting
federal contractors to conflicting or at least different legal regimes.
Commenters also objected to specific aspects of the rule on grounds
that they differed from the EEOC's position, including the proposed
rule's inclusion of for-profit entities as among those able to qualify
for the religious exemption, the proposed rule's disagreement that the
exemption's scope is limited to a coreligionist preference, and the
proposed rule's but-for causation standard.
OFCCP has a decades-long partnership with the EEOC and works
closely with it to ensure equal employment opportunity for American
workers. OFCCP rejects the idea that this rule would undermine that
longstanding and constructive partnership. The EEOC reviewed the
proposed rule and this final rule. This final rule applies only to
government contractors and subcontractors, not the broader swath of
U.S. employers that the EEOC regulates. Within that smaller segment of
employers, it applies only to that small minority of contractors and
subcontractors that qualify or may seek to qualify for the religious
exemption. Among that group, they would need to have 15 or more
employees to be covered by the EEOC. And within that group, there would
still need to be a situation in which any differences between the views
of OFCCP and EEOC would cause a different result. In short, OFCCP
doubts this rule will create any systemic disharmony between the
agencies' enforcement programs.
For the small universe of employers remaining as defined above, the
differences that may exist are minor. At the outset, OFCCP notes that
EEOC does not have substantive rulemaking authority under Title VII,
see EEOC v. Arabian Am. Oil Co., 499 U.S. 244, 257 (1991), and the EEOC
statements on this issue are in nonbinding subregulatory guidance. As
to the specifics of that guidance, the differences that do exist are
small. OFCCP has revised its approach in the final rule to adopt a
motivating-factor standard of causation, so a difference there,
assuming there was one, no longer exists. Regarding OFCCP's definition
of Religious corporation, association, educational institution, or
society, the EEOC's current subregulatory guidance on this topic has
not been updated since 2008, before World Vision and Hobby Lobby were
decided.\31\ Contrary to some commenters' assertions, this guidance
treats for-profit status as a significant factor, but not as
dispositive; this final rule does the same. Notably, the EEOC very
recently issued a proposal to update its compliance manual on religious
discrimination.\32\ This rule is not inconsistent with the proposal
either, which notes that ``[t]he religious organization exemption under
Title VII does not mention nonprofit and for-profit status'' and states
that ``[w]hether a for-profit corporation can constitution a religious
corporation under Title VII is an open question.'' \33\ The EEOC's 2008
guidance states that the exception is only for organizations that are
primarily religious. Its recently proposed guidance describes the
inquiry as one into ``whether an entity is religious.'' \34\ OFCCP's
test also seeks to identify organizations that are primarily
religious--through an appropriately guided, reliable, and objective
inquiry. The EEOC's 2008 guidance (and its proposed guidance) suggests
an open-ended set of non-dispositive factors, while this final rule
uses a set of clearly defined factors that are sufficient for non-
profit entities; regarding for-profit entities, additional evidence
compatible with some of the additional factors listed by the EEOC's
2008 guidance may come into play. Insofar as any difference still
remains between this final rule and EEOC's 2008 guidance, OFCCP
believes that difference is tolerable when weighed against the
subsequent developments in the case law, the reasoning of which OFCCP
finds persuasive, and OFCCP's desire for a more structured test,
especially given OFCCP's unique contract-based regulatory structure.
---------------------------------------------------------------------------
\31\ See EEOC, Questions and Answers: Religious Discrimination
in the Workplace (July 22, 2008), www.eeoc.gov/laws/guidance/questions-and-answers-religious-discrimination-workplace; EEOC, EEOC
Compliance Manual Sec. 12-I.C.1 (July 22, 2008), www.eeoc.gov/laws/guidance/section-12-religious-discrimination. The EEOC's website
states for both these documents that, ``[a]s a result of the Supreme
Court's decision in Our Lady of Guadalupe School v. Morrissey-Berru,
we are currently working on updating this web page.'' Id.
\32\ See EEOC, ``PROPOSED Updated Compliance Manual on Religious
Discrimination'' (Nov. 17, 2020), https://beta.regulations.gov/document/EEOC-2020-0007-0001 (last accessed November 18, 2020).
\33\ Id. at 21.
\34\ Id. at 20.
---------------------------------------------------------------------------
Regarding OFCCP's definition of Particular religion, the same EEOC
guidance documents from 2008 state that the religious exemption ``only
allows religious organizations to prefer to employ individuals who
share their religion.'' It then addresses two religiously based views
that are not protected by the exemption: Racial discrimination and
differences in fringe benefits between men and women. This final rule
is fully compatible with both those examples. As discussed earlier in
this preamble, OFCCP always has a compelling interest in enforcing
prohibitions on racial discrimination, and OFCCP endorses the result in
Fremont, 781 F.2d 1362. This final rule, however, does provide an
exemption broader than a mere coreligionist hiring preference. OFCCP
believes, for the reasons stated earlier in this preamble, that that
view is sufficiently supported by the Title VII case law, and in fact
is the more persuasive view of the law. OFCCP also believes that a
broader view is more likely to encourage religious organizations to
enter the pool of competitors for government contracts, which benefits
the government. For
[[Page 79366]]
these reasons, OFCCP believes that any issues arising from any
differences with the EEOC's views as stated in subregulatory guidance
from 2008 are outweighed by the benefits of adopting a broader view of
the exemption. Additionally, OFCCP believes any differences on this
issue may be resolved in the near future. The EEOC's proposed guidance
is even more consistent with OFCCP's final rule. The proposed guidance
states that ``the exemption allows religious organizations to prefer to
employ individuals who share their religion, defined not by the self-
identified religious affiliation of the employee, but broadly by the
employer's religious observances, practices, and beliefs.'' \35\ The
guidance goes on to state that ``[t]he prerogative of a religious
organization to employ individuals `` `of a particular religion' . . .
has been interpreted to include the decision to terminate an employee
whose conduct or religious beliefs are inconsistent with those of its
employer.'' \36\
---------------------------------------------------------------------------
\35\ EEOC, ``PROPOSED Updated Compliance Manual on Religious
Discrimination'' at 24.
\36\ Id. (citing Hall, 215 F.3d at 625; Little, 929 F.3d at
951).
---------------------------------------------------------------------------
OFCCP also believes some commenters mischaracterize any differences
between the OFCCP and EEOC in this area as presenting contractors with
conflicting liability. OFCCP's final rule is at least as, or more,
protective of religious organizations than the view stated in the
EEOC's guidance. A contractor can choose to adhere to the view
articulated by the EEOC in 2008 and be in full compliance under the
view of both agencies.
Finally, OFCCP must balance its coordination with the EEOC with its
need to follow directives from the President and the U.S. Department of
Justice. Section 4 of Executive Order 13798 states that ``[i]n order to
guide all agencies in complying with relevant Federal law, the Attorney
General shall, as appropriate, issue guidance interpreting religious
liberty protections in Federal law.'' The Attorney General issued such
guidance on October 6, 2017, ``to guide all administrative agencies and
executive departments in the executive branch.'' Office of the Att'y
Gen., Memorandum for All Executive Departments and Agencies: Federal
Law Protections for Religious Liberty at 1 (Oct. 6, 2017), available at
www.justice.gov/opa/press-release/file/1001891/download. This rule is
fully compatible with that guidance:
Religious corporations, associations, educational institutions,
and societies--that is, entities that are organized for religious
purposes and engage in activity consistent with, and in furtherance
of, such purposes--have an express statutory exemption from Title
VII's prohibition on religious discrimination in employment. Under
that exemption, religious organizations may choose to employ only
persons whose beliefs and conduct are consistent with the
organizations' religious precepts. For example, a Lutheran secondary
school may choose to employ only practicing Lutherans, only
practicing Christians, or only those willing to adhere to a code of
conduct consistent with the precepts of the Lutheran community
sponsoring the school. Indeed, even in the absence of the Title VII
exemption, religious employers might be able to claim a similar
right under RFRA or the Religion Clauses of the Constitution.
Id. at 6; see also id. at 12a-13a
IV. Regulatory Procedures
A. Executive Order 12866 (Regulatory Planning and Review), Executive
Order 13563 (Improving Regulation and Regulatory Review), and Executive
Order 13771 (Reducing Regulation and Controlling Regulatory Costs)
Under Executive Order 12866 (E.O. 12866), OMB's Office of
Information and Regulatory Affairs (OIRA) determines whether a
regulatory action is significant and, therefore, subject to the
requirements of E.O. 12866 and OMB review. Section 3(f) of E.O. 12866
defines a ``significant regulatory action'' as an action that is likely
to result in a rule that: (1) Has an annual effect on the economy of
$100 million or more, or adversely affects in a material way a sector
of the economy, productivity, competition, jobs, the environment,
public health or safety, or State, local or tribal governments or
communities (also referred to as economically significant); (2) creates
serious inconsistency or otherwise interferes with an action taken or
planned by another agency; (3) materially alters the budgetary impacts
of entitlement grants, user fees, or loan programs, or the rights and
obligations of recipients thereof; or (4) raises novel legal or policy
issues arising out of legal mandates, the President's priorities, or
the principles set forth in E.O. 12866. This final rule has been
designated a ``significant regulatory action'' although not
economically significant, under section 3(f) of E.O. 12866. The Office
of Management and Budget has reviewed this final rule. Pursuant to the
Congressional Review Act (5 U.S.C. 801 et seq.), OIRA designated this
rule as not a ``major rule,'' as defined by 5 U.S.C. 804(2).
Executive Order 13563 (E.O. 13563) directs agencies to adopt a
regulation only upon a reasoned determination that its benefits justify
its costs; tailor the regulation to impose the least burden on society,
consistent with obtaining the regulatory objectives; and in choosing
among alternative regulatory approaches, select those approaches that
maximize net benefits. E.O. 13563 recognizes that some benefits are
difficult to quantify and provides that, where appropriate and
permitted by law, agencies may consider and discuss qualitatively
values that are difficult or impossible to quantify, including equity,
human dignity, fairness, and distributive impacts.
This final rule is an E.O. 13771 deregulatory action because it is
expected to reduce compliance costs and potentially the cost of
litigation for regulated entities.
1. The Need for the Regulation
As discussed in the preamble, OFCCP received numerous comments
addressing the need for the regulation. Some commenters stated the
proposal was necessary to ensure religious entities could contract with
the federal government without compromising their religious identities
or missions. Some commenters also agreed with OFCCP's observation that
religious organizations have been reluctant to participate as federal
contractors because of the lack of clarity or perceived narrowness of
the E.O. 11246 religious exemption.
OFCCP also received comments objecting to the proposal because they
claimed it would permit taxpayer- or government-funded discrimination.
Commenters argued that the Government should not allow federal
contractors to fire or refuse to hire qualified individuals because
they do not regularly attend religious services or adhere to the
``right'' religion. Additionally, commenters expressed skepticism about
religious organizations' reluctance to participate as federal
contractors. Many of these commenters stated that OFCCP provided no
evidence to support its claim or asserted that the proposed rule would
increase rather than reduce confusion. In addition, several commenters
cited a report from a progressive policy institute concluding that
faith-based organizations that had objected to the lack of an expanded
religious exemption in E.O. 13672 continued to be awarded government
contracts.
OFCCP disagrees with commenters' characterization of the rule as
discriminatory. OFCCP is committed to enforcing all of E.O. 11246's
protections, including those protecting employees from discrimination
on the basis of religion. OFCCP emphasizes again that
[[Page 79367]]
this rule will have no effect on the overwhelming majority of federal
contractors. Even for religious organizations that serve as government
contractors, they too must comply with all of E.O. 11246's
nondiscrimination requirements except in some narrow respects under
some narrow and reasonable circumstances recognized under law. This
rule provides clarity on those circumstances, consistent with OFCCP's
obligations to also respect and accommodate the free exercise of
religion.
OFCCP agrees with the comments stating that the religious exemption
contained in section 204(c) of E.O. 11246 is necessary to ensure
religious organizations can contract with the federal government
without compromising their religious identities or missions. The fact
that some faith-based organizations have been willing to enter into
federal contracts does not mean that other faith-based organizations
have not been reluctant to do so. Indeed, a few commenters offered
evidence that religious organizations have been reluctant to contract
with or receive grants from the federal government because of the lack
of clarity regarding religious exemptions in federal law. In addition,
although some commenters objected to the provision of any religious
exemption for federal contractors, the religious exemption is part of
E.O. 11246 that OFCCP is obligated to administer and enforce and has
been part of the Executive Order for nearly two decades.
OFCCP is publishing this final rule to clarify the scope and
application of the religious exemption. The intent is to provide
certainty and make clear that the exemption includes not only churches
but employers that are organized for religious purpose, hold themselves
out to the public as carrying out a religious purpose, and engage in
activity consistent with and in furtherance of that religious purpose.
OFCCP believes that the rule will promote consistency in OFCCP's
administration and that it will be clearer for contractors to follow.
Further, OFCCP believes it will help achieve consistency with the
administration policy to enforce federal law's robust protections of
religious freedom.
2. Discussion of Impacts
In this section, OFCCP presents a summary of the costs associated
with the new definitions in Sec. 60-1.3 and the new rule of
construction in Sec. 60-1.5. While this rule will only apply to
federal contractors that are religious, OFCCP lacks data to determine
the number of contractors that would fall within that definition and
thus evaluates the impacts using data for the entire contractor
universe despite the fact this number significantly overstates the
number of religious contractors. Prior to publication of the NPRM,
OFCCP surveyed the list of contractors in the General Service
Administration's System for Award Management (SAM) to identify
organizations whose North American Industry Classification System
(NAICS) descriptions or names included the word ``religious,''
``church,'' ``mosque,'' etc. This survey was not a useful or
appropriate proxy for the number of potentially affected entities for
several reasons. First, not all organizations with ``religious'' NAICS
codes or names would qualify for the exemption, given that any
formulation of the religious-organization test is fact-intensive and
requires much more than that the organization simply have (what is
commonly understood to be) a religious term in its name. This holds
true under any formulation of the test, whether that used in a case
like LeBoon or the test set out in the NPRM and refined in the final
rule. Second, and similarly, many religious organizations that could
qualify for the religious employer exemption at issue here may not
include one of those three specific descriptors in their NAICS
description much like many religious organizations do not include one
of those three words in their legal names. Third, the religious
exemption is an optional accommodation. Organizations that qualify for
it may choose to use it, or not, and OFCCP has no reliable way of
determining which will do so. Fourth, OFCCP believes that, as a
government agency, it would be a fraught matter for it to search for
potentially religious organizations based on its own view of what sorts
of terms are religious, assess the results in the abstract, and attempt
to attribute religious characteristics to the organizations found. This
rule elsewhere rejects that sort of approach. For all these reasons,
OFCCP has chosen to use broader estimates of the contractor universe.
Further, OFCCP anticipates that many contractors would
affirmatively disclaim any religious basis and thus OFCCP recognizes
that the following analysis will be an overestimate, but uses it out of
an abundance of caution. OFCCP determined that there are approximately
435,000 entities registered in the SAM database.\37\ Entities
registered in the SAM database consist of contractor firms and other
entities (such as state and local governments and other organizations)
that are interested in federal contracting opportunities and other
forms of federal financial assistance. The total number of entities in
the SAM database fluctuates and is posted on a monthly basis. The
current database includes approximately 435,000 entities. Thus, OFCCP
determines that 435,000 entities is a reasonable representation of the
number of entities that may be affected by the final rule.\38\ OFCCP
recognizes that this SAM number likely results in an overestimation for
two reasons: The system captures firms that do not meet the
jurisdictional dollar thresholds for the three laws that OFCCP
enforces, and it captures contractor firms for work performed outside
the United States by individuals hired outside the United States, over
which OFCCP does not have authority. Further, because this rule only
applies to religious contractors, OFCCP is confident that this estimate
overstates the true universe of contractors affected by the rule.
---------------------------------------------------------------------------
\37\ U.S. General Services Administration, System for Award
Management, data released in monthly files, available at https://sam.gov. The SAM database is an estimate with the most recent
download of data occurring November 2020.
\38\ While the final rule may result in more religious
corporations, associations, educational institutions or societies
entering into federal contracting or subcontracting, there is no way
to estimate the volume of increase. As noted above, OFCCP does not
anticipate that the number of religious contractors will grow to be
equal to non-religious contractors, but uses this estimate due to
the lack of data.
---------------------------------------------------------------------------
OFCCP anticipates three main groups that potentially will be
impacted: Religious organizations that decide to become federal
contractors because of this final rule's clarity on the scope and
application of the religious exemption, religious organizations that
are already federal contractors, and all current federal contractors.
OFCCP is unable to reasonably quantify the costs, benefits, and
transfers for these three groups of organizations, but provides the
following qualitative analysis. Though religious organizations new to
federal contracting will likely incur upfront costs and compliance
costs associated with becoming a federal contractor, it is reasonable
to assume they believe that becoming a federal contractor will further
their goals, which will result in benefits to the organization (whether
increased revenues, more financial stability, or better market access).
In addition, if the new potential contractors are awarded government
contracts, the government and the public will receive better quality or
lower-cost services because most federal contracts are rewarded through
competitive bidding which selects (generally speaking) either the
lowest
[[Page 79368]]
cost per unit or highest quality unit at a specific price. As the
number of potential federal contractors rises, the competitive process
should result in better quality and prices for goods and services which
will enhance the societal benefits of federal contracting. If total
costs from contracting with the new organization are lower than the
status quo, the result will be a transfer to taxpayers.
Religious organizations which are already federal contractors will
see a minimal cost for rule familiarization and compliance and will
continue to efficiently provide services to the U.S. government. The
clear boundaries of the religious exemption may permit these
contractors to more freely seek the religious exemption with assurance
that they are complying with their legal obligations under Executive
Order 11246, and they may revisit their employment practices
accordingly. OFCCP cannot determine quantitatively the direction or
magnitude of any changes in employment but believes the overall effects
will be quite small at these organizations, as most employees at them
were likely attracted to them because of a shared sense of religious
mission, and extremely small when considering the entire contractor
universe or the economy as a whole. On one hand, religious employers
may feel more free to hire those that are not denominational
coreligionists, given this final rule's explanation, consistent with
law, that an organization does not forfeit the exemption when it hires
outside strict denominational boundaries, and that an organization may
require acceptance of or adherence to particular religious tenets as
part of the employment relationship regardless of employees'
denominational membership. On the other hand, given this clarity,
religious employers may also feel more confident in their ability to
hire and retain employees based on religious criteria. Additionally,
OFCCP believes these assurances for religious organizations will result
in reduced legal costs for both the religious contractors and OFCCP.
All current federal contractors may face additional competition as
new potential competitors enter the market. Since the total amount of
available government contracts is not anticipated to change, the
increased competition may provide better prices for the government, but
may also result in a reallocation of the contracts. Should this occur,
it is possible that revenues will be transferred between various
government contractors or from current contractors to new entrants.
3. Public Comments
In this section, OFCCP addresses the public comments specifically
received on the Regulatory Impact Analysis.
One commenter, a public policy research and advocacy organization,
asserted that OFCCP underestimated the wage rate of the employees who
would likely review the rule. The commenter asserted that the employee
would likely be an attorney rather than a human resource manager. The
commenter suggested that most contractors would consult in-house or
outside counsel to help with rule familiarization. The commenter also
provided an alternate fully loaded hourly compensation rate for Lawyers
(SOC 23-1011). OFCCP acknowledges that some contractors may have in-
house counsel review the final rule. However, some contractors do not
have in-house counsel, and their review will be conducted by human
resource managers. Taking into consideration this comment, OFCCP has
adjusted its wage rate to reflect review by either in-house counsel or
human resource managers.
Several commenters addressed the time needed for a contractor to
become familiar with the final rule. These commenters asserted that the
estimate of one half-hour was too low. One commenter provided no
additional information or alternative calculation. The remaining two
provided alternative estimates ranging from 1.5 hours to 2.5 hours to
become familiar with the final rule. OFCCP acknowledges that the
precise amount of time each company will take to become familiar with
understanding the new regulations is difficult to estimate. However,
the elements that OFCCP uses in its calculation take into account the
length and complexity of the final rule. The final rule adds
definitions to the existing regulations implementing E.O. 11246 and
clarifies the exemption contained in section 204(c) of E.O. 11246. As
such, the final rule clarifies requirements and reduces burdens on
contractors trying to understand their obligations and responsibilities
of complying with E.O. 11246. Thus, OFCCP has decided to retain its
initial estimate of one half-hour for rule familiarization. This
estimate accounts for the time needed to read the final rule or
participate in an OFCCP webinar about the final rule.
Many commenters asserted that OFCCP did not address the potential
costs of the final rule on employees, taxpayers, and minority groups,
including LGBT individuals, women, and religious minorities. The
commenters asserted that OFCCP failed to address the economic and non-
economic costs to employees in the form of lost wages and benefits, out
of pocket medical expenses, job searches, and negative mental and
physical health consequences of discrimination. Two commenters, a civil
liberties organization and a labor union, mentioned that there are 25
states without explicit statutory protections barring employment
discrimination based on gender identity and sexual orientation and
asserted that workers in these states are not otherwise covered by
statutory protections. The commenters who made these assertions
provided no additional information or data to support their assertions.
Additionally, given Bostock's holding that Title VII's prohibition on
sex discrimination includes discrimination on the basis of sexual
orientation and transgender status, these concerns seem lessened.
OFCCP has reviewed these comments and notes that any attempt to
project costs to employees would necessarily require OFCCP to speculate
that certain workers will face discrimination only once this rule is
finalized. Further, the commenters ignore the possibility that
contractors may choose to hire individuals of greater religious
diversity as a result of this rule because their incentive to only hire
coreligionists will be diminished. Absent data regarding the number of
individuals who are not discriminated against in the status quo but
would be discriminated against when this rule is finalized, and non-
coreligionist individuals who will be hired by a contractor as a result
of this rule that OFCCP cannot assess the mere possibility that some
workers could face different costs. Likewise, OFCCP lacks data for the
number of new contractors that may enter the market and the number of
employees that work for such companies. As such, OFCCP does not
estimate the benefits to the employees of those new contractors.
Commenters also said that OFCCP failed to address the costs to
taxpayers in the form of a restricted labor pool, decreased
productivity, employee turnover, and increased health care costs
related to employment discrimination and increased social stigma. In
addition, some commenters mentioned that OFCCP did not account for
intangible costs related to reductions in equity, fairness, and
personal freedom that would result from allowing businesses and
organizations receiving taxpayer dollars to opt out of critical
nondiscrimination provisions that protect employees based on gender
identity and sexual orientation. The commenters who made these
assertions
[[Page 79369]]
provided no additional information or data to support their assertions.
Further, the commenters provide no additional support for their
assertion that the rule will increase costs to taxpayers and ignore the
possibility that the rule will expand the pool of federal contractors,
thereby saving taxpayers money.
Similarly, several commenters addressed the potential impact of the
rule on state and local governments. Three commenters, a city attorney,
a state's attorney, and a civil liberties and human rights legal
advocacy organization, mentioned that state and local governments may
lose important tax revenue if people relocate or choose to withdraw
from the workforce because of the final rule. Another commenter
mentioned that state and local governments that serve victims of
discrimination will need to contribute to, provide, and administer more
public benefits programs for vulnerable populations. These comments are
assume that the rule will impose costs on workers and that those costs
will in turn be imposed upon the communities in which those workers
live. None of these commenters provided additional information or data
to support their statements.
One individual commenter asserted that OFCCP did not properly
determine the rule's economic significance. The commenter asserted that
the Regulatory Impact Analysis in the NPRM did not take into account
``the actual monetary impact of the regulation.'' Using all available
information and data, OFCCP has addressed the quantifiable and
qualitative costs and benefits of this final rule as required. It
provides an assessment of the costs associated with rule
familiarization and concludes that the addition of definitions and
clarification of an exemption do not create additional burdens for the
regulated community. As stated in the preamble, the intent of the final
rule is to clarify the scope of the religious exemption and promote
consistency in OFCCP's administration of it. The commenter also
asserted that OFCCP did not account for the impact on larger
contractors. The Regulatory Flexibility Act requires agencies to
consider the impact of a regulation on a wide range of small entities,
including small businesses, nonprofit organizations, and small
governmental jurisdictions. It does not address larger corporations.
However, OFCCP's assessment reflects that it does not anticipate any
costs beyond rule familiarization for contractors.
Taking the Regulatory Impact Analysis comments into consideration,
OFCCP has assessed the costs and benefits of the final rule as follows.
OFCCP believes that either a Human Resource Manager (SOC 11-3121)
or a Lawyer (SOC 23-1011) would review the final rule. OFCCP estimates
that 50% of the reviewers would be human resource managers and 50%
would be in-house counsel. Thus, the mean hourly wage rate reflects a
50/50 split between human resource managers and lawyers. The mean
hourly wage of human resource managers is $62.29 and the mean hourly
wage of lawyers is $69.86.\39\ Therefore, the average hourly wage rate
is $66.08 (($62.29 + $69.86)/2). OFCCP adjusted this wage rate to
reflect fringe benefits such as health insurance and retirement
benefits, as well as overhead costs such as rent, utilities, and office
equipment. OFCCP used a fringe benefits rate of 46% \40\ and an
overhead rate of 17%,\41\ resulting in a fully loaded hourly
compensation rate of $107.71 ($66.08 + ($66.08 x 46%) + ($66.08 x
17%)).
---------------------------------------------------------------------------
\39\ BLS, Occupational Employment Statistics, Occupational
Employment and Wages, May 2019, https://www.bls.gov/oes/current/oes_nat.htm.
\40\ BLS, Employer Costs for Employee Compensation, https://www.bls.gov/ncs/data.htm. Wages and salaries averaged $24.26 per
hour worked in 2017, while benefit costs averaged $11.26, which is a
benefits rate of 46%.
\41\ Cody Rice, U.S. Environmental Protection Agency, ``Wage
Rates for Economic Analyses of the Toxics Release Inventory
Program'' (June 10, 2002), https://www.regulations.gov/document?D=EPA-HQ-OPPT-2014-0650-0005.
Table 1--Labor Cost
----------------------------------------------------------------------------------------------------------------
Fully loaded
Major occupational groups Average hourly Fringe benefit Overhead rate hourly
wage rate rate (%) (%) compensation
----------------------------------------------------------------------------------------------------------------
Human Resources Managers and Lawyers........ $66.08 46 17 $107.71
----------------------------------------------------------------------------------------------------------------
4. Cost of Regulatory Familiarization
OFCCP acknowledges that 5 CFR 1320.3(b)(1)(i) requires agencies to
include in the burden analysis the estimated time it will take for
contractors to review and understand the instructions for compliance.
In order to minimize the burden, OFCCP will publish compliance
assistance materials, such as fact sheets and answers to frequently
asked questions. OFCCP may also host webinars for interested persons
that describe the new regulations and conduct listening sessions to
identify any specific challenges contractors believe they face, or may
face, when complying with the new regulations. OFCCP notes that such
informal compliance guidance is not binding.
OFCCP believes that human resource managers or lawyers at each
contractor firm would be the employees responsible for understanding
the new regulations. OFCCP further estimates that it will take a
minimum of one half-hour for a human resource professional or lawyer at
each contractor firm to read the rule, read the compliance assistance
materials provided by OFCCP, or participate in an OFCCP webinar to
learn the new requirements.\42\ Consequently, the estimated burden for
rule familiarization would be 217,500 hours (435,000 contractor firms x
\1/2\ hour). OFCCP calculates the total estimated cost of rule
familiarization as $23,426,925 (217,500 hours x $107.71/hour) in the
first year, which amounts to a 10-year annualized cost of $2,666,359 at
a discount rate of 3% (which is $6.13 per contractor firm) or
$3,117,259 at a discount rate of 7% (which is $7.17 per contractor
firm).
---------------------------------------------------------------------------
\42\ OFCCP believes that contractor firms that may be
potentially affected by the rule may take more time to review the
final rule, while contractor firms that may not be affected may take
less time, so the one half-hour reflects an estimated average for
all contractor firms.
Table 2--Regulatory Familiarization Costs
------------------------------------------------------------------------
------------------------------------------------------------------------
Total number of contractors.................. 435,000.
Time to review rule.......................... 30 minutes.
[[Page 79370]]
Human resources manager and lawyer fully $107.71.
loaded hourly compensation.
Regulatory familiarization cost.............. $23,426,925.
Annualized cost with 3% discounting.......... $2,666,359.
Annualized cost per contractor with 3% $6.13.
discounting.
Annualized cost with 7% discounting.......... $3,117,259.
Annualized cost per contractor with 7% $7.17.
discounting.
------------------------------------------------------------------------
5. Cost Savings
OFCCP expects that contractors impacted by the rule will experience
cost savings. Specifically, the clarity provided in the new definitions
and the interpretation provided will reduce the risk of noncompliance
to contractors and the potential legal costs that findings of
noncompliance with OFCCP's requirements might impose. One mass mail
campaign of commenters asserted that allowing religious organizations
to continue to provide a variety of services, such as assisting victims
of sexual abuse, the hungry, and the homeless, is effective because it
saves taxpayer dollars through contracting instead of expanding
government bureaucracy.
Some commenters argued that the rule will decrease clarity and will
thus increase costs for contractors, especially if those contractors
believe their obligations under the EEOC conflict with their
obligations under the final rule. First, OFCCP believes that the E.O.
11246 nondiscrimination obligations it enforces remain in force and
that the rule is sufficiently consistent with Title VII case law and
principles and that it will promote consistency in administration.
Second, even assuming for purposes of this analysis that contractors'
obligations under EEOC and E.O. 11246 differ (e.g., that the exemption
in E.O. 11246 permits an action forbidden under the EEOC's view of
Title VII), a contractor remains obligated to abide by Title VII and
any exemption from E.O. 11246 simply prevents additional liability
before OFCCP for the same action. Accordingly, only those contractors
that wish to rely on the E.O. 11246 exemption need consider it, and we
expect that the additional costs incurred by such organizations to
understand the exemption beyond their existing compliance costs will be
minimal.
6. Benefits
E.O. 13563 recognizes that some rules have benefits that are
difficult to quantify or monetize but are important, and states that
agencies may consider such benefits. This final rule improves equity
and fairness by giving contractors clear guidance on the scope and
application of the religious exemption to E.O. 11246. It also increases
religious freedom for religious employers.
The final rule increases clarity for federal contractors. This
impact most likely yields a benefit to taxpayers (if contractor fees
decrease because they do not need to engage third-party representatives
to interpret OFCCP's requirements). While some commenters expressed
concern that the rule was not clear, OFCCP believes that the rule is
sufficiently consistent with Title VII case law and principles and that
it will promote consistency in administration. Furthermore, by
increasing clarity for both contractors and for OFCCP enforcement, the
final rule may reduce the number and costs of enforcement proceedings
by making it clearer to both sides at the outset what is required under
the regulations. This would also most likely represent a benefit to
taxpayers (since fewer resources would be spent in OFCCP administrative
litigation).
OFCCP notes that some commenters asserted that OFCCP did not
provide evidence that faith-based organizations have been reluctant to
contract with the federal government because of the lack of certainty
about the religious exemption. The fact that some small number of
faith-based organizations have been willing to enter into federal
contracts does not mean that other faith-based organizations have not
been reluctant to do so. OFCCP believes that providing clarity to the
religious exemption currently included under E.O. 11246 will promote
clarity and certainty for all contractors. Moreover, a few commenters
confirmed OFCCP's observation that religious organizations have been
reluctant to participate as federal contractors because of the lack of
clarity or perceived narrowness of the E.O. 11246 religious exemption.
One individual commenter described his experience with religious
organizations' reluctance to contract or subcontract with the federal
government, and two other commenters offered examples or evidence of
religious organizations' reluctance to participate in other contexts,
such as federal grants. Thus, OFCCP expects that the number of new
contractors may increase because religious entities may be more willing
to contract with the government after the religious exemption is
clarified.
A further benefit of this rule would be that some religious
contractors will increase the diversity of their workforce. Under some
prior interpretations, the religious exemption was only provided to
contractors who hired co-religionists (e.g., a Catholic company hiring
only Catholics; a Latter-day Saint contractor hiring only Latter-day
Saints; etc.) and thus religious contractors were incentivized to limit
their hiring to only co-religionists. Once this rule is finalized, such
religious contractors will no longer be required to limit their hiring.
The likely outcome of this change is that the workforces of religious
employers will become more diverse.
B. Regulatory Flexibility Act and Executive Order 13272 (Consideration
of Small Entities)
The agency did not receive any public comments on the Regulatory
Flexibility Analysis.
The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601 et seq.,
establishes ``as a principle of regulatory issuance that agencies shall
endeavor, consistent with the objectives of the rule and applicable
statutes, to fit regulatory and informational requirements to the scale
of the businesses, organizations, and governmental jurisdictions
subject to regulation.'' Public Law 96-354, 2(b). The RFA requires
agencies to consider the impact of a regulation on a wide range of
small entities, including small businesses, nonprofit organizations,
and small governmental jurisdictions.
Agencies must review whether a final rule would have a significant
economic impact on a substantial number of small entities. See 5 U.S.C.
603. If the rule would, then the agency must prepare a regulatory
flexibility analysis as described in the RFA. See id. However, if the
agency determines that the rule would not be expected to have a
significant economic impact on a substantial number of small entities,
then the head of the agency may so certify and the RFA does not require
a regulatory flexibility analysis. See 5 U.S.C. 605. The certification
must provide the factual basis for this determination.
[[Page 79371]]
OFCCP does not expect the final rule to have a significant economic
impact on a substantial number of small entities and does not believe
the final rule has any recurring costs. The regulatory familiarization
cost discounted at a 7% rate of $50.33 per contractor or $7.17
annualized is a de minimis cost. Therefore, the first year and
annualized burdens as a percentage of the smallest employer's revenue
would be far less than 1%. Accordingly, OFCCP certifies that the final
rule would not have a significant economic impact on a substantial
number of small entities. That is consistent with the Department's
analysis in the NPRM.
C. Paperwork Reduction Act
The Paperwork Reduction Act of 1995 requires that OFCCP consider
the impact of paperwork and other information collection burdens
imposed on the public. See 44 U.S.C. 3507(d). An agency may not collect
or sponsor the collection of information or impose an information
collection requirement unless the information collection instrument
displays a currently valid OMB control number. See 5 CFR 1320.5(b)(1).
OFCCP has determined that there is no new requirement for
information collection associated with this final rule. The final rule
provides definitions and a rule of construction to clarify the scope
and application of current law. The information collections contained
in the existing E.O. 11246 regulations are currently approved under OMB
Control Number 1250-0001 (Construction Recordkeeping and Reporting
Requirements) and OMB Control Number 1250-0003 (Recordkeeping and
Reporting Requirements--Supply and Service). Consequently, this final
rule does not require review by the Office of Management and Budget
under the authority of the Paperwork Reduction Act.
D. Unfunded Mandates Reform Act of 1995
For purposes of the Unfunded Mandates Reform Act of 1995, 2 U.S.C.
1532, this final rule does not include any federal mandate that may
result in excess of $100 million in expenditures by state, local, and
tribal governments in the aggregate or by the private sector.
E. Executive Order 13132 (Federalism)
OFCCP has reviewed this final rule in accordance with Executive
Order 13132 regarding federalism. OFCCP recognizes that there may be
some existing costs that may shift from the federal government to state
or local governments; however, the agency believes that these effects
will be neither direct nor substantial. Thus, OFCCP has determined that
it does not have ``federalism implications.'' This rule will not ``have
substantial direct effects on the States, on the relationship between
the national government and the States, or on the distribution of power
and responsibilities among the various levels of government.''
F. Executive Order 13175 (Consultation and Coordination With Indian
Tribal Governments)
This final rule does not have tribal implications under Executive
Order 13175 that would require a tribal summary impact statement. The
final rule will not ``have substantial direct effects on one or more
Indian tribes, on the relationship between the Federal Government and
Indian tribes, or on the distribution of power and responsibilities
between the Federal Government and Indian tribes.''
List of Subjects in 41 CFR Part 60-1
Civil rights, Employment, Equal employment opportunity, Government
contracts, Government procurement, Investigations, Labor, and Reporting
and recordkeeping requirements.
Craig E. Leen,
Director, OFCCP.
For the reasons set forth in the preamble, OFCCP revises 41 CFR
part 60-1 as follows:
PART 60-1--OBLIGATIONS OF CONTRACTORS AND SUBCONTRACTORS
0
1. The authority citation for part 60-1 continues to read as follows:
Authority: Sec. 201, E.O. 11246, 30 FR 12319, 3 CFR, 1964-1965
Comp., p. 339, as amended by E.O. 11375, 32 FR 14303, 3 CFR, 1966-
1970 Comp., p. 684, E.O. 12086, 43 FR 46501, 3 CFR, 1978 Comp., p.
230, E.O. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. 258 and E.O.
13672, 79 FR 42971.
0
2. Amend Sec. 60-1.3 by
0
a. Adding in alphabetical order the definitions of ``Particular
religion,'' ``Religion,'' ``Religious corporation, association,
educational institution, or society,'' and ``Sincere,'' and
0
b. Adding paragraph (a) and adding and reserving paragraph (b).
The revisions read as follows:
Sec. 60-1.3 Definitions.
* * * * *
Particular religion means 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.
* * * * *
Religion includes all aspects of religious observance and practice,
as well as belief.
* * * * *
Religious corporation, association, educational institution, or
society. (1) Religious corporation, association, educational
institution, or society means a corporation, association, educational
institution, society, school, college, university, or institution of
learning that:
(i) Is organized for a religious purpose;
(ii) Holds itself out to the public as carrying out a religious
purpose;
(iii) Engages in activity consistent with, and in furtherance of,
that religious purpose; and
(iv)(A) Operates on a not-for-profit basis; or
(B) Presents other strong evidence that its purpose is
substantially religious.
(2) Whether an organization's engagement in activity is consistent
with, and in furtherance of, its religious purpose is determined by
reference to the organization's own sincere understanding of its
religious tenets.
(3) To qualify as religious a corporation, association, educational
institution, society, school, college, university, or institution of
learning may, or may not: Have a mosque, church, synagogue, temple, or
other house of worship; or be supported by, be affiliated with,
identify with, or be composed of individuals sharing, any single
religion, sect, denomination, or other religious tradition.
(4) The following examples apply this definition to various
scenarios. It is assumed in each example that the employer is a federal
contractor subject to Executive Order 11246.
(i)(A) Example. A closely held for-profit manufacturer makes and
sells metal candlesticks and other decorative items. The manufacturer's
mission statement asserts that it is committed to providing high-
quality candlesticks and similar items to all of its customers, a
majority of which are churches and synagogues. Some of the
manufacturer's items are also purchased by federal agencies for use
during diplomatic events and presentations. The manufacturer regularly
consults with
[[Page 79372]]
ministers and rabbis regarding new designs to ensure that they conform
to any religious specifications. The manufacturer also advertises
heavily in predominantly religious publications and donates a portion
of each sale to charities run by churches and synagogues.
(B) Application. The manufacturer likely does not qualify as a
religious organization. Although the manufacturer provides goods
predominantly for religious communities, the manufacturer's fundamental
purpose is secular and pecuniary, not religious, as evidenced by its
mission statement. Because the manufacturer lacks a religious purpose,
it cannot carry out activity consistent with that (nonexistent)
religious purpose. And while the manufacturer advertises heavily in
religious publications and consults with religious functionaries on its
designs, the manufacturer does not identify itself, as opposed to its
customers, as religious. Finally, given that the manufacturer is a for-
profit entity, it would need to make a strong evidentiary showing that
it is a religious organization, which it has not.
(ii)(A) Example. A nonprofit organization enters government
contracts to provide chaplaincy services to military and federal law-
enforcement organizations around the country. The contractor is
organized as a non-profit, but it charges the military and other
clients a fee, similar to fees charged by other staffing organizations,
and its manager and employees all collect a market-rate salary. The
organization's articles of incorporation state that its purpose is to
provide religious services to members of the same faith wherever they
may be in the world, and to educate other individuals about the faith.
Similar statements of purpose appear on the organization's website and
in its bid responses to government requests for proposals. All
employees receive weekly emails, and occasionally videos, about ways to
promote faith in the workplace. The employee handbook contains several
requirements regarding personal and workplace conduct to ensure ``a
Christian atmosphere where the Spirit of the Lord can guide the
organization's work.''
(B) Application. Under these facts, the contractor likely qualifies
as a religious organization. The contractor's organizing documents
expressly state that its mission is primarily religious in nature.
Moreover, the contractor exercises religion through its business
activities, which is providing chaplaincy services, and through its
hiring and training practices. Through its emails and other
communications, the contractor holds itself out as a religious
organization to its employees, applicants, and clients. Finally,
notwithstanding that the contractor collects a placement fee similar to
nonreligious staffing companies, it is organized as a non-profit.
(iii)(A) Example. A small catering company provides kosher meals
primarily to synagogues and for various events in the Jewish community,
but other customers, including federal agencies, sometimes hire the
caterer to provide meals for conferences and other events. The
company's two owners are Hasidic Jews and its six employees, while not
exclusively Jewish, receive instruction in kosher food preparation to
ensure such preparation comports with Jewish laws and customs. This
additional work raises the company's operating costs higher than were
it to provide non-kosher meals. The company's mission statement, which
has remained substantially the same since the company was organized,
describes its purpose as fulfilling a religious mandate to strengthen
the Jewish community and ensure Jewish persons can participate fully in
public life by providing kosher meals. The company's ``about us'' page
on its website states that above all else, the company seeks to ``honor
G-d'' and maintain the strength of the Jewish religion through its
kosher meal services. The company also donates a portion of its
proceeds to charitable projects sponsored by local Jewish
congregations. In its advertising and on its website, the company
prominently includes religious symbols and text.
(B) Application. The company likely qualifies as a religious
organization. The company's mission statement and other materials show
a religious purpose. Its predominant business activity of providing
kosher meals directly furthers and is wholly consistent with that self-
identified religious purpose, as are its hiring and training practices.
Through its advertising and website, the company holds itself out as a
religious organization. Finally, although the company operates on a
for-profit basis, the other facts here show strong evidence that the
company operates as a religious organization.
(iv)(A) Example. A for-profit collector business sells a wide
variety of artistic, cultural, religious, and archeological items. The
government purchases some of these from time to time for research or
aesthetic purposes. The business's mission statement provides that its
purpose is to curate the world's treasures to perpetuate its historic,
cultural, and religious legacy. Most of the business's customers are
private individuals or museums interested in the items as display
pieces or for their cultural value. The business's marketing materials
include examples of religious iconography and artifacts from a variety
of world religions, as well as various cultural and artistic items.
(B) Application. The business likely does not qualify as a
religious organization. Its mission statement references an arguably
religious purpose, namely perpetuating the world's religious legacy,
but in context that appears to have more to do with religion's historic
value rather than evidencing a religious conviction of the business or
its owner. Similarly, it is at best unclear whether the business is
engaging in activities in furtherance of this purpose when most of its
sales serve no religious purpose. Finally, while the business displays
some religious items, these appear to be a minor part of the business's
overall presentation and do not convey that the business has a
religious identity. The factors to qualify as a religious organization
do not appear to be met, especially given that the business as a for-
profit entity would need to make a strong evidentiary showing that it
is a religious organization.
* * * * *
Sincere means sincere under the law applied by the courts of the
United States when ascertaining the sincerity of a party's religious
exercise or belief.
* * * * *
(a) Severability. Should a court of competent jurisdiction hold any
provision(s) of this section to be invalid, such action will not affect
any other provision of this section.
(b) [Reserved]
0
3. Amend Sec. 60-1.5 by adding paragraphs (e) and (f) to read as
follows:
Sec. 60-1.5 Exemptions.
* * * * *
(e) Broad interpretation. This subpart shall be construed in favor
of a broad protection of religious exercise, to the maximum extent
permitted by the U.S. Constitution and law, including the Religious
Freedom Restoration Act of 1993, as amended, 42 U.S.C. 2000bb et seq.
(f) Severability. Should a court of competent jurisdiction hold any
provision(s) of this section to be invalid, such action will not affect
any other provision of this section.
[FR Doc. 2020-26418 Filed 12-8-20; 8:45 am]
BILLING CODE 4510-45-P