Labor & Employment Law Daily Multi-agency final rule clarifies rights, obligations of faith-based organizations in federally funded social programs
Friday, December 18, 2020

Multi-agency final rule clarifies rights, obligations of faith-based organizations in federally funded social programs

By Pamela Wolf, J.D.

Religious organizations do not lose legal protections and rights when they participate in federal programs and activities, such as the rights to accommodations and conscience protections under the First Amendment, RFRA, and other federal laws.

A multi-agency joint final rule will implement President Trump’s May 2018 Executive Order 13831, “Establishment of a White House Faith and Opportunity Initiative,” to clarify the rights and obligations of faith-based organizations participating in the federal agency financial assistance programs and activities. The final rule is intended to ensure that the financial assistance programs and activities are implemented consistent with federal law, including the First Amendment and the Religious Freedom Restoration Act (RFRA).

Slated for publication in the Federal Register December 17, the final rule will be effective 30 days later.

At the DOL. At the Department of Labor, as it does in other agencies, the final rule is designed to ensure that religious and non-religious organizations are treated equally in DOL-supported programs. Religious organizations do not lose their legal protections and rights just because they participate in federal programs and activities, such as the rights to accommodations and conscience protections under the First Amendment, RFRA, and other federal laws.

This final rule preserves most of the existing regulations governing participation of religious organizations in the DOL’s financial assistance programs, including provisions barring providers from discriminating against beneficiaries based on religion and requiring that any religious activities by an organization be separated in time or location from any services directly funded with federal money.

Changes from proposed rule. The DOL issued its proposed rule on January 17, 2020 (as did other agencies). In view of public comments from the proposed rule, the agencies made some changes from the proposed rulemaking. The final rule updates prohibitions against agencies and/or their intermediaries discriminating in selecting and disqualifying an organization and prohibits that conduct based on religious character and affiliation. It adds a prohibition against discrimination based on religious exercise with additional language based on the applicable Free Exercise Clause and RFRA standards.

The final also updates notices in the appendices of certain agency regulations to reflect that these prohibitions apply to discrimination based on religious character, affiliation, or exercise. The agencies are also updating notices to indicate that the listed federal laws provide religious freedom “and conscience” protections.

Amendments. The final regulations (unless otherwise specified) amend existing regulations or establish new regulations to do the following (consistent with the proposed regulations):

  • Remove the notice-and-referral requirements that were required of faith-based organizations but not of other organizations;
  • Require the agencies’ notices or announcements of award opportunities and notices of awards or contracts to include language clarifying the rights and obligations of faith-based organizations that apply for and receive federal funding. Some agencies, including the DOJ, DOL, DHS, and HHS, are also including specific language to clarify that, among other things, a faith-based organization may apply for awards on the same basis as any other organization; a participating faith-based organization retains its independence and may carry out its mission consistent with—and may be able to seek an accommodation under— religious freedom (and conscience) protections in federal law; and a faith-based organization may not discriminate against beneficiaries on certain religious bases;
  • Clarify that accommodations are available under existing federal law and directly reference the definition of “religious exercise” from RFRA;
  • Update the definition of “indirect federal financial assistance” to align more closely with the Supreme Court’s decision in Zelman v. Simmons-Harris (536 U.S. 639 (2002)) by removing the requirement that beneficiaries have at least one secular option;
  • Clarify the existing provision that a faith-based organization participating in an indirect federal financial assistance program or activity need not modify its program to accommodate a beneficiary, so that it expressly states that such an organization need not modify its policies that require attendance in “all activities that are fundamental to the program;”
  • Clarify that faith-based organizations participating in agency-funded programs shall retain their autonomy, right of expression, religious character, and independence;
  • Clarify that none of the guidance documents that the agencies or their intermediaries use in administering the financial assistance shall require faith-based organizations to provide assurances or notices where similar requirements are not imposed on secular organizations, and that any restrictions on the use of grant funds shall apply equally to faith-based and secular organizations;
  • Clarify that faith-based organizations need not remove, conceal, or alter any religious symbols or displays;
  • Clarify the standard for permissible discrimination based on religion with respect to employment or board membership, as relevant;
  • Clarify the methods that can be used to demonstrate nonprofit status;
  • Update the terminology to refer to “faith-based organizations,” not “religious organizations;” and
  • Clarify that the agencies and their intermediaries cannot advantage or disadvantage faith-based organizations affiliated with historic or well-established religions or sects in comparison with other religions or sects.

“The Department of Labor is pleased to join other Departments across the Administration in ensuring that religious organizations participate on an equal footing with non-religious organizations in federal programs for delivering assistance to the poor and underprivileged,” Secretary of Labor Eugene Scalia said in a statement. “This new rule respects the Constitution’s principles of religious freedom, and religious organizations’ timeless commitment to charity toward those in need.”

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