Government Contracts Final OFCCP Rule Clarifies Scope of Religious Exemption
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Tuesday, January 12, 2021

Final OFCCP Rule Clarifies Scope of Religious Exemption

By Government Contracts Editorial Staff

The Department of Labor’s Office of Federal Contract Compliance Programs has issued a final rule clarifying the scope and application of the religious exemption in section 204(c) of Executive Order 11246, as amended. Title VII of the Civil Rights Act of 1964 (PL 88-352), which extended civil rights protections to employment opportunity, prohibits discrimination on the basis of race, color, religion, sex, or national origin. However, section 702(a) of the legislation allows religious employers to consider religion for employees performing religious activities, and in 1972, Congress broadened the scope of this exemption to cover all activities of a religious organization, not just religious activities (PL 92-261). E.O. 11246, signed by President Lyndon B. Johnson in 1965, requires equal employment opportunity in federal government contracting. The order mandates 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.” In 2002, President George W. Bush amended E.O. 11246 by expressly adding Title VII’s exemption for religious organizations (E.O. 13279), and DOL has implemented the exemption at 41 CFR 60-1.5(a)(5). According to OFCCP, some religious organizations are reluctant to participate as federal contractors because of uncertainty regarding the scope of the religious exemption in E.O. 11246 and DOL’s regulations.

Broad Construction. The rule provides guidance on the scope and application of the religious exemption, consistent with recent Supreme Court decisions, in revisions to 41 CFR 60-1.3, Definitions, and in a new rule of construction at 41 CFR 60-1.5, Exemptions. The rule clarifies that the E.O. 11246 religious exemption covers churches as well as employers that are organized for a religious purpose, hold themselves out to the public as carrying out a religious purpose, and engage in the exercise of religion consistent with, and in furtherance of, a religious purpose. The rule also clarifies that religious employers can condition employment on acceptance of or adherence to sincere religious tenets without sanction from the federal government, as long as they do not discriminate based on other protected bases. Further, the rule states that the exemption should be construed in favor of a broad protection of religious exercise, to the maximum extent permitted by the Constitution and laws, including the Religious Freedom Restoration Act of 1993, as amended (42 USC 2000bb et seq). These clarifications will help organizations with government contracts and subcontracts and federally assisted construction contracts and subcontracts better understand their obligations. OFCCP received 109,726 comments in response to the proposed rule (84 FR 41677). The rule goes into effect on January 8, 2021. For the text of the rule, see 85 FR 79324.

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