DOL Releases Final Religious Exemption Rule

This week, The U.S. Department of Labor released a finalized rule that eases anti-discrimination restrictions for religious employers that contract with the federal government.

Under the new rule, religious federal contractors and sub-contractors are permitted to make employment decisions based on their faith. The DOL contends the rule provides necessary clarity for contractors about their obligations under Executive Order 11246— a civil rights mandate protecting employees from discrimination on the basis of race, color, religion, sex and other characteristics.

“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,” the final rule states.

Defining Religious Organizations

In an accompanying FAQ, the DOL defines religiosity using a four-prong test.

  1. A Religious organization must be organized for a religious purpose, as shown by mission statements or other foundational documents.
  2. The organization must hold itself to the public as carrying out that purpose. Examples of holding itself to the public include mentioning religiosity on the “contractor’s website, publications, advertisements, letterhead, or other public-facing materials, and in statements to members of the public.”
  3. The organization must engage in activity consistent with that purpose.
  4. The organization must operate on a not-for-profit basis or present evidence that its purpose is substantially religious.

Potential Implications of the New Rule

The rule was not passed without controversy. The rule was first proposed in August of 2019 and received over 109,000 comments during the month-long public comment period. Comments ranged from those expressing support to outcry over the potential for organizations to use the rule to target the transgender and LGBTQ community, single mothers, or interracial couples.

The final rule offers partial reassurances to these concerns in broad strokes, writing that the Executive Order nondiscrimination protections all still apply—except when they do not.

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,” the rule states.

In sum, the final rule does allow for terminating employees whose personal relationships are not aligned with company beliefs assuming the employer qualifies for religious exemption

The rule will go into effect on January 8th, 2021.

By Susanna Vogel, Associate Consultant at DCI Consulting Group

    Stay up-to-date with DCI Alerts, sign up here:

    Advice, articles, and the news you need, delivered right to your inbox.


    Stay in the Know!