Trump Administration Finalizes Rule to Protect Religion-Based Federal Contractors

The Trump administration released a finalized rule on Monday that will clarify religious protections for federal contractors. Many critics argue it will allow for discrimination. 

The Labor Department’s Office of Federal Contract Compliance Programs said its upcoming rule will provide a “clearer interpretation” of the exceptions of Title VII and the 1965 executive order that established non-discriminatory practices for federal contractors, but noted that “religious organizations may prefer in employment ‘individuals of a particular religion.’” The department first issued the proposed rule in August 2019, and it was immediately met with widespread criticism that it would sanction discrimination. It received over 109,000 comments during the public comment period and is one of the “controversial and consequential” regulation changes the administration is pursuing during its lame duck period, according to a ProPublica tracker. 

“First, the rule adds definitions of key terms. Second, it adds a rule of construction to provide the maximum legal protections of religious exercise permitted by the Constitution and law, including the Religious Freedom Restoration Act,” a senior Labor Department official said during a press briefing on Monday. “The rule also adds several examples within the definition of ‘religious corporation, association, educational institution or society’ to better illustrate which contractors may qualify for the religious exemptions. And lastly, the rule and associated preamble demonstrate an abiding respect for religious organizations and allowing these organizations to fully participate in federal contracting without sacrificing their right to be religious.” 

It will take effect on January 8, which is 12 days before President-elect Biden is sworn in. The senior official directed Government Executive to the public affairs office when asked if the department has spoken to the incoming Biden administration about the upcoming rule, as part of the transition process, and what its reaction was, if so. 

The initial, proposed rule was based on an opinion by the father of Labor Solicitor Kate O’Scannlain, Judge Diarmuid O’Scannlain, in Spencer v. World Vision Inc. (2010), which was brought before three judges and had no majority opinion.

Under Judge O’Scannlain’s test, an organization would be exempt if it: “1) Is organized for a self-identified religious purpose (as evidenced by Articles of Incorporation or similar foundational documents), 2) is engaged in activity consistent with, and in furtherance of, those religious purposes, and 3) holds itself out to the public as religious,” according to Brigham Young University's law review.

The department added a fourth requirement to the final rule that says a contractor “either operates on a not-for-profit basis; or presents other strong evidence that it possesses a substantial religious purpose.” This is because “in certain, rare circumstances, an organization might be for-profit, yet still be fairly considered a religious rather than secular organization.” The department does not believe many for-profits will be seeking the exemption. 

Lastly, in accordance with various Supreme Court rulings, the U.S. Constitution and other laws, “the rule clarifies the protections and obligations for religious organizations that qualify for the exemption,” said the senior official. 

While religious advocates and two Republican members of the House Education and Labor Committee applauded the new clarifications (as Bloomberg Law reported), there was still much backlash to the rule. 

“The final rule would significantly expand eligibility for federal contractors to claim a religious exemption from non-discrimination rules,” Matt Kent, regulatory policy associate at Public Citizen, an advocacy nonprofit, told Government Executive. “It’s an invitation for any contractor that’s loosely affiliated with a religious purpose to discriminate against LGBTQ employees. Yet another major, ideologically driven last-minute rule change from the Trump administration.” 

American Atheists, an organization advocates for civil liberties for atheists and separation of religion and government, also criticized the rule. “Job applicants and workers should not have to pass a religious litmus test, especially when it comes to government funded contracts,” said Alison Gill, the group’s vice president for legal and policy. “The American taxpayer should not be forced to fund discrimination, period.”

Additionally, Jennifer Pizer, director of law and policy for Lambda Legal, the oldest and largest legal organization that protects the rights of LGBTQ individuals and all those with HIV, said in a press release “it is hard to overstate the harm that [Office of Federal Contract Compliance Programs] is visiting on LGBTQ people, women, religious minorities and others with the sledgehammer it is taking to nondiscrimination protections.” The new rule has “a grotesquely overbroad exemption that will be used by many federal contractors as a totally improper, catch-all defense to discrimination complaints.” 

The senior Labor official tried to quell some of those concerns on the call by stressing that the rule neither allows for discrimination, exempts religious organizations from undergoing the contracting office’s compliance reviews or favors religious organizations over non-religious ones. 

The department doesn’t expect a majority of the 25,000 federal contractors to seek religious exemptions. Additionally, it noted in a statement that the rule also complies with President Trump’s 2017 executive order on deregulation because it minimizes confusion under the 1965 executive order.