Labor Department Works to Rescind ‘Problematic’ Contractor Rule

The Labor Department announced on Monday it’s working to rescind a rule issued under the Trump administration that clarified religious protections for federal contractors, which many critics argued would allow for discrimination.

The rule was first announced in August 2019 and then finalized and took effect during the presidential transition. The Labor Department’s Office of Federal Contract Compliance Programs under President Trump said the 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 rule was met with criticism from Lambda Legal, the oldest and largest legal organization that protects the rights of LGBTQ individuals and all those with HIV; and American Atheists, among others, as well as was challenged in two lawsuits. 

This is a “problematic” rule, Jenny Yang, director of the Labor Department’s Office of Federal Contract Compliance Programs, said in a blog post on Monday. “Since the religious exemption has been in place, [the contract compliance office] has no record of any federal contractor having invoked this exemption in any [office] compliance evaluation or complaint investigation.”

The new proposal “would preserve the exemption for religious employers under executive order 11246,” which President Lyndon B. Johnson issued in 1965 to prohibit discrimination in hiring and employment by federal contractors, Yang continued. The Office of Federal Contract Compliance Programs “would simply return to the policy in place under both the Bush and Obama administrations of analyzing a contractor’s exemption claim, if one ever arose, on a case-by-case basis consistent with Title VII precedent and other applicable law.” This “would increase clarity and consistency in application of the religious exemption.”

The proposal to return to the old policy questions the legality and merits of what the Trump administration issued. 

During a December 2020 press conference, a senior Labor official tried to quell concerns, stressing that the Trump rule did not allow for discrimination, exempt religious organizations from undergoing the contracting office’s compliance reviews or favor religious organizations over non-religious ones. The Trump rule created its own religious employer test, which was based on an opinion by the father of then-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. 

“This not only places the rule in tension with the president’s intent in expressly incorporating the Title VII religious exemption into executive order 11246 in 2003, but also undermines the government’s long-standing policy of requiring that federal contractors provide equal employment opportunity, subject to a religious exemption for contractors with primarily religious purpose and character,” said the proposed rule from the Biden administration. 

The Office of Management and Budget finished its review of the Office of Federal Contract Compliance Program’s proposal to rescind the rule on October 26. The proposal will be formally published in the Federal Register on Tuesday. Public comments are due by December 9. 

“We definitely support the [Biden administration] measure,” Alison Gill, vice president for legal and policy at American Atheists, told Government Executive. “The Title VII exemptions are something that have been in place for decades and are well understood by contractors and other companies. The Trump administration’s rule just caused unnecessary confusion and allowed for discrimination.”