USDOL Announced A Coming Controversial OFCCP Final Rule Recognizing Expanded Religious Defenses, Even While Only Mirroring the Recent Case Law Which Established Them, Published the Rule Two Days Later, And Then Two Days Later Drew Angry Criticism From House Speaker Pelosi

On Monday December 7, 2020, OFCCP issued a press release announcing that it would soon publish its Final Rule updating OFCCP’s Rules re religious discrimination titled: “Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption.” OFCCP reported that it intended the Final Rule to acknowledge case law decisions permitting religious-exercising organizations and “closely held” corporations to apply religious belief defenses to claims of alleged unlawful discrimination in employment.

Two days later, on Wednesday December 9th, OFCCP published its Final Rule in the Federal Register.

Two days after that, on Friday December 11th, Speaker of the House Nancy Pelosi attacked the Final Rule and heatedly vowed that the House of Representatives would work with the Biden Administration to seek to cause OFCCP to repeal it. “Our Democratic House Majority, working alongside the new Biden-Harris Administration, will work to reverse this and other hateful Trump anti-worker policies, and we will fight tirelessly to protect the rights and well-being of all people in our country,” Pelosi said. The Speaker’s statement is a major policy announcement that Democrats are going to champion the rights of the LGBTQ community over the rights of certain large religious communities in America. This is a change in Democrat Party policy and comes, of course, at the risk of offending many traditional religious groups historically supportive of Democrats, but in opposition to the rights of members of the LGBTQ community.)

Background

OFCCP had originally published a Notice of Proposed Rulemaking on August 15, 2019. OFCCP then received over 109,000 comments from the public, although over 50,000 of those comments were in the form of a pre-printed digital post card the ACLU distributed to all of its chapter affiliates with a request that ACLU members submit the postcard in opposition to the Proposed Rule. The Final Rule acknowledged the growing tensions between social justice advocates and religious groups, each pressing their respective rights. This competition of rights, colliding in the workplace and in society at large, has now become highly controversial and politicized. We call these court cases “collision of rights” cases.

The controversy is quite simply whether the SCOTUS will eventually find “the exercise of” sincerely held religious beliefs which do not recognize homosexuality or transgender transformations will trump statutory rights protecting homosexuality and transgender transformations. OFCCP did not take a position on this issue, but intimated in language and in examples that OFCCP will place its priority on the free exercise of religion. However, for the most part, OFCCP merely teed-up the issue and identified recent federal case decisions priming this issue for resolution in coming years. Civil rights groups fault OFCCP for not championing the rights of the LGTBQ community uncritically over the free exercise of religion. The civil rights community is also disturbed that OFCCP even seeks to acknowledge and publicize the recent federal case decisions which have EXPANDED free exercise rights even at a time the Courts have also found novel theories to protect gay, lesbian and transgender people under Title VII of the 1964 Civil Rights Act.

This collision of competing rights has now worked its way to the forefront of social and political debate. OFCCP’s attempt to clarify the Rule as to federal Contractors in the employment arena is especially ripe given recent court decisions extending the statutory protections of Title VII to sexual orientation and transgender rights at the same time that other legislative and court decisions have expanded protections for the free exercise of religion:

Legislative Developments

See the Religious Freedom Restoration Act of 1993, (“RFRA”) as amended by the Religious Land Use and Institutionalized Persons Act of 2000 (RLUIPA). The importance of RFRA is that it installs, by statute, the requirement that the federal government must have a “compelling interest” (and not just a good technical or neutral reason) before it may substantially burden a person’s free exercise of his or her religion. NOTE: SCOTUS held in Employment Div., Dept. of Human Resources of Ore. v. Smith, 494 U. S. 872, 885– 890 (1990), that the First Amendment tolerates neutral, generally applicable laws that burden or prohibit religious acts even when the laws are unsupported by a narrowly tailored, compelling governmental interest. By the way, this observation points up that the most important collision of rights is likely going to be a RFRA vs LGBT claim face-off. This is because LGBT advocates will need to put in proof at trial satisfying the higher legal requirement that the protected civil rights of the estimated 9 million people in the United States who are gay and lesbian are more compelling than the rights of the estimated more than the tens of millions of people of faith in the United States who sincerely believe homosexuality is “sinful” (including, among others, the Roman Catholic Church with approximately 51 million followers in the United States and the Baptist Church with an estimated almost 15 million followers in the United States.) .

Court Decisions

Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014) [resolved a collision of rights case which pitted the beliefs of three “closely held” companies that contraceptive drugs and devices violated their sincerely held religious beliefs that life begins at conception and that it would violate their religion to facilitate access to contraceptives which the ACA (Affordable Care Act) requires corporate medical plans to supply]; Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, 138 S. Ct. 1719 (2018) more recently held that the free exercise clause trumped a homosexual customer’s claim of illegality pursuant to the Colorado Anti-Discrimination Act when a Colorado baker refused to make a cake to celebrate a same-sex couple marriage.

Let the Donnybrook begin. And make no mistake, people on both sides of this issue hold very STRONG views about their position. Please note, however, that the Final Rule OFCCP has published will not affect the vast majority of federal Contractors. That is because they will not meet the definition of a “Religious corporation, association, education institution, or society,” or be owned by a “closely held” group. These are the only institutions which OFCCP’s Final Rule protects as to the free exercise of their religions. We will call them “religious-exercising” organizations in this Blog.

What the Final Rule Says

The Final Rule revises 41 C.F.R. § 60-1 in three separate and substantive ways:

• The Final Rule adds definitions for the terms “Particular religion,” “Religion,” “Religious corporation, association, educational institution, or society,” and “Sincere.” Most importantly, OFCCP’s definition of “Religious corporation, association, educational institution, or society” adopts a modified view of the Ninth Circuit Court of Appeals’ test used in Spencer v. World Vision, Inc., 633 F.3d 723 (9th 2011) to determine the conditions a federal Contractor must satisfy to be eligible for the religious exemption. To be eligible, a federal Contractor must be a corporation, association, educational institution, society, school, college, university, or institution of learning that: (i) is organized for a religious purpose; (ii) holds itself out to the public as carrying out a religious purpose; (iii) engages in activity consistent with, and in furtherance of, that religious purpose; and (iv) operates either as a nonprofit, or presents other strong evidence that its purpose is substantially religious.
• The Final Rule provides real-life examples of how the term “Religious corporation, association, educational institution, or society” should be applied, to assist federal Contractors to determine whether they are eligible for the religious exemption as a defense to discrimination claims. Generally, to qualify, the services or products the federal Contractor provides must be in furtherance of a religious purpose identified in its mission statement or articles of incorporation.
• The Final Rule adds language that exemptions from equal opportunity and affirmative action obligations based on religious beliefs should be considered in favor of a “broad protection of religious exercise, to the maximum extent permitted by the U.S. Constitution and law, including the Religious Freedom Restoration Act of 1993.”

Note: It is this last statement which has ignited concern in the LGBTQ community that OFCCP now intends, and is directed to, exalt the religious views of managers of a closely held corporation above the asserted rights of gay, lesbian and transgender applicants and employees. The Courts have not yet addressed who wins in such a collision of rights.

Background

In the summary of its Final Rule, OFCCP outlines the historical background that gave rise to the need to issue a rule clarifying the accommodations available to federal Contractors which are also “religious organizations.” Specifically, while Title VII of the 1964 Civil Rights Act made certain kinds of discriminatory decisions in employment unlawful, it also protected employees against religious discrimination. 42 U.S.C. §§ 2000e-1(a), 2000e-2(e)(2). This was subsequently expanded in 1972. 42 U.S.C. § 2000e(j). Then along came the Religious Freedom Restoration Act of 1993 providing religious organizations protection against religious discrimination, in addition to the First Amendment right to the exercise of religious beliefs free from federal government interference or burden on those beliefs.

Note: The Courts have not yet interpreted the Constitutional protection to practice the religion of one’s choice when in conflict with statutorily protected rights against unlawful employment discrimination. There are two reasons for this:

First, when hearing constitutional claims, the federal courts always try to avoid interpreting the United States Constitution to resolve a matter if they may dispose of the case on the basis of a lesser statutory, regulatory or common law ground. The federal courts will thus interpret the RFRA first before proceeding to resolve a dispute by reference to rights which the U.S. Constitution allegedly protects. Accordingly, before the SCOTUS would hear and decide a case bottomed on a claim of religious freedom the U.S. Constitution allegedly protects in collision with a claim of statutory protection of sexual orientation or gender identity, the federal courts would FIRST have to decide the collision of statutory rights. So, to reach the employer’s/federal contractor’s Constitutional defenses, the Court would have to first rule in favor of and exalt a Title VII (or Executive Order 11246) Applicant’s or Employee’s sexual orientation and/or gender identity claim above that of the religious organization’s RFRA defense. If the RFRA defense faltered and fell, the federal Court would THEN be forced to address the religious organization’s First Amendment constitutional claim (i.e., that the federal government was interfering with the religious organization’s free exercise of religion protected through what scholars of the Constitution describe as the “free exercise clause.” The “free exercise clause” states very bluntly: “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof… .”).

Second, protection of LGBTQ rights protected under Title VII is still too new to have allowed enough time to incubate the collision of rights case which would need to find its way to the SCOTUS. (The SCOTUS decision in Bostock v. Clayton County, 140 S. Ct. 1731 (2020) which found protection under Title VII for sexual orientation and gender identity, was not quite yet six months ago: i.e., decided June 15, 2020). And, the SCOTUS usually allows constitutional claims cases to percolate for a while in the lower federal appellate courts and allow, if it occurs, “a split” in the decisions of the federal appellate circuit courts so as to warrant the need for SCOTUS’ attention to the matter to settle the uncertainty resulting from any particular federal circuit court decision.

Accordingly, do not look for a SCOTUS decision any year soon resolving the collision of the free exercise clause with Title VII’s protection of LGBT rights. A decade or more could easily go by before the right series of cases could arise in the lower federal courts, the circuit courts then had a chance to split their thinking and decisions, and the SCOTUS then had a chance to choose to take a case bringing a collision of rights case before it for resolution. Then, and only then, would SCOTUS bring this collision of claimed rights to a rapid boil for resolution. Rather, the SCOTUS will almost certainly let this collision of rights case simmer while society wrestles further with the issue.

Keep in the back of your mind, too, that LGBTQ advocates will also vigorously and consciously seek to RETARD the advent or progress of these particular collision of rights cases in the federal courts to avoid giving this particular SCOTUS a chance to hear such a case. The perception in the LGBTQ community is that it is more prudent to delay a decision in a First Amendment vs statutory rights face-off case until a Democrat President has had an opportunity to appoint a few SCOTUS Justices to change the current make-up of the sitting SCOTUS. The LGBTQ community view is, right or wrong, that the current SCOTUS would be more inclined to uphold religious exercise rights over the statutory protections against otherwise unlawful discrimination based on sexual orientation and gender identity.

A final challenge the law imposes upon LGBTQ advocates is that constitutional law has for over two centuries been ingrained with the notion that Constitutional claims pre-empt and trump lesser protections such as those afforded by statute or regulation, or via the common law. Constitutional protections exist on a higher plane of importance and acceptance across all fields of statutory competition.

How Did We Get Here?

President Lyndon B. Johnson signed Executive Order 11246 one year after enactment of the 1964 Civil Rights Act, requiring equal employment opportunity in federal government contracting. Two years later in 1967, President Johnson issued Executive Order 11375 to amend his first Executive Order 11246. Expressly relying on the footprint of Title VII (which surprisingly, and only at the last moment, was an amendment to add sex discrimination to the list of unlawful discriminations in employment Title VII covered), President Johnson only belatedly (3 years after he drove through passage of the Civil Rights Act of 1964) expanded Executive Order 11246 to prohibit discrimination on the bases of sex and religion. When President Jimmy Carter later consolidated in 1978 within the U.S. Department of Labor (“USDOL”) the responsibility to enforce Executive Order 11246, the newly created OFCCP then imported Title VII’s exemption for religious educational institutions into its implementing regulations. See 43 FR 49249 (October 20, 1978). President George W. Bush thereafter then amended Executive Order 11246 by expressly importing Title VII’s exemption for religious organizations upon signing Executive Order 13279 (“Equal Protection of the Laws for Faith-Based and Community Organizations”) See 67 FR 77143 (December 12, 2002).

The drafters of Executive Order 11246 adopted both Title VII’s non-discrimination mandate, as well as its exemption for religious organizations. OFCCP’s Final Rule now attempts to bring Executive Order 11246’s implementing Rules into conformity with recent Title VII decisions to update their applicability to religious organizations which are also federal Contractors. Those decisions, as noted above, have expanded religious freedom protections to the consternation of the LGBTQ community.

Recent Supreme Court Decisions

OFCCP cites several recent U.S. Supreme Court cases related to religion-exercising organizations and individuals as the impetus for its Final Rule. First, OFCCP relied on SCOTUS case decisions that have expanded religious protections under RFRA and the Free Exercise Clause of the First Amendment to establish the importance of anti-discrimination protections afforded religious institutions. OFCCP cites recent court decisions such as Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Commission, 138 S. Ct. 1719 (2018), and Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014) to confirm restrictions on government interference with religious beliefs. In Masterpiece, the Supreme Court held that the federal government violated the Free Exercise Clause of the First Amendment by making decisions based on hostility to a religion or religious viewpoint, such as forcing a private business to perform services for a gay wedding antithetical to the cakemaker’s religious philosophy.

In Burwell, the Supreme Court extended the protections provided under the RFRA to business activities of for-profit “closely held” corporations, as noted above, where limited ownership groups (made up typically, but not necessarily of family members) operated the three businesses before the SCOTUS in ways consistent with their religious beliefs. This was true even though the businesses were economically large in scale and financially profitable. This means that RFRA did not disqualify large corporations from its protections so long as a small group controlled the decision-making: that is, the company was “closely held.” This decision also made clear that RFRA did not exclude from its protections wealthy people possessed of religious beliefs. (Throughout all of U.S. business history, there have been individuals or small family groups which have owned some of the country’s largest businesses: witness George Washington, the wealthiest person to ever become President of the United States and owner of one of the then largest corporations in Virginia; John D. Rockefeller, The Standard Oil companies; Andrew Carnegie, U.S. Steel; Jeff Bezos, Amazon; Larry Ellison, Oracle, Inc; Sam Walton, Wal-Mart; the Koch family, Koch Industries (owners of the world’s largest privately owned corporation); the Cargill family, Cargill, Inc. (the world’s second largest privately held corporation). So, whether a sole proprietor owns only a one-person shop, or a 100,000 employee company, and regardless of that proprietor’s or small partnership group’s great wealth, it is that proprietor’s, or small ownership group’s, sincerely held belief which is definitive for protection under RFRA.

Even as recently as Thursday, December 10th, 2020, SCOTUS re-emphasized the importance of the RFRA by unanimously holding that monetary damages were available to plaintiffs against individual federal FBI officers who violated the religious beliefs of three Muslim men. The at-issue FBI agents placed the three Muslims on the federal no-fly list as punishment for refusing to become government informants against their religious communities in violation of their right to the free exercise of their religion. See Tanzin, et al. v. Tanvir, et al., Case No. 19-71 (December 10, 2020).

Second, OFCCP identified employment cases where religious protections provided a defense to purported violations of discrimination laws. OFCCP first cited to Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 565 U.S. 171 (2012), which held the ministerial exception grounded in the Establishment and Free Exercise clauses of the First Amendment bars employment discrimination suits by a minister against a religious school. Next, OFCCP referenced the recent expansion of the ministerial exception in Our Lady of Guadalupe School v. Morrissey-Berru, 140 S. Ct. 2049 (2020). We previously discussed the Our Lady case decision in a July 14th webinar and noted it expanded the “ministerial exception” to Title VII to include teachers at schools with a religious mission entrusted with the responsibility to educate and steep students in religious faith.

Finally, OFCCP also cites to the Bostock v. Clayton County, 140 S. Ct. 1731 (2020) decision, briefly noted above, holding that Title VII prohibits discrimination on the basis of sexual orientation and transgender status. OFCCP cites the Bostock decision at pp. 1753 -1754 for the specific proposition that members of society must be especially careful to not trample the rights of people in the United States to exercise their right to practice the religion of their choice (noting the Court’s concern that “complying with Title VII’s requirement may require some employers to violate their religious convictions,” and that the Court was “deeply concerned with preserving the promise of the free exercise of religion enshrined in our Constitution”). LGBTQ advocates found this particular OFCCP commentary on Bostock (seeking to limit its protection), to be offensive and fueled their concern that OFCCP, in this Administration, would put its hand heavily on the side of the scale protecting a discriminatory religious belief.

What this Means for Contractors

The practical impact of OFCCP’s Final Rule is in fact very limited as to most current federal Contractors. Why? Very few federal Contractors will be able to qualify for the religious exemption from non-discrimination and affirmative action requirements. The Contractor would first (a) have to be a “closely held” corporation whose owners had a sincere religious belief in conflict with a requirement OFCCP was seeking to impose upon the contractor; or second (b) a “religious corporation, association, educational institution, or society” as further described in OFCCP’s Final Rule.

Rather, the more practical effect on existing federal Contractors is the potential EXPANSION of competitors which may solicit federal contracts from federal executive agencies. OFCCP predicted and hoped, in fact, in its Final Rule that the religious exemption defense may incentivize many religious organizations to now feel comfortable to pursue federal contracting opportunities despite OFCCP Rules protecting sexual orientation and gender identity. But that statement only served to galvanize LGBTQ advocate concerns, as you might imagine, that this OFCCP, at least, would allow religious objection to trump claims of LGBT discrimination.

For those limited number of federal Government Contractors which will be able to satisfy the definition of a “religious corporation, association, educational institution, or society,” the Final Rule provides these entities the power to enforce their sincerely held religious belief regarding homosexuality in employment decisions they may make. Specifically, if a job serves the religious purpose of the business, the Final Rule permits a “religious-exercising” organization to consider an Applicant’s sexual orientation and transgender status should it conflict with the organization’s religious purpose. These Contractors will need to establish the religious belief of the owner(s) of the business and explain how their religious views conflict with whatever compliance obligation OFCCP is attempting to impose on this particular employer. Alternatively, a federal Government Contractor must show that the purpose of the business is to support certain identified religious beliefs. The OFCCP Final Rule supplied the example of a small catering company which provides kosher meals to fulfill a religious mandate to strengthen the Jewish community. A chef position in such an organization would clearly be geared toward the religious purpose of the company, the Final Rule concluded, given that the chef must learn to cook kosher meals and to comply with religious standards for food preparation.

However, these protections surprisingly may survive during a Biden Administration. The Catholic and Baptist churches have large congregations of Democrats. And remember, that even though President Obama enjoyed a Democrat Senate and Democrat House for the first two years of his Presidency, no laws protecting sexual orientation and/or gender identity were forthcoming. Indeed, in the second year of President Obama’s first 4-year term, no bill to protect sexual orientation and/or gender identity was even introduced in the Congress. Democrats, too, like many Republicans, are conflicted about how to handle the collision of sexual orientation and gender identity rights with other protected rights. Much will depend in the Biden Administration on not only who President-Elect Biden taps to be his next Secretary of Labor, but also who fills out the most senior posts within the Biden USDOL, including especially the OFCCP: the agency most likely within USDOL to precipitate a conflict of rights case.

THIS COLUMN IS MEANT TO ASSIST IN A GENERAL UNDERSTANDING OF THE CURRENT LAW AND PRACTICE RELATING TO OFCCP. IT IS NOT TO BE REGARDED AS LEGAL ADVICE. COMPANIES OR INDIVIDUALS WITH PARTICULAR QUESTIONS SHOULD SEEK ADVICE OF COUNSEL.