OFCCP Announces Proposed Rule on Religious Exemption for Federal Contractors

On August 15, 2019, the U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) released a Notice of Proposed Rulemaking (NPRM) focused on clarifying the civil rights protections for religious organizations that have federal contracts.  Keeping with the Trump administration’s policy to enforce the religious freedom found in federal law, the proposed rule is intended to provide the broadest protection of religious rights recognized under the U.S. Constitution and other laws, such as the Religious Freedom Restoration Act. It does not, however, exempt federal contractors from adhering to other required affirmative action obligations.

Some of the notable proposed changes are as follows:

• Definitions

If finalized, the new rule would amend regulatory definitions involving religion that are currently contained in 41 C.F.R. Section 60-1.3. For example, the proposal would amend the current definition of “exercise of religion” to encompass “any exercise of religion, whether or not compelled by, or central to, a system of religious belief.” Four other definitional changes are included in the proposed rule.

• New OFCCP “Religious Entity” Test

Borrowing heavily from the 2011 ruling of the U.S. Court of Appeals for the Ninth Circuit in Spencer v. World Vision, Inc., OFCCP will consider the following factors to determine if a federal contractor is a religious entity:

1. “the contractor must be organized for a religious purpose, meaning that it was conceived with a self-identified religious purpose. This need not be the contractor’s only purpose.”
2. “the contractor must hold itself out to the public as carrying out a religious purpose.”
3. “the contractor must exercise religion consistent with, and in furtherance of, a religious purpose.”

OFCCP believes that this test will provide clear guidance to contractors and that agency staff can easily and consistently apply these factors.

• New Causation Standard

In assessing discrimination claims alleged by OFCCP against religious organizations based on protected traits other than religion, OFCCP proposes a “but-for” standard of causation. Under this standard, if a contractor claims that a challenged employment action is based on religion, OFCCP will find a violation “only if it can prove by a preponderance of the evidence that a protected characteristic other than religion was a but-for cause of the adverse action.”

Comments on the proposed rule may be submitted through the Federal eRulemaking Portal by fax or by mail and must be received by September 16, 2019.