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DEPARTMENT OF LABOR participation in this rulemaking, and the Court unanimously upheld this agency has revised certain aspects of expansion of the religious exemption to Office of Federal Contract Compliance this regulation in response to all activities of religious organizations Programs commenters’ concerns. against an Establishment Clause As stated in the NPRM, on July 2, challenge. See Corp. of the Presiding 41 CFR Part 60–1 1964, President Lyndon B. Johnson Bishop of the Church of Jesus Christ of signed the landmark Civil Rights Act of RIN 1250–AA09 Latter-day Saints v. Amos, 483 U.S. 327, 1964. See Public Law 88–352, 78 Stat. 330 (1987).2 Implementing Legal Requirements 241. This legislation prohibited One year after President Johnson Regarding the Equal Opportunity discrimination on various grounds in signed the Civil Rights Act, he signed Clause’s Religious Exemption many of the most important aspects of E.O. 11246, requiring equal employment civic life. Its Title VII extended these opportunity in federal government AGENCY: Office of Federal Contract protections to employment opportunity, contracting. The order mandated that all Compliance Programs, Labor. prohibiting discrimination on the basis government contracts include a ACTION: Final rule. of race, color, religion, sex, or national provision stating that ‘‘[t]he contractor origin. In Title VII, Congress also will not discriminate against any SUMMARY: The U.S. Department of provided a critical accommodation for employee or applicant for employment Labor’s (DOL’s) Office of Federal religious employers. Congress permitted because of race, creed, color, or national Contract Compliance Programs (OFCCP) religious employers to take religion into origin.’’ Exec. Order No. 11246, § 202, publishes this final rule to clarify the account for employees performing 30 FR 12319, 12320 (Sept. 28, 1965). scope and application of the religious religious activities: ‘‘This title shall not Two years later, President Johnson exemption. These clarifications to the apply . . . to a religious corporation, expressly acknowledged Title VII of the religious exemption will help association, or society with respect to Civil Rights Act when expanding E.O. organizations with federal government the employment of individuals of a 11246 to prohibit, as does Title VII, contracts and subcontracts and federally particular religion to perform work discrimination on the bases of sex and assisted construction contracts and connected with the carrying on by such religion. See Exec. Order No. 11375, § 3, subcontracts better understand their corporation, association, or society of its 32 FR 14303–04 (Oct. 17, 1967). In 1978, obligations. religious activities . . . .’’ Public Law the responsibilities for enforcing E.O. DATES: Effective Date: These regulations 88–352, 702(a), 78 Stat. 241, 255 11246 were consolidated in DOL. See are effective January 8, 2021. (codified as amended at 42 U.S.C. Exec. Order No. 12086, 43 FR 46501 2000e–1(a)). Congress provided a FOR FURTHER INFORMATION CONTACT: (Oct. 5, 1978). In its implementing Tina similar exemption for religious Williams, Director, Division of Policy regulations, DOL imported Title VII’s educational institutions. See id. exemption for religious educational and Program Development, Office of § 703(e)(2), 78 Stat. at 256 (codified at Federal Contract Compliance Programs, institutions. See 43 FR 49240, 49243 42 U.S.C. 2000e–2(e)(2)). (Oct. 20, 1978) (now codified at 41 CFR 200 Constitution Avenue NW, Room Title VII’s protections for religious C–3325, Washington, DC 20210. 60–1.5(a)(6)); cf. 42 U.S.C. 2000e– organizations were expanded by 2(e)(2). In 2002, President George W. Telephone: (202) 693–0104 (voice) or Congress in 1972 into their current (202) 693–1337 (TTY). Bush amended E.O. 11246 by expressly form. Congress added a broad definition importing Title VII’s exemption for SUPPLEMENTARY INFORMATION: of ‘‘religion’’: ‘‘The term ‘religion’ religious organizations, which likewise includes all aspects of religious I. Executive Summary has since been implemented by DOL’s observance and practice, as well as regulations. See Exec. Order No. 13279, On August 15, 2019, OFCCP issued a belief, unless an employer demonstrates § 4, 67 FR 77143 (Dec. 16, 2002) (adding notice of proposed rulemaking (NPRM) that he is unable to reasonably E.O. 11246 § 202(c)); 68 FR 56392 (Sept. to clarify the scope and application of accommodate to an employee’s or 30, 2003) (codified at 41 CFR 60– Executive Order 11246’s (E.O. 11246) prospective employee’s religious religious exemption consistent with 1.5(a)(5)); cf. 42 U.S.C. 2000e–1(a). observance or practice without undue Because the exemption administered recent legal developments. 84 FR 41677. hardship on the conduct of the by OFCCP springs directly from the During the 30-day public comment employer’s business.’’ Equal Title VII exemption, it should be given period, OFCCP received 109,726 Employment Opportunity Act of 1972, a parallel interpretation, consistent with comments on the proposed rule.1 This Public Law 92–261, 2(7), 86 Stat. 103 the Supreme Court’s repeated counsel total included over 90,000 comments (codified at 42 U.S.C. 2000e(j)). that the decision to borrow statutory generated by organized comment- Congress also added educational text in a new statute is a ‘‘strong writing efforts. Comments came from institutions to the list of those eligible indication that the two statutes should individuals and from a wide variety of for section 702’s exemption. In addition, be interpreted pari passu.’’ Northcross v. organizations, including religious Congress broadened the scope of the Bd. of Educ. of Memphis City Sch., 412 organizations, universities, civil rights section 702 exemption to cover not just and advocacy organizations, contractor religious activities, but all activities of a U.S. 427, 428 (1973) (per curiam). associations, legal organizations, labor religious organization: ‘‘This title [VII] OFCCP thus generally interprets the organizations, and members of shall not apply . . . to a religious nondiscrimination provisions of E.O. Congress. Comments addressed all corporation, association, educational 11246 consistent with the principles of aspects of the NPRM. OFCCP institution, or society with respect to the Title VII. Because OFCCP regulates appreciates the public’s robust employment of individuals of a federal contractors rather than private particular religion to perform work employers generally, OFCCP must apply 1 Of the 109,726 comments, 35 comments were connected with the carrying on by such Title VII principles in a manner that inadvertently posted on Regulations.gov before corporation, association, educational redactions were made. The posted comments were 2 Justice White wrote the majority opinion for five withdrawn, redacted, and then reposted. When the institution, or society of its activities.’’ justices. Justices O’Connor, Blackmun, and Brennan comments were reposted, the number of comments Id. § 3, 86 Stat. at 104 (codified at 42 (with Justice Marshall joining) wrote opinions on Regulations.gov increased to 109,761. U.S.C. § 2000e–1(a)). The Supreme concurring in the judgment.

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best fit its unique field of regulation, for which she worked). Recent executive professionals association commented including when applying the religious orders have done the same. See Exec. that Congress has repeatedly declined to exemption. Order No. 13831, 83 FR 20 715 (May 8, extend the Title VII exemption to With that said, there has been some 2018); Exec. Order No. 13798, 82 FR 21 government-funded entities. A lesbian, variation among federal courts of 675 (May 9, 2017). Additional decisions gay, bisexual, and transgender (LGBT) appeals in interpreting the scope and from the Supreme Court, issued after the rights advocacy organization application of the Title VII religious NPRM, have likewise extended Title commented that, at the time Title VII exemption, and many of the relevant VII’s protections while affirming the was enacted, Congress could not have Title VII court opinions predate importance of religious freedom. See envisioned that religious organizations Supreme Court decisions and executive Bostock, 140 S. Ct. at 1754 (holding that would qualify for the Title VII orders that shed light on the proper Title VII’s prohibition on discrimination exemption would also seek to contract interpretation. The purpose of this final because of sex prohibits ‘‘fir[ing] an with the federal government, ‘‘let alone rule is to clarify the contours of the E.O. individual merely for being gay or be given a broad right to discriminate 11246 religious exemption and the transgender’’); Little Sisters of the Poor based on religion while accepting related obligations of federal contractors Saints Peter & Paul Home v. federal funding.’’ and subcontractors to ensure that Pennsylvania, 140 S. Ct. 2367, 2379–84 In a related vein, OFCCP also received OFCCP respects religious employers’ (2020) (holding the Departments of comments objecting generally to the free exercise rights, protects workers Labor, Health and Human Services, and provision of a religious exemption for from prohibited discrimination, and the Treasury had authority to federal contractors or specifically to defends the values of a pluralistic promulgate religious and conscience OFCCP’s proposal. Most of these society. See, e.g., Bostock v. Clayton exemptions from the Affordable Care commenters characterized the religious Cnty., 140 S. Ct. 1731, 1754 (2020) Act’s contraceptive mandate); Espinoza exemption as taxpayer- or government- (‘‘[T]he promise of the free exercise of v. Mont. Dep’t of Revenue, 140 S. Ct. funded discrimination that was contrary religion . . . lies at the heart of our 2246 (2020) (a state ‘‘cannot disqualify to the purpose of E.O. 11246. For pluralistic society.’’). This rule is some private schools [from a subsidy example, an affirmative action intended to correct any misperception program] solely because they are professionals association commented that religious organizations are religious’’ without violating the Free that ‘‘[t]he Federal Government should disfavored in government contracting by Exercise clause); and Our Lady of not be in the business of funding setting forth appropriate protections for Guadalupe Sch. v. Morrissey-Berru, 140 employment discrimination’’ and their autonomy to hire employees who S. Ct. 2049, 2069 (2020) (holding the emphasized that religious organizations will further their religious missions, ministerial exception applies ‘‘[w]hen a should not expect to maintain autonomy thereby providing clarity that may school with a religious mission entrusts and independence from the government expand the eligible pool of federal a teacher with the responsibility of when they solicit and accept contractors and subcontractors. educating and forming students in the government contracts. An international Recent Supreme Court decisions have faith’’). These decisions are discussed in labor organization submitted a similar addressed the freedoms and the final rule’s analysis as appropriate comment, stating that organizations that antidiscrimination protections that must and applicable. choose to accept government funding be afforded religion-exercising In this final rule, OFCCP has sought through government contracts should organizations and individuals under the to follow the principles articulated by not be allowed to conduct what it U.S. Constitution and federal law. See, these recent decisions and orders, and described as discrimination against e.g., Masterpiece Cakeshop, Ltd. v. Colo. has interpreted older federal appellate- qualified job applicants and employees. Civil Rights Comm’n, 138 S. Ct. 1719, level case law in light of them as Relatedly, a public policy research 1731 (2018) (holding the government applicable. OFCCP has chosen a path and advocacy organization commented violates the Free Exercise Clause of the consistent with the Supreme Court’s that no one should be disqualified from First Amendment when its decisions are religion and Title VII jurisprudence as a taxpayer-funded job because they are based on hostility to religion or a well as what OFCCP views to be the the ‘‘wrong’’ religion or do not adhere religious viewpoint); Trinity Lutheran more persuasive reasoning of the federal to any religion. A technology company Church of Columbia, Inc. v. Comer, 137 courts of appeals in these areas of the commented that the proposal conflicted S. Ct. 2012, 2022 (2017) (holding the law. with the spirit of nondiscrimination government violates the Free Exercise law. A group of U.S. Senators Clause of the First Amendment when it A. Title VII and the EEOC Generally commented: ‘‘The government cannot decides to exclude an entity from a Some commenters on the NPRM use religious exemptions as a pretext to generally available public benefit agreed that OFCCP’s proposal was permit discrimination against or harm because of its religious character, unless appropriately consistent with Title VII others.’’ that decision withstands the strictest principles. For example, a faith-based Some religious organizations were scrutiny); Burwell v. Hobby Lobby advocacy organization commented that among the commenters that opposed the Stores, Inc., 573 U.S. 682, 719 (2014) the religious employer exemption in provision of a religious exemption for (holding the Religious Freedom federal contracting regulations is federal contractors. One religious Restoration Act applies to federal modeled on Title VII, and should organization commented that, in line regulation of the activities of for-profit therefore be understood ‘‘in the strong with its commitment to religious closely held corporations); Hosanna- way’’ the Title VII exemptions have freedom, it opposed granting Tabor Evangelical Lutheran Church & traditionally been understood. government contracts to organizations Sch. v. EEOC, 565 U.S. 171, 196 (2012) Other commenters asserted that that, in its words, discriminate against (holding the ministerial exception, OFCCP’s proposal was inconsistent with qualified individuals based on their grounded in the Establishment and Free Title VII overall. Some of these practices and beliefs. One religious Exercise clauses of the First commenters stated that the proposal’s organization commented that barring Amendment, bars an employment- interpretation of the exemption was people from taxpayer-funded jobs based discrimination suit brought on behalf of contrary to congressional intent. For on their faith violates principles of a minister against the religious school example, an affirmative action equality and meritocracy. Another faith-

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based organization cited First intent or that such an exemption is exemption. Those commenters—the Amendment separation of church and misplaced in the government ones who would actually need to state principles, and commented that, contracting context, that question is not negotiate the purportedly two different while some religious organizations hire at issue in this rulemaking. The standards—were by and large staff based on religion, accommodations religious exemption was added to E.O. supportive of the rule and did not raise for religious hiring should not be 11246 almost twenty years ago, and this concern. For another, OFCCP applied broadly in the federal contracts OFCCP’s implementing regulations are believes that this rule, which context, as federal contracts are not nearly as old. The existence of the incorporates many recent Supreme provided to advance religious ends. exemption itself is not at issue in this Court decisions and other case law and Other commenters stated that the rulemaking. is in accord with recent Executive proposal’s expansion of the exemption Regarding comments that the rule Orders and guidance from the was contrary to Title VII case law or deviates from the EEOC’s interpretation Department of Justice, offers clarity as principles. For example, an of the Title VII religious exemption or compared to less recent guidance from international labor organization creates two separate standards, OFCCP EEOC that does not incorporate these commented that, in its view, the believes these concerns are unfounded. more recent developments. proposed rule mischaracterized federal This rule is restricted to the application case law in order to transform of the religious exemption. The vast B. The Relevance of Recent Supreme provisions designed to protect workers majority of contractors and their Court Cases from religious discrimination into employees, as well as OFCCP’s Commenters both supported and exemptions that would allow federally enforcement program, will be unaffected opposed OFCCP’s acknowledgement of funded employers to discriminate by this rule. As for the religious recent Supreme Court cases granting against workers for religious reasons. exemption specifically, OFCCP has antidiscrimination protections for Some commenters stated that the followed the Title VII case law it finds persons bringing religious claims in a proposal was inconsistent with the most persuasive, especially in light of variety of contexts. These cases interpretation of Title VII by the EEOC, the principles of religious equality and included Hobby Lobby, Trinity the agency primarily responsible for autonomy reinforced by recent Lutheran, and Masterpiece Cakeshop. enforcing Title VII. A group of state executive orders and Supreme Court Supreme Court decisions in attorneys general commented that decisions. OFCCP has also adapted Title employment and religion cases issued OFCCP should not undermine the VII principles to ensure a proper fit in after the proposed rule’s publication are EEOC’s efforts, ‘‘as would occur under the government contracting context. addressed elsewhere in the preamble as the Proposed Rule, which takes OFCCP’s specific choices in this regard appropriate. positions contrary to the EEOC.’’ The and how they compare to the EEOC’s state attorneys general asserted that the stated views are explained more fully in Some commenters expressed support proposal would not increase clarity the section-by-section discussion and a for OFCCP’s interpretations of these because it would create two separate section at the end of this preamble. Supreme Court cases and their legal standards for federal contractors OFCCP has also made some revisions to application to the proposal in general. and OFCCP staff—one under Title VII align this rule even more closely with For example, a group of members of the and one under E.O. 11246. A contractor Title VII. But even assuming any U.S. House of Representatives noted association asserted that ‘‘federal variation with the EEOC as to the approvingly that the proposed rule was contractors could face the Hobson’s exemption, this rule does not create a consistent with these cases, each of choice of determining whether ‘‘Hobson’s choice’’ for government which ‘‘came with the cost’’ of religious compliance with an OFCCP regulation contractors. The exemption, to describe Americans shouldering the material, will result in liability under Title VII.’’ it most broadly, is an optional emotional, and spiritual burdens Other commenters stated that the accommodation for religious associated with litigating issues related overall proposal departed from OFCCP’s organizations, not a requirement to their faith. Discussing Masterpiece prior interpretation, which they asserted mandating compliance. In the rare, Cakeshop, a religious public policy had been consistent with the EEOC’s hypothetical instance where a women’s organization commented that interpretation of Title VII prior to contractor would be entitled to the E.O. the Supreme Court in that case August 2018, when OFCCP issued 11246 exemption but not the Title VII acknowledged ‘‘the blatant, systematic Directive 2018–03, concerning the exemption, the contractor would not government bias’’ against the owner of religious exemption in section 204(c) of face conflicting liability regardless of its Masterpiece Cakeshop for refusing to E.O. 11246. For example, a public choice: Rather, it would face potential participate in a same-sex wedding policy research and advocacy liability under one enforcement scheme ceremony, noting that the owner organization asserted that, until August rather than two. OFCCP acknowledges continues to be harassed for his faith ‘‘to 2018, the Department consistently that it is often helpful to regulated this day.’’ The commenter stated that interpreted the E.O. 11246 religious parties for regulators to try to harmonize this and other such cases prove that exemption narrowly to permit their approaches when enforcing related further clarification regarding existing preferences for coreligionists by certain legal requirements. OFCCP believes its First Amendment protections are religious organizations, and applied the approach here is consistent with Title necessary. Addressing Trinity Lutheran, ‘‘motivating factor’’ test to evaluate VII and religious-accommodation a religious public policy advocacy claims of discrimination. principles, adapted appropriately to its organization asserted that the Supreme OFCCP agrees with the comments own regulatory context and the Court in that case made clear that stating that the rule will provide government contracting community. Trinity Lutheran Church’s status as a necessary clarity for contractors and OFCCP also is not concerned about church did not prevent it from potential contractors about the scope of this rule purportedly decreasing clarity participating on an equal playing field the E.O. 11246 religious exemption. by creating two standards for additional with secular organizations in seeking Regarding comments that a religious reasons. For one, it was not a concern government grants. The commenter exemption protecting government primarily raised by commenters who continued that OFCCP’s proposed rule contractors is contrary to congressional may qualify for the E.O. 11246 religious simply reaffirmed a principle the

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Supreme Court had held to be association described it—and asserted racial discrimination are precisely tailored to consistent with the First Amendment. that the decision was therefore achieve that critical goal. Other commenters criticized OFCCP’s inapplicable to OFCCP’s proposal. Some Hobby Lobby, 573 U.S. at 733. For reliance on these Supreme Court cases. of these commenters pointed to a example, a city public advocate argued Many of these commenters stated that footnote in the Court’s opinion limiting that the Hobby Lobby decision affirmed the cases were inapplicable because it to ‘‘express discrimination based on that securing equal access to workplace they did not involve federal contractors. religious identity with respect to participation is a compelling interest. A For example, a secular humanist playground resurfacing.’’ Trinity civil liberties and human rights legal advocacy organization criticized the Lutheran, 137 S. Ct. at 2024 n.3. Many advocacy organization commented that proposed rule for its reliance on case commenters stated that there are legally the Court in Hobby Lobby expressly law unrelated to employment significant distinctions between declined to promulgate a rule discrimination laws or the text of E.O. government grant programs and authorizing for-profit corporations that 11246. Many of the commenters stated government contracts. A labor union willingly enter into contracts with the that the cases cited, if interpreted argued, regarding the Supreme Court’s federal government to discriminate properly, did not provide support for decision, that it would have been against workers ‘‘because of who they OFCCP’s proposal. For example, a labor perfectly lawful for the government to are.’’ A contractor organization union commented that the decisions deny grants to religious applicants who commented that it is ‘‘not at all clear’’ cited did not authorize ‘‘the expansive restricted access to their playgrounds on that Hobby Lobby supports the idea that view that the Proposed Rule seeks to the basis of sexual orientation, for religious rights override any other legal support.’’ A group of U.S. Senators example. The union also asserted that rights, given that the decision concerns commented: ‘‘The Court has long held ‘‘Federal contracting is not a generally only the availability of government federally-funded employers cannot use available public benefit, but a programs. religion to discriminate. Each of the reticulated system for the funding and Finally, some commenters criticized cases cited in the proposed rule are delivery of governmental functions and OFCCP’s discussion of Hosanna-Tabor. consistent with that approach.’’ services by private parties.’’ A religious Many of these commenters pointed out Many of the commenters who organization commented that Trinity criticized OFCCP’s discussion of that this case applied the Lutheran did not address whether a (constitutionally grounded) ministerial Masterpiece Cakeshop pointed to this religious institution can discriminate sentence from the Court’s opinion: exception developed by courts and not with public funds, and stressed that the the (statutory) Title VII religious ‘‘While . . . religious and philosophical government’s interest in prohibiting objections are protected, it is a general exemption enacted by Congress. Some discrimination in taxpayer-funded jobs commenters expressed doubt that the rule that such objections do not allow is ‘‘of the highest order.’’ A group of business owners and other actors in the ministerial exception was applicable to state attorneys general commented that economy and in society to deny federal contractors. For example, a the Court’s decision drew a careful protected persons equal access to goods transgender legal professional distinction between situations where a and services under a neutral and organization commented that, though benefit is denied to an entity based generally applicable public the ministerial exception bars ministers solely that entity’s religious identity and accommodations law.’’ 138 S. Ct. at from pursuing employment situations involving neutral and 1727. A labor union asserted that discrimination cases, most federal generally applicable laws that restrict an Masterpiece Cakeshop was irrelevant in contractors are unlikely to employ entity’s actions. The group asserted that the ‘‘entirely secular’’ context of federal ministers or others who ‘‘preach or E.O. 11246’s anti-discrimination contracting, and argued that the teach the faith.’’ Other commenters Establishment Clause dictates that provisions are directed toward the expressed concern that OFCCP intended federal contracting must be entirely latter. An LGBT rights advocacy to broaden the scope of the religious secular. A transgender civil rights organization commented that, because exemption to mimic the ministerial organization commented that, in the the decision involved a religious grant exception and asserted that Hosanna- proposed rule, OFCCP did not suggest applicant that had agreed to abide by Tabor did not support such an that its existing requirements or prior certain nondiscrimination provisions, expansion. For example, a labor union conduct reflect the sort of hostility to its holding was inapplicable in the commented that the decision could not religious beliefs that the Court was federal contracting context where be read to extend the ministerial concerned with in Masterpiece funding is awarded on a competitive exception to lay people employed by Cakeshop, and noted that, on the basis, as well as in situations where the religious institutions, or to private for- contrary, ‘‘EEO requirements for federal contractor has no intention of profit businesses whose owners may contractors fall squarely within the complying with governing also hold religious beliefs. ‘general rule’ stated by the Court.’’ A nondiscrimination rules. OFCCP believes the critical comments group of state attorneys general Some commenters similarly criticized here are misplaced because OFCCP did commented that, if anything, OFCCP’s discussion of Hobby Lobby. not acknowledge these Supreme Court Masterpiece Cakeshop stands for the Many of these commenters quoted or cases for the propositions that proposition that overly broad religious paraphrased the following paragraph commenters said the agency did. OFCCP objections to civil rights laws of general from the Supreme Court’s decision: acknowledged in the NPRM that these Supreme Court cases did not applicability are inappropriate. The principal dissent raises the possibility specifically address government Commenters also criticized OFCCP’s that discrimination in hiring, for example on discussion of Trinity Lutheran. Many of the basis of race, might be cloaked as contracting. And indeed, with the these commenters read the decision religious practice to escape legal exception of Hosanna-Tabor, they did narrowly—as holding that ‘‘the state sanction.... Our decision today provides not specifically address employment violated the First Amendment by no such shield. The Government has a law, Title VII, or E.O. 11246. Rather, denying a public benefit to an otherwise compelling interest in providing an equal OFCCP noted the recent Supreme Court eligible recipient solely on account of its opportunity to participate in the workforce cases for the general and commonsense religious status,’’ as one contractor without regard to race, and prohibitions on propositions that the government must

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be careful when its actions may infringe needs of the communities they serve religious organizations to help the private persons’ religious beliefs and and predicted that the proposal would public through these programs was that it certainly cannot target religious allow religious contractors to better abysmally small—0.0025%.’’ The persons for disfavor. These principles ‘‘order[ ] their affairs.’’ A religious organization cited the concern of are not new, but these recent cases show convention commission approved of the religious organizations that their right to that those principles remain vital. That rule on the basis that the government hire members of their faith would be is especially important when should not be in the business of judging eroded as one of the reasons for this government at times has been callous in theology or privileging certain religious discrepancy. its treatment of religious persons.3 beliefs over others. Many commenters expressed Those general themes of caution, A few commenters expressed support skepticism that religious organizations permissible accommodation, and for the proposal specifically because have been reluctant to participate as equality for religious persons have they believed it would exempt religious federal contractors because of the lack of informed the policy approach in this organizations from the prohibitions on clarity or perceived narrowness of the rule. Where specific holdings or discrimination based on sexual religious exemption. Most of these language in these Supreme Court orientation and gender identity that commenters stated that OFCCP had decisions—and additional Supreme were added when E.O. 11246 was provided no evidence to support its Court decisions issued since—suggest amended by Executive Order 13672 claim. For example, a legal think tank answers to specific aspects of this rule, (E.O. 13672). 79 FR 42971 (July 23, commented that the proposal was ‘‘a they are noted in the section-by-section 2014). For example, a faith-based regulation in search of a problem,’’ and analysis. Comments on those more advocacy organization praised OFCCP criticized OFCCP for failing to provide specific issues are addressed there as for ‘‘the important positive precedent data regarding the number of religious well. that will be set by the proposed strong organizations reluctant to enter into protection of the religious staffing federal contracts, the number of C. Clarity and Need for the Rule freedom in the context of the contractors that have invoked the The NPRM noted that prior to its requirement of no sexual-orientation or Section 204(c) exemption in the past, publication, some religious gender-identity employment and the number of contractors expected organizations provided feedback to discrimination in federal contracting.’’ to avail themselves of the ‘‘expanded OFCCP that they were reluctant to An evangelical chaplains’ advocacy exemption’’ in the proposed rule. A participate as federal contractors organization commented that ‘‘E.O. labor union commented: ‘‘[T]here is no because of uncertainty regarding the 13672 . . . prohibited military evidence that the current, settled scope of the religious exemption chaplains from selecting religious interpretation of the E.O. 11246 contained in section 204(c) of E.O. support contractors who did not affirm religious exemption has deterred 11246 and codified in OFCCP’s sexual orientation, same-sex marriage organizations from submitting regulations. The NPRM also noted that and gender identity’’ in violation of competitive bids for federal contracts or while ‘‘only a subset of contractors and these chaplains’ free exercise rights. prevented them from obtaining such would-be contractors may wish to seek Some commenters agreed with contracts. At best, the Proposed Rule is this exemption, the Supreme Court, OFCCP’s observation that religious an unjustified rulemaking solution in Congress, and the President have each organizations have been reluctant to search of a problem.’’ affirmed the importance of protecting provide the government with goods or A few commenters stated that the religious liberty for those organizations services as federal contractors because proposal was unnecessary given the who wish to exercise it.’’ 84 FR at of the lack of clarity or perceived applicability of Title VII case law. For narrowness of the E.O. 11246 religious 41679. The NPRM also noted example, a contractor association exemption. One individual commenter throughout OFCCP’s desire to provide commented that the extent to which who identified himself as a legal adviser clarity in this area of regulation. religious employers can condition to federal contractors noted that OFCCP received numerous comments employment on religion has been imposing ‘‘pass through’’ contracting addressing the need for the proposed addressed by a long line of Title VII obligations on subcontractors can be rule. Some commenters stated that the cases, rendering an executive challenging, as religious subcontractors proposal was necessary to ensure that rulemaking on this topic unnecessary. often fear that complying with federal religious entities could contract with the Some commenters cited evidence that anti-discrimination laws will require federal government without federal contracts are being awarded to them to compromise their religious compromising their religious identities faith-based organizations. For example, integrity. Two other commenters offered a group of state attorneys general cited or missions. Many of these commenters examples or evidence of religious noted the important services provided the 2016 congressional testimony of organizations’ reluctance to participate Oklahoma Representative Steve Russell, by religious organizations. For example, in other contexts, such as federal grants. a religious school association who explained that more than 2,000 A religious medical organization cited a federal government contracts were being encouraged the federal government to survey suggesting that many individuals protect religious staffing ‘‘in all forms of awarded to religious organizations and working in faith-based organizations contractors per year. As examples of federal funding,’’ asserting that doing so (FBOs) overseas feel that the would enable religious organizations to faith-based organizations that were government is not inclined to work with awarded contracts in the previous year, expand the critical services they FBOs, and called for outreach programs provide. A religious liberties legal the state attorneys general listed the to correct this perception. following: organization likewise commented that A religious legal organization religious organizations are often referenced an audit of the Department of Army World Service Office ($27.5 million), uniquely equipped to respond to the Justice’s Office of Justice Programs (OJP) Mercy Hospital Springfield ($14.4 million), Young Women’s Christian Association of which revealed that, though religious 3 See, e.g., Nat’l Inst. of Family & Life Advocates Greater Los Angeles California ($10.2 v. Becerra, 138 S. Ct. 2361, 2368 (2018); organizations were interested in million), City of Faith Prison Ministries ($5.2 Masterpiece Cakeshop, 138 S. Ct. at 1729–30; Holt participating in many programs, ‘‘the million), Riverside Christian Ministries, Inc. v. Hobbs, 574 U.S. 352, 359 (2015). percentage of OJP funds distributed to ($2.7 million), Jewish Child and Family

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Services ($2.1 million), Catholic Charities, sexual orientation or gender identity, disagrees that the rule will introduce various affiliates (over $1 million in sum OFCCP repeats here as it did many confusion. OFCCP anticipates this rule total), to name a few.4 times in the NPRM that the religious will have no effect on the vast majority In addition, several commenters cited a exemption does not permit of contractors or the agency’s regulation report from a progressive policy discrimination on the basis of other of them, since they do not and would institute noting that some religious protected categories. The section-by- not claim the religious exemption. As organizations continue to be federal section analysis of Particular religion commenters noted, religious contractors despite their objections to a addresses the application of the organizations do not appear to be a large lack of an expanded religious exemption religious exemption and other legal portion of federal contractors. While in E.O. 13672. requirements to E.O. 11246’s other this rule may add clarity that Some commenters expressed protections including those pertaining encourages more religious organizations skepticism that the proposal would to sexual orientation and gender to seek to become federal contractors encourage participation in federal identity, and the application of the and subcontractors, OFCCP does not contracting because, they asserted, the Religious Freedom Restoration Act believe the increase will greatly rule as proposed would increase rather (RFRA) in certain situations. influence the composition or behavior than reduce confusion. For example, a Regarding comments that the rule is of the contractor pool that it regulates. contractor association commented that unnecessary because religious The exemption is a helpful OFCCP’s proposal would create more organizations are not presently deterred accommodation for this small minority confusion than clarity for federal from contracting with the government, of religious organizations that may seek contractors. An atheist civil liberties OFCCP believes that clarifying the law its protection. For them specifically, the organization echoed this concern, for current contractors is a valuable goal rule is intended to bring clarity. For commenting that the proposal would in itself, regardless of whether more instance, as explained below, this rule increase confusion because, in its view, religious organizations would provides a clear three-part test for the proposed rule deviated from participate as federal contractors or determining whether an entity can decades of Title VII law. Other subcontractors. The disputes among qualify for the exemption. Contrary to commenters stated that the proposal commenters over the proper the assertions of some commenters, and would have negative effects because of interpretation of the Title VII case law as described more fully below, Title VII increased uncertainty about or suggests as well that the guidance case law offers differing tests on a expansion of the exemption. These provided by this rule would be valuable jurisdiction-by-jurisdiction basis, and commenters stated that the proposal to the contracting community. And in some of those tests provide little would undercut other entities’ fact, as just noted, other commenters guidance at all. As another example, enforcement of nondiscrimination offered evidence that faith-based this rule provides a clear approach to obligations, increase EEOC enforcement organizations have indeed been determining when a religious employer actions, increase contractors’ reluctant to contract with the federal is appropriately taking action on the noncompliance, and strain OFCCP’s government because of the lack of basis of an employee’s particular resources. For example, a group of state certainty about the religious exemption. religion, another area where the case attorneys general commented that, given The fact that some faith-based law is not uniform. the prevalence of workplace organizations have been willing to enter OFCCP also disagrees that this rule discrimination, expanding E.O. 11246’s into federal contracts or subcontracts will impede the agency’s enforcement religious organization exemption to does not mean that other faith-based efforts. OFCCP promulgates this rule lessen OFCCP’s oversight could result in organizations have not been reluctant to from a position of familiarity with its employers claiming the exemption in do so. Admittedly, OFCCP cannot own enforcement resources, priorities, bad faith when faced with charges of perfectly ascertain how many religious and budget. For the reasons just stated discrimination. The state attorneys organizations are government above, OFCCP does not see this rule as general commented that the proposed contractors, or would like to become significantly affecting the vast majority rule had the potential to strain OFCCP’s such, and how those numbers compare of its work. OFCCP also does not limited resources due to employers to the whole of the contracting pool. But anticipate a flood of employers claiming requesting determinations of whether neither does OFCCP find persuasive the exemption in bad faith when faced they are exempt, and challenging the commenters’ assertions that faith-based with discrimination claims. That has applicability of OFCCP enforcement organizations are already well- not been the experience under the Title actions already underway. represented among government VII exemption thus far: The number of OFCCP appreciates the comments contractors, when those assertions are reported cases involving the exemption supporting its view that clarity based on examples showing contracting since 1964 are in the dozens, not the regarding the exemption would be awards to them totaling only tens of thousands. And in those cases, the useful, and notes their accounts of millions, when the federal government employer may or may not have religious organizations that are hesitant expended $926.5 billion on contractual succeeded in claiming the exemption or to participate as government services in fiscal year 2019 5 and, defending against a discrimination contractors, as well as their evidence of according to one estimate, faith-based claim, but in nearly all the employer did a perception among faith-based organizations account for hundreds of not appear to invoke the exemption organizations that the federal billions of dollars of economic activity nefariously, in bad faith. OFCCP is also government could do more to annually in the United States.6 OFCCP optimistic given the federal demonstrate that it will select the best government’s experience under the organizations for its partners, whether 5 See USA Spending, Spending Explorer (select RFRA. This law provides generous faith-based or not. Given certain Object Class, Fiscal Year 2019), https:// _ accommodation for religious claims and statements by these commenters www.usaspending.gov/#/explorer/object class. 6 See Brian J. Grim and Melissa E. Grim, ‘‘The regarding discrimination on the basis of Socio-economic Contribution of Religion to revenues of faith-based charities, congregations, American Society: An Empirical Analysis,’’ healthcare networks, educational institutions, and 4 The commenter cited USASPENDING.GOV, Interdisciplinary Journal of Research on Religion, other organizations), www.religjournal.com/pdf/ https://www.usaspending.gov/#/recipient. vol. 12 (2016), article 3, p. 10, 25, (describing ijrr12003.pdf.

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strict boundaries for the federal the final rule, as explained below. contractors in understanding the government, yet neither the courts nor Second, this final rule adds several exemption. OFCCP have been inundated with illustrative examples within the Other commenters argued that claims.7 definition of Religious corporation, importing the definition from Title VII OFCCP appreciates all comments association, educational institution, or is inappropriate because the context of received, and for the reasons stated society to better illustrate which Title VII is protection of an employee’s believes that proceeding with a final organizations qualify for the religious individual religious beliefs in the rule clarifying the religious exemption exemption. Third, this final rule adds a workplace, not those of the employer. A is warranted. For the small minority of severability clause. legal professional organization raised current and potential federal contractors the concern that this definition is and subcontractors interested in the A. Section 60–1.3 Definitions overbroad as applied to the employer, exemption, this will help them The definitions added to § 60–1.3 are particularly where it could allow a understand its scope and requirements interrelated, so they are discussed below government-funded employer to make and may encourage a broader pool of in a particular order. This order is faith-based employment decisions organizations to compete for different from that presented in the beyond those currently allowed under government contracts, which will inure NPRM. The change in order is not Title VII and E.O. 11246. Commenters to the government’s benefit. For the vast substantive. The change is intended also objected to the omission of the majority of contractors, OFCCP does not only to make the rule as a whole easier second part of the Title VII definition, expect this rule to affect their operations to understand. arguing that the weighing of the burden or OFCCP’s monitoring and 1. Definition of Religion that an employee’s request for religious enforcement. accommodations places on an employer This final rule is an Executive Order OFCCP’s proposed definition of is an important limitation on Congress’s 13771 (E.O. 13771) deregulatory action Religion provided that the term is not intent to accommodate religion in the because it is expected to reduce limited to religious belief but also workplace. Commenters stated that, in compliance costs and potentially the includes all aspects of religious their view, an employee’s requested cost of litigation for regulated entities. observance and practice. The proposed accommodations may impose no more Pursuant to the Congressional Review definition was identical to the first part than a de minimis burden on the Act (5 U.S.C. 801 et seq.), OIRA of the definition of ‘‘religion’’ in Title employer. Commenters argued that determined that this rule is not a ‘‘major VII: ‘‘The term ‘religion’ includes all OFCCP’s proposed definition is broader rule,’’ as defined by 5 U.S.C. 804(2). aspects of religious observance and than Congress intended in that it does Details on the estimated costs of this practice, as well as belief . . . .’’ 42 not consider the burden the employer’s rule can be found in the economic U.S.C. 2000e(j). The proposed definition assertion of the religious exemption analysis below. omitted the second portion of the Title would impose on employees, thus VII definition, which refers to an II. Section-by-Section Analysis allowing religious employers to take employer’s accommodation of an adverse actions against employees based The NPRM proposed five new employee’s religious observance or on religious belief no matter the definitions to clarify key terms used in practice, because that would have been hardship it causes them. Some OFCCP’s religious exemption: Exercise redundant with OFCCP’s existing commenters argued that partially of religion; Particular religion; Religion; regulations. OFCCP’s regulations at 41 importing the Title VII definition would Religious corporation, association, CFR part 60–50, Guidelines on ‘‘muddy the waters’’ rather than provide educational institution, or society; and Discrimination Because of Religion or clarity. Sincere. The regulatory codification of National Origin, contain robust religious Other commenters requested the underlying exemption itself—which protections for employees, including clarification on the proposed definition is not at issue in this rulemaking—is accommodation language substantially of Religion. Specifically, some found at 41 CFR 60–1.5(a)(5). The new the same as that in the portion of the commenters proposed that the final rule definitions were proposed to be placed Title VII definition omitted here. clarify that ‘‘observance and practice’’ with the rest of the regulations’ Compare 42 U.S.C. 2000e(j), with 41 includes refraining from certain generally applicable definitions at 41 CFR 60–50.3. Those provisions continue activities. Another commenter noted CFR 60–1.3. The NPRM also proposed to govern contractors’ obligations to that the proposed rule did not explain adding a rule of construction to § 60–1.5 accommodate employees’ and potential the extent to which it might displace to provide the maximum legally employees’ religious observance and employees’ right to reasonable permissible protection of religious practice. accommodation of their religious beliefs exercise. The proposed definition of Religion is and practices if such accommodation This final rule retains the same basic used by other agencies. It is identical to conflicts with the contractor’s religion. structure as the NPRM, with a few the definition used by the Department of For the reasons described above and changes. First, there have been some Justice in grant regulations in the NPRM, and considering the modifications to some of the definitions, implementing section 815(c) of the comments received, OFCCP is finalizing and one proposed definition, for Justice System Improvement Act of the proposed definition of Religion Exercise of religion, is not included in 1979. See 28 CFR 42.202(m). The Small without modification. No change is Business Administration has used the needed to make clear that inaction or 7 See 42 U.S.C. 2000bb(a)(5) (‘‘[T]he compelling same definition as well in its grant omission can be a form of ‘‘observance interest test as set forth in prior Federal court regulations. See 13 CFR 113.2(c). and practice.’’ See, e.g., Emp’t Div., rulings is a workable test for striking sensible balances between religious liberty and competing Some commenters generally Dep’t of Human Res. of Or. v. Smith, prior government interests.’’); Holt, 574 U.S. at 368 supported the proposed definition, 494 U.S. 872, 877 (1990) (holding the (rejecting the argument that the only workable rule noting that it is legally sound, as it ‘‘exercise’’ of religion protected by the is one of no exceptions); Gonzales v. O Centro tracks the Title VII definition and First Amendment ‘‘involves not only Espı´rita Beneficente Unia˜ o do Vegetal, 546 U.S. 418, 436 (2006) (rejecting ‘‘slippery-slope provides broad protection for religious belief and profession but the argument’’ that RFRA-mandated exceptions would entities. Commenters also noted that the performance of (or abstention from) become unworkable). definition is sensible and will aid physical acts’’); see also Espinoza, 140

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S. Ct. at 2277 (Gorsuch, J., concurring) religious exemption at 42 U.S.C. 2000e– the public as carrying out that religious (‘‘The right to be religious without the 1(a). The definition as proposed would purpose. The third and fourth prongs right to do religious things would hardly apply to a corporation, association, reflect Judge Kleinfeld’s view. See id. at amount to a right at all.’’). educational institution, society, school, 748 (Kleinfeld, J., concurring). OFCCP disagrees with commenters college, university, or institution of Regarding the third prong, Judge who argued that the definition of learning.8 O’Scannlain would have employed a Religion is overbroad and would permit As explained in the NPRM, clarity on broader formulation, requiring that the contractors to make faith-based this topic is essential because federal employer engage ‘‘in activity consistent employment decisions beyond those courts of appeals have used a confusing with, and in furtherance of, those permitted by law. The definition is the variety of tests, and the tests themselves [founding] religious purposes.’’ Id. at same as that used in other federal often involve unclear or constitutionally 734 (O’Scannlain, J., concurring). As to regulations and the same as that used in suspect criteria. The NPRM favored, the fourth prong, Judge Kleinfeld Title VII when read in conjunction with with some modifications, the test used restricted the exemption to the rest of OFCCP’s regulations. The by the U.S. Court of Appeals for the organizations that charge little or definition must also be construed in Ninth Circuit in Spencer v. World nothing for their goods or services, harmony with those regulations, the Vision, Inc., 633 F.3d 723 (9th Cir. 2011) regardless of their formal incorporation requirements of which remain in force (per curiam). This was for several as a nonprofit organization. See id. at just as strongly as before this reasons, including because the World 745–47 (Kleinfeld, J., concurring). Judge regulation’s promulgation. Vision test generally prevents invasive O’Scannlain would have broadened the OFCCP also disagrees that it should inquiries into matters of faith, the fourth prong (in most instances) by import the second half of Title VII’s uncertainty and subjectivity of a requiring nonprofit status, including definition of religion into its general list multifactor balancing test, and the nonprofit organizations that charge of definitions in § 60–1.3. OFCCP’s inherently difficult and constitutionally market rates for their goods or services. regulations in part 60–50 governing suspect exercise of measuring the See id. at 734 (O’Scannlain, J., protection of employees’ religion and quantum of an organization’s religiosity. concurring). national origin already contain this See 84 FR 41681–84. The NPRM proposed to follow a language and remain in force, and The controlling per curiam opinion in modified World Vision test. The NPRM employers must continue to comply World Vision offered a four-pronged test proposed adopting the first two prongs with them. The definition of Religion for determining an entity’s qualification of the per curiam opinion. The NPRM added to § 60–1.3 is intended to apply for the religious exemption: favored Judge O’Scannlain’s formulation generally, to both employers and an entity is eligible for the . . . exemption, of the second prong given the significant employees. at least, if it is [1] organized for a religious constitutional difficulties that Regarding comments about burden on purpose, [2] is engaged primarily in carrying accompany determining whether an employees’ exercise of religion, OFCCP out that religious purpose, [3] holds itself out organization is ‘‘primarily’’ religious. looks to the functioning of the religious to the public as an entity for carrying out that The NPRM also proposed to revise exemption. E.O. 11246, like Title VII, religious purpose, and [4] does not engage primarily or substantially in the exchange of Judge O’Scannlain’s phraseology, that requires employers to accommodate the entity be engaged ‘‘in activity’’ employees’ religious practices to a goods or services for money beyond nominal amounts. consistent with those religious prescribed extent. But the religious purposes, with the requirement that the exemption is precisely that: An World Vision, 633 F.3d at 724 (per entity be engaged ‘‘in exercise of exemption that relieves ‘‘religious curiam). religion’’ consistent with a religious organizations from Title VII’s [or E.O. This four-pronged test reflects the purpose. No material change was 11246’s] prohibition against overlap of agreement between the two intended by this adjustment; it was discrimination in employment on the judges in the majority, Judges meant to capture in succinct regulatory basis of religion.’’ Amos, 483 U.S. at O’Scannlain and Kleinfeld, who also text Judge O’Scannlain’s lengthy 329. That logically includes a lesser each wrote separate concurrences that discussion that the kind of activity exemption from the duty to laid out their own preferred tests. Both contemplated under this prong is accommodate religious practice. While judges agreed on the first two prongs, religious exercise. See 84 FR at 41683; religious organizations can that the entity be organized for a 9 see also World Vision, 633 F.3d at 737– accommodate employees’ religious religious purpose and hold itself out to 38 (O’Scannlain, J., concurring). Finally, practices, and in many instances may the NPRM proposed not to adopt the 8 The words ‘‘school, college, university, or find that desirable, under the fourth prong of the test, on grounds that exemption, they are not required to do institution of learning’’ also appear in 41 CFR 60– 1.5(a)(6), the exemption for religious educational a no-charging rule would exclude many so. See Kennedy v. St. Joseph’s organizations. They were included in the definition bona fide religious organizations, Ministries, Inc., 657 F.3d 189, 194 (4th to make clear that the definition’s listing of especially in the government Cir. 2011). ‘‘educational institution’’ includes schools, colleges, universities, and institutions of learning. contracting context, and that an absolute 2. Definition of Religious Corporation, Depending on the facts, an educational organization bar on for-profit organizations was Association, Educational Institution, or may qualify under the § 60–1.5(a)(5) exemption, the tenuous given other court decisions and Society § 60–1.5(a)(6) exemption, both, or neither. The the Supreme Court’s more recent inclusion of educational organizations is One of the primary objectives of this maintained in the final rule. decision in Hobby Lobby. See 84 FR at rulemaking is to clarify the conditions 9 To be precise, Judge O’Scannlain’s formulation was that the entity be ‘‘organized for a self- (Kleinfeld, J., concurring). Judge Kleinfeld wrote of eligibility for the religious exemption. identified religious purpose (as evidenced by that this ‘‘narrowness problem may be repairable by Thus the NRPM proposed a definition of Articles of Incorporation or similar foundational a tweak in the test,’’ id., which may be why the per Religious corporation, association, documents).’’ World Vision, 633 F.3d at 734 curiam opinion does not include Judge educational institution, or society. This (O’Scannlain, J., concurring). Judge Kleinfeld noted O’Scannlain’s parenthetical referring to Articles of that some people organize in religious bodies ‘‘with Incorporation. The difference is slight—a ‘‘tweak.’’ term is used in E.O. 11246 section no corporate apparatus’’ and expressed concerns OFCCP’s approach to this first factor, including the 204(c) and 41 CFR 60–1.5(a)(5), and it about the exemption being defeated by an necessary evidence to satisfy it, is discussed below is the same term used in the Title VII ‘‘[a]bsence of corporate papers.’’ Id. at 745 in this preamble.

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41684. The proposed rule could also be agreed that OFCCP should reject non- Vision involved the removal of two viewed as essentially following Judge World Vision tests based on these employees by a religious organization O’Scannlain’s concurrence save for his shortcomings. For example, a religious based on the employees’ failure to requirement that the entity be nonprofit legal organization commented that the adhere to the organization’s religious to qualify for the exemption. proposed test ‘‘eliminates the views. Therefore, according to the In response to comments and a subjectivity inherent in the LeBoon association, the World Vision test subsequent reevaluation of World Vision tests. It further eliminates the should not apply to for-profit and other case law, OFCCP is revising Establishment Clause violation present organizations holding themselves out as the proposed regulatory text in this final when a court determines whether an religiously motivated. A group of U.S. rule. The final rule’s test can be viewed organization is ‘religious enough,’ and it Senators criticized the proposal not only as generally adopting Judge also prevents inter-religion for adopting the test set forth in the O’Scannlain’s concurrence in World discrimination.’’ concurrence, but also for modifying part Vision, including by adopting a fourth Some commenters who supported of that test. prong. Satisfaction of this test will be OFCCP’s proposed definition A legal think tank asserted that sufficient to qualify for the exemption, commented that it provided important OFCCP appeared to have created its and OFCCP believes that this is the clarification that would be helpful to own test, designed to qualify more types means by which most organizations religious organizations in meeting their of contractors for the exemption. This interested in the exemption will qualify. missions. For example, a religious commenter went on to say that the However, OFCCP acknowledges that in school association commented that the ‘‘exceedingly more expansive criteria’’ certain rare circumstances, an proposal is especially important proposed by OFCCP are untethered to organization might not satisfy the non- considering that local control and Title VII case law and not in line with profit prong of the World Vision test yet leadership are central to many of its the ‘‘measured’’ exemption required by still present strong evidence that it participating schools’ beliefs. A the Establishment Clause, quoting possesses a substantial religious religious charities organization Cutter v. Wilkinson, 544 U.S. 709, 722 purpose. Thus the regulatory text commented that the proposed definition (2005) (‘‘Our decisions indicate that an includes an alternative means of would help it advance its mission of accommodation [of religious satisfying the fourth prong: When an providing essential services to people in observances] must be measured so that organization does not operate on a not- need—a mission rooted in its religious it does not override other significant for-profit basis, it must present ‘‘other convictions. interests.’’). strong evidence that it possesses a Other commenters disagreed with As explained in the NPRM, OFCCP substantial religious purpose.’’ The final OFCCP’s characterization of the existing believes that a LeBoon-type test invites rule also adds several examples to religious employer tests in Title VII case subjectivity and uncertainty. See illustrate how the test will be applied. law. For example, a legal professional LeBoon v. Lancaster Jewish Cmty. Ctr. The final rule also adds a clarifying organization noted that courts have Ass’n, 503 F.3d 217 (3d Cir. 2007). That provision regarding the meaning of generally agreed that the following is problematic in any circumstance, but ‘‘consistent with and in furtherance of’’ factors are relevant in deciding whether especially so in the context of a religious purpose, a phrase used in an organization qualifies for the government contracting, where parties’ one of the test’s prongs. The Department religious exemption: (1) The purpose or obligations should be as clear as does not anticipate many for-profit mission of the organization; (2) the possible. OFCCP also declines to organizations claiming the exemption, ownership, affiliation, or source of attempt to write a definition that and as explained through the examples financial support of the organization; (3) purports to synthesize all the Title VII and their accompanying discussion, it requirements placed upon staff and case law on this subject. OFCCP is may be quite difficult for such members of the organization; and (4) the doubtful that such a task could be done, organizations to do so. extent of religious practices in or the especially given Judge O’Scannlain’s This section of the preamble religious nature of products and services observation (with which Judge Kleinfeld addresses this topic as well as other offered by the organization. agreed) that several factors used by comments regarding OFCCP’s proposed Other commenters opposed the other courts are constitutionally definition of Religious corporation, proposed definition because they suspect, including, contrary to the association, educational institution, or viewed it as too broad and unsupported commenter’s suggestion above, an society. OFCCP believes its definition is by Title VII case law. For example, an assessment of the religious nature of an reasonable in light of Title VII and organization that advocates separation organization’s products and services. Supreme Court case law and that it will of church and state asserted that the See World Vision, 633 F.3d at 730–32 contribute to one of OFCCP’s primary definition in the proposed rule has not (O’Scannlain, J., concurring); id. at 741 goals in this rulemaking, which is to been proposed or used by any federal (Kleinfeld, J., concurring). OFCCP’s increase economy and efficiency in court and represents an attempt by approach in the final rule, like World government contracting by providing for OFCCP to vastly expand the scope of the Vision, instead requires consideration of a broader pool of government existing narrow exemption. A labor a discrete set of factors that can be contractors and subcontractors. Issues organization likewise commented that, reliably ascertained in each case. specific to the EEOC’s view on this in its view, the definition in the OFCCP acknowledges that the matter are also discussed below and proposed rule is contrary to law and definition it is promulgating here later in a separate part of this preamble. does not reflect the Title VII definition. modifies the World Vision test in some Some commenters objected generally respects, or alternatively can be viewed a. The Selection of World Vision as the to OFCCP’s selection or modification of as following Judge O’Scannlain’s Basis for the Religious Organization Test the World Vision test. For example, one concurrence with one addition. OFCCP OFCCP received numerous public contractor association commented that describes those modifications in more comments on its proposed definition, the proposed rule removes critical limits detail below along with its reasons for including comments on OFCCP’s on the standard set forth by Judge making them, including the need to discussion of the shortcomings in some O’Scannlain. Another contractor provide clarity to contractors and Title VII case law. Some commenters association emphasized that World enforcement staff. OFCCP disputes the

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relevance of commenters’ assertions that Commenters expressed a variety of analysis when even the courts struggle these modifications are being made for views on the NPRM’s proposed to do so. The commenter requested the purpose of qualifying more approach. Some were supportive. For more specific examples of how the organizations for the exemption. OFCCP instance, a religious legal organization proposed test will apply and asked that acknowledges that the modifications commented that Judge O’Scannlain’s the contractor community be consulted may allow marginally more test requires little judicial ‘‘‘trolling’ before a test is adopted. organizations to qualify for the through’’ an organization’s religious OFCCP appreciates these comments exemption and that the final rule is beliefs, because it is based exclusively and has re-reviewed World Vision and intended to increase the pool of federal on information the organization makes other relevant case law in light of them. contractors. But, as described herein, public. Relatedly, the same commenter World Vision and its antecedent cases in OFCCP believes the test adopted by this observed that OFCCP staff can easily the Ninth Circuit, as well as LeBoon in final rule is appropriately measured and and consistently apply the test, with the Third Circuit, begin from the serves the purpose of qualifying only positive implications for the rule of law. premise that the religious exemption genuinely religious organizations for the Other commenters objected generally to should cover only organizations that exemption. OFCCP’s description of how it would are, in fact, primarily religious. But determine whether a contractor had met courts have labored over how to b. OFCCP’s Application of the the test. For example, a civil liberties operationalize that requirement into a Definition Generally organization expressed concern that set of factors that can be applied The NPRM proposed how OFCCP OFCCP would not enforce baseline neutrally, objectively, and with minimal would apply the factors in its proposed evidentiary standards in determining constitutional entanglement. See World test for religious organizations. The whether an entity meets the test’s Vision, 633 F.3d at 729 (O’Scannlain, J., NPRM stated ‘‘that it would be factors. A contractor association concurring) (‘‘Though our precedent inappropriate and constitutionally commented that the modified World provides us with the fundamental suspect for OFCCP to contradict a claim, Vision test ‘‘is unclear on its face and question—whether the general picture found to be sincere, that a particular problematic in application.’’ A of World Vision is primarily religious— activity or purpose has religious transgender civil rights organization we must assess the manner in which we meaning’’; that ‘‘all the factors . . . are commented that the test relies on ill- are to answer that question in the case determined with reference to the defined criteria that must be measured at hand.’’); LeBoon, 503 F.3d at 226. contractor’s own sincerely held view of from the perspective of the employer. That does not mean that courts have its religious purposes and the religious Many of the commenters who dispensed with an organization’s need meaning (or not) of its practices’’; and opposed the proposed definition to present evidence in order to claim the that the proposed three-factor test expressed concern that it would have exemption. Rather, it means that the would be exclusive ‘‘stand-alone negative consequences. For example, a evidence required must be of a kind that components and not factors guiding an legal professional association asserted courts are competent to evaluate and ultimate inquiry into whether an that the proposal would allow even that avoids entanglement. See World organizations is ‘primarily religious’ or nominally religious entities to Vision, 633 F.3d at 730–33 secular as a whole.’’ 84 FR at 41682–83. discriminate on the basis of religion in (O’Scannlain, J., concurring); cf. NLRB The NPRM proposed this approach hiring, potentially exposing them to v. Catholic Bishop of Chi., 440 U.S. 490, for several reasons. The NPRM relied on legal liability under federal and state 502 & n.10 (1979); id. at 507–08 World Vision’s concerns about courts’ law despite their ability to retain their (appendix). Indeed, one of the purposes substituting their own judgment for status as federal contractors. A group of of Congress’s expansion of the Title VII what has religious meaning when the state attorneys general stated that religious exemption to cover all of an question is disputed: ‘‘The very act of OFCCP’s proposed test represents a employer’s activities, rather than simply making that determination . . . runs sharp departure from precedent and its religious activities, was to avoid counter to the ‘core of the constitutional thus would be difficult for OFCCP staff difficult line-drawing between religious guarantee against religious and adjudicators to apply. The attorneys and secular activities and the establishment.’ ’’ World Vision, 633 F.3d general also commented that the test interference with religious organizations at 731 (O’Scannlain, J., concurring) would likely cause non-compliance by that could result. See Amos, 483 U.S. at (quoting New York v. Cathedral Acad., increasing legal uncertainty about 336. In OFCCP’s view, World Vision 434 U.S. 125, 133 (1977)). ‘‘[I]nquiry which organizations qualify. generally, and Judge O’Scannlain’s into . . . religious views . . . is not only Other commenters requested clarity. concurrence in particular, has done the unnecessary but also offensive. It is well Regarding the NPRM’s statement that best job of formulating a test that meets established . . . that courts should the three factors would be standalone the competing and delicately balanced refrain from trolling through a person’s provisions rather than factors guiding an goals of giving the exemption only its or institution’s religious beliefs.’’ Id. ultimate ‘‘primarily religious’’ inquiry, a proper reach while employing useable (alterations in original) (quoting contractor association commented that, and constitutionally proper inquiries. Mitchell v. Helms, 530 U.S. 793, 828 in its view, the statement was unclear With that in mind, OFCCP clarifies (2000) (plurality opinion) (internal and did not lend credence to OFCCP’s here its general approach to applying quotation marks omitted)). Further, such assertion that the test would be easy to the exemption, addresses the particular inquiries could lead to discrimination apply or likely to be consistent in evidence needed for each factor, and among religions. See id. at 732 & n.8. application. The commenter asked for adds to the regulatory text examples The NPRM also drew on Supreme Court clarification as to how OFCCP would with accompanying explanation to and Title VII case law showing the apply the factors of the test as further illustrate its approach. First, constitutional and practical difficulties standalone factors, rather than as factors OFCCP acknowledges the need to clarify of determining whether a particular leading to the ultimate determination and revise its statement that the factors religious belief is ‘‘central’’ to one’s faith whether the contractor is primarily are ‘‘stand-alone components and not or whether an organization is religious or secular. The commenter factors guiding an ultimate inquiry’’ in ‘‘primarily’’ religious. See 84 FR at sought explanation from OFCCP as to order to make clear the agency’s intent. 41682–83. how it could easily conduct the required 84 FR at 41683. OFCCP agrees with

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commenters that the aim of any test in 1344 (D.C. Cir. 2002); see also Duquesne Bayamon v. NLRB, 793 F.2d 383, 401 this context is to determine whether the Univ. of the Holy Spirit v. NLRB, 947 (1st Cir. 1985) (finding no NLRB organization qualifies as a religious F.3d 824, 831 (D.C. Cir. 2020). jurisdiction when, among other things, organization, and that any components It is true that in applying the World an educational institution’s mission had are intended to guide or define that Vision factors, OFCCP will not ‘‘admittedly religious functions but ultimate inquiry. The NPRM’s statement substitute its own judgment for a whose predominant higher education was intended to mean that OFCCP contractor’s view—found to be sincere— mission is to provide . . . students with would apply the proposed three factors that a particular activity, purpose, or a secular education’’). A religious as the exclusive elements for belief has religious meaning. For purpose can be shown by articles of ascertaining whether an organization instance, OFCCP would not contradict a incorporation or other founding qualifies for the religious exemption, drug-rehabilitation center’s view, found documents, but that is not the only type rather than as mere considerations to be to be sincere, that its work is a religious of evidence that can be used. See World weighed along with other facts and healing ministry by stating that its work Vision, 633 F.3d at 736 (O’Scannlain, J., circumstances. is merely secular healthcare delivery. concurring); id. at 745 (Kleinfeld, J., OFCCP affirms that approach here as See Amos, 483 U.S. at 344 (Brennan, J., concurring) (noting that some religious the predominant path by which concurring) (finding religious entities have ‘‘no corporate apparatus’’). organizations are anticipated to qualify organizations ‘‘often regard the And finally, ‘‘the decision whether an for the exemption. This approach is provision of [community] services as a organization is ‘religious’ for purposes consistent with World Vision. The per means of fulfilling religious duty’’); cf. of the exemption cannot be based on its curiam opinion and both concurrences World Vision, 633 F.3d at 745 conformity to some preconceived notion provided slightly different factors, but (Kleinfeld, J., concurring) (‘‘Religious of what a religious organization should in each instance the factors were missionaries and Peace Corps do, but must be measured with presented as sufficient to determine an volunteers both perform humanitarian reference to the particular religion organization’s entitlement to the work, but only the latter is secular.’’). identified by the organization.’’ Id. at exemption. See World Vision, 633 F.3d Any other course would risk severe 735–36 (O’Scannlain, J., concurring) at 724 (per curiam) (holding ‘‘an entity constitutional difficulties. ‘‘The (quoting LeBoon, 503 F.3d at 226–27). is eligible for the . . . exemption, at prospect of church and state litigating in Some commenters objected that this least, if it’’ meets four factors (emphasis court about what does or does not have factor, as described in the NPRM and added)); id. at 734 (O’Scannlain, J., religious meaning touches the very core summarized above, was too relaxed or concurring) (holding ‘‘a nonprofit entity of the constitutional guarantee against that OFCCP was proposing to accept qualifies for the . . . exemption if it religious establishment . . . .’’ New insufficient evidence. Many of these establishes that it’’ satisfies three factors York v. Cathedral Acad., 434 U.S. 125, commenters stated that the proposal (footnote omitted)); id. at 748 (Kleinfeld, 133 (1977). But a contractor must prove was inconsistent with Judge J., concurring) (‘‘To determine whether its sincerity, which is a question of fact O’Scannlain’s requirement of an entity is a ‘religious corporation, to be proved or disproved in the same demonstrating religious purpose association, or society,’ determine manner as any other question of fact. through ‘‘Articles of Incorporation or whether it [satisfies the four factors].’’). And questions about religious similar foundational documents.’’ Id. at Second, the World Vision-derived test characterization apply to only some 734. For example, a labor union asserted promulgated here is not a subjective aspects of the test. For instance, whether that OFCCP’s implementation of this one. OFCCP shares commenters’ an organization operates on a nonprofit factor would be ‘‘more lax than Judge concern about contractors attempting to basis is a factual determination to which O’Scannlain’s concurrence.’’ A claim the exemption with little evidence religious characterizations have little if contractor association stated that the other than their own testimony that any relevance. Similarly, as clarified in test was vague and overly simple. An theirs is a religious organization. this final rule, an organization’s holding individual commenter requested more (Though OFCCP is also skeptical that itself out as religious requires an guidance as to what types of evidence many contractors would attempt to do objective evidentiary showing. Finally, OFCCP would accept to prove a so. As noted above, bad-faith claims to OFCCP does not defer to any contractor’s organization for a religious the Title VII exemption have been rare.) contractor’s assessment that it is entitled purpose. An organization that advocates The World Vision factors have been to the exemption itself. Whether an separation of church and state selected because they provide objective organization is a religious corporation, commented that an organization that criteria for determining an association, educational institution, or fails to document a religious purpose in organization’s religious status without society under E.O. 11246 is a legal any of its foundational documents was the need for intrusive religious determination based on whether the likely not organized for a religious inquiries. See id. at 733 (O’Scannlain, J., organization satisfies the relevant purpose. concurring) (holding where religious factors. OFCCP appreciates these comments activities or purposes are ‘‘hotly OFCCP next addresses specific issues and is revising its approach in response. contested, . . . we should stay our hand related to each factor, including the OFCCP agrees that additional clarity is and rely on considerations that do not evidence necessary to satisfy each needed here and that this factor should require us to engage in constitutionally factor. require documentary evidence of an precarious inquiries’’). The World organization’s religious purpose in its Vision factors are similar to a test used c. The First Factor: The Organization’s foundational documents. Judge in the National Labor Relations Act Religious Purpose O’Scannlain’s concurrence examined context, which similarly ‘‘avoids . . . As stated in the NPRM, to qualify for World Vision’s Articles of constitutional infirmities’’ while the religious exemption, a contractor Incorporation, bylaws, core values, and providing ‘‘some assurance that the must be organized for a religious mission statement. See id. at 736. An institutions availing themselves of the purpose, meaning that it was conceived organization may have other Catholic Bishop exemption are bona with a self-identified religious purpose. foundational documents, such as a fide religious institutions.’’ Univ. of This need not be the contractor’s only statement of faith, company code of Great Falls v. NLRB, 278 F.3d 1335, purpose. Cf. Universidad Cent. de conduct, business policies, or other

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governance documents demonstrating a As explained in the NPRM, OFCCP evidence. Many of these commenters religious purpose. No one particular proposed not to follow the World Vision stated that the incorporation of document is necessary. For instance, per curiam opinion’s formulation of this ‘‘exercise of religion’’ as defined in some federal contractors may be factor for both practical and legal RFRA into this factor further loosened unincorporated proprietorships or reasons. The per curiam opinion would the standard. For example, a group of partnerships and thus not have formal require a contractor to be ‘‘engaged state attorneys general asserted that corporate-formation documents. But the primarily in carrying out [its] religious incorporation of the RFRA standard organization must be able to show a purpose.’’ Id. at 724 (per curiam) revealed confusion on the part of religious purpose in documents that are (emphasis added). But such a OFCCP as to the fundamental difference central to the organization’s identity and formulation would invite OFCCP to between the religious organization purpose. OFCCP believes this balance things that cannot be balanced exemption and RFRA. The state requirement for documentary evidence consistently and leave contractors attorneys general stated that the will reduce uncertainty, provide without the kind of clarity that ought to religious organization exemption is objective means for the agency to prevail in contractual relations. Further, triggered only when an organization’s confirm an organization’s satisfaction of the Supreme Court and lower courts exercise of religion is so significant that this factor of the test, and help have cautioned against drawing lines the organization’s overall identity contractors better understand the kind between religious activity or belief that becomes religious and criticized the of showing they will need to make to is ‘‘central’’ or ‘‘primary’’ and religious proposed rule for focusing instead on satisfy this factor. activity or belief that is not. See 84 FR whether an organization engages in OFCCP emphasizes that it will not at 41682, 41683. exercises of religion generally. A civil Also as explained in the NPRM, challenge a sincere claim characterizing liberties organization characterized the OFCCP proposed to use the phrase a document’s statements as religious in preamble as mistakenly stating that ‘‘engages in exercise of religion’’ rather the contractor’s view. See id. at 735–36. inquiry into the religious nature of than Judge O’Scannlain’s phrase, But OFCCP will rarely be able to find a entities’ actions is impermissible. A ‘‘engages in activity.’’ See World Vision, claim of religious purpose to be sincere labor union commented that this aspect 633 F.3d at 734 (O’Scannlain, J., of OFCCP’s proposal could lead where the documents themselves are no concurring) (‘‘engaged in activity businesses to feign religiosity solely for different from standard corporate consistent with, and in furtherance of, the purpose of cloaking discriminatory documents or where an organization those religious purposes’’). No material activity. adds a religious purpose to its change was intended by this Some commenters also criticized the documents after it becomes aware of adjustment; it was meant to capture in exclusion from OFCCP’s proposed test potential discrimination liability or succinct regulatory text Judge of the requirement that a contractor be government scrutiny, including through O’Scannlain’s lengthy discussion that ‘‘primarily religious,’’ or ‘‘engaged an OFCCP compliance review. Sincerity the kind of activity contemplated under primarily in carrying out that religious is a factual determination, so each case this prong is religious exercise. See 84 purpose.’’ Some of these comments where sincerity is at issue will turn on FR at 41683; see also World Vision, 633 stated that OFCCP did not persuasively 10 its own particular circumstances. F.3d at 737–38. explain why it was excluding this d. The Second Factor: Engages in OFCCP received many comments on element from the definition. A Activity Consistent With, and in this aspect of the NPRM. A religious contractor association commented that Furtherance of, Its Religious Purpose organization asked OFCCP to clarify that Title VII’s religious organization ‘‘consistent’’ as used in the third factor exception has traditionally been limited Second, the contractor must engage in does not mean that OFCCP will be to institutions whose ‘‘purpose and activity consistent with, and in assessing ‘‘the coherence or consistency character are primarily religious,’’ and furtherance of, its religious purpose. of the contractor’s religious beliefs, see that OFCCP has no basis to depart from Here too, ‘‘religious purpose’’ means Thomas v. Review Bd., 450 U.S. 707 this principle. An anti-bigotry religious religious as ‘‘measured with reference to (1981) (forbidding such an inquiry), but organization commented that OFCCP the particular religion identified by the only [making] a determination that the should consider all relevant contractor.’’ Id. This factor is adopted contractor is engaged in activity circumstances in determining whether a from Judge O’Scannlain’s World Vision reflecting a religious, as opposed to a contractor is indeed religious, as OFCCP concurrence rather than the per curiam secular, purpose.’’ OFCCP confirms that proposed to do for Sincere (that is, opinion. Cf. id. at 734. The regulatory its intent in including this element is to taking into account all relevant facts). text of the final rule has been slightly determine whether the contractor’s The organization commented that the revised from the proposed language to exercise of religion is consistent with its Supreme Court in Hosanna-Tabor more closely reflect Judge O’Scannlain’s religious purpose, not to test the reviewed the employee’s religious and formulation. This factor is now the internal consistency of a contractor’s secular functions, undermining second factor in the test rather than the religious beliefs. To make this point as OFCCP’s claim that it cannot engage in third. No material change is intended. clear as possible, OFCCP has added a similar type of balancing. This factor also now states that the regulatory text explaining that OFCCP disagrees with the idea that organization must exercise religion ‘‘[w]hether an organization’s this factor, either as proposed or as consistent with, and in furtherance of, engagement in activity is consistent adopted in the final rule, confuses the ‘‘its’’ religious purpose, rather than ‘‘a’’ with, and in furtherance of, its religious religious exemption with RFRA. An religious purpose. OFCCP does not view purpose is determined by reference to organization that exercises religion this change as significant, since a the organization’s own sincere under RFRA may not satisfy this factor religious organization is quite unlikely understanding of its religious tenets.’’ of the test, yet even if it did, that alone to further a religious purpose other than As with other factors, some would not satisfy the other factors of the its own. commenters asserted that this factor, as test necessary to claim the E.O. 11246 described in the NPRM and summarized religious exemption. Further, as will be 10 As noted in the proposed rule, see 84 FR at above, was too relaxed or that OFCCP discussed shortly, OFCCP has revised 41685, sincerity is often not at issue. was proposing to accept insufficient this prong to adhere to Judge

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O’Scannlain’s formulation, which organization’s religious activity under comparison between the amount of should alleviate any confusion this factor must be shown to ‘‘constitute religious and secular activity at an regarding RFRA.11 a comprehensive religious identity.’’ organization. In essence, the OFCCP agrees with commenters that That is simply a rephrasing of the organization must engage in a greater activity consistent with the contractor’s ultimate inquiry underlying the World quantum of religious activity than religious purpose must be a substantial Vision test. This factor has a crucial role secular activity, though without aspect of the contractor’s operations. to play in that inquiry, but it should not specifying whether the ratio must be Insofar as the NPRM could be read to be mistaken for the whole of it. One of 51:49, 70:30, or 99:1. However, any suggest that a one-time or de minimis the most useful aspects of the World attempt to so compare religious and amount of religious activity would be Vision test is that it provides a step-by- secular activity leads to additional sufficient, OFCCP clarifies that step framework for assessing an problems: Some activities do not clearly understanding here. The need for a organization’s religious nature, fall on one side of the line or the other, material amount of religious activity including this factor, rather than leaving and a court’s or an agency’s attempts to flows from the text used in the the inquiry an open-ended assessment determine on which side of the line regulation, that the entity ‘‘engage in in which a religious organization is those activities fall can lead to religious activity.’’ To engage is ‘‘[t]o simply known when it is seen. Cf. constitutionally intrusive inquiries. See, employ or involve oneself; to take part Jacobellis v. State of Ohio, 378 U.S. 184, e.g., Cathedral Acad., 434 U.S. at 133 in; to embark on,’’ Black’s Law 197 (1964) (Stewart, J., concurring). (observing the ‘‘excessive state Dictionary (11th ed. 2019), or to Regarding comments that applying involvement in religious affairs’’ that ‘‘involve oneself or become occupied; Judge O’Scannlain’s concurrence rather may result from litigation over ‘‘what participate,’’ American Heritage than a ‘‘primarily engaged’’ factor is an does or does not have religious Dictionary (5th ed. 2020). It suggests unjustified departure from Title VII meaning’’). Moreover, even when all more than occasional or half-hearted jurisprudence or reflects an overly activities are properly categorized, it is efforts. The case law further illustrates prophylactic view of religious inquiry, unclear what weight each should have. that there must be a significant level of OFCCP respectfully disagrees. OFCCP’s See, e.g., Univ. of Great Falls, 278 F.3d religious activity. For instance, World position requires being mindful of the at 1343 (observing that a test that Vision easily satisfied that requirement distinction between the test’s requires ascertaining an entity’s since activity consistent with its underlying inquiry and the factors used ‘‘substantial religious character’’ or lack religious purpose was ‘‘essentially all to ascertain the answer to that inquiry. thereof ‘‘boils down to ‘is it sufficiently World Vision appears to do.’’ World The test’s underlying inquiry is whether religious?’’’). OFCCP avoids these Vision, 633 F.3d at 737–38 an organization’s ‘‘purpose and problems by adopting Judge (O’Scannlain, J., concurring). The character are primarily religious.’’ See, O’Scannlain’s formulation of this prong. examples added to the final regulatory e.g., World Vision, 633 F.3d at 726 OFCCP agrees with commenters that text also help illustrate the religious (O’Scannlain, J., concurring). But World some courts have nonetheless activity needed to qualify for the Vision operationalized that inquiry into undertaken the task of comparing exemption. four factors. Thus any constitutional or secular and religious activity when OFCCP disagrees with commenters to practical problems regarding the examining the religious exemption. See the extent they argue that an inquiry’s ‘‘primarily religious’’ LeBoon, 503 F.3d 217; Kamehameha organization must engage solely in formulation are academic because Sch., 990 F.2d 458; Boydston v. Mercy religious activity (and explains below OFCCP will be answering the inquiry by Hosp. Ardmore, Inc., No. CIV–18–444– that such an inquiry would be difficult means of applying the factors. That is G, 2020 WL 1448112 (W.D. Okla. Mar. and constitutionally imprudent). When one of the reasons why OFCCP prefers 25, 2020). OFCCP disagrees that it also an organization engages in other, the World Vision test to other must do so when Judge O’Scannlain’s secular, activities, that alone does not formulations. concurrence provides a viable diminish its ability to satisfy this factor When it comes to those four factors, alternative. That alternative is especially of the test. See LeBoon, 503 F.3d at 229; however, the World Vision per curiam attractive to OFCCP as an enforcement cf. Univ. of Great Falls, 278 F.3d at opinion carried forward a ‘‘primarily’’ agency and as a regulator of government 1342. This is made clear by the text of inquiry in two of the factors: The contractors. In both instances a factor the religious exemption. The Title VII organization must be ‘‘engaged that offers more clarity than another exemption was expanded in 1972 (and primarily in carrying out [its] religious gives better notice to contractors, better that expanded language is used in E.O. purpose’’ and must ‘‘not engage guidance to field staff, and crisper lines 11246) to cover religious organizations’ primarily or substantially in the to the bargain between the two parties. employees engaged in any of the exchange of goods or services for money organization’s activities, rather than beyond nominal amounts.’’ Id. at 724 e. The Third Factor: Holding Itself Out only employees engaged in the (per curiam). Judge O’Scannlain’s well- as Religious organization’s religious activities. Thus reasoned concurrence used an Third, the contractor must hold itself the exemption contemplates that alternative formulation that avoids the out to the public as carrying out a religious organizations will engage in ‘‘primarily’’ questions. OFCCP believes religious purpose. Again here, and as activities that are not religious, and it the better choice is to adopt the explained in the NPRM, ‘‘religious makes clear that religious organizations concurrence. The main problem with purpose’’ ‘‘must be measured with do not forfeit the exemption simply determining whether an organization is reference to the particular religion because they do. ‘‘primarily’’ engaged in its religious identified by the contractor.’’ World OFCCP also disagrees with purpose—as opposed to substantially or Vision, 633 F.3d at 736 (O’Scannlain, J., commenters who argued that the materially or genuinely engaged in its concurring). The NPRM proposed that a religious purpose—is not that it requires contractor could satisfy this requirement 11 Because of this change, the phrase ‘‘exercises a determination that the organization is in a variety of ways, including by religion’’ no longer appears in this prong. Thus, as engaged in significant religious activity, evidence of a religious purpose on its explained later in this preamble, the definition for Exercise of religion is no longer needed and has something that can be ascertained easily website, publications, advertisements, been removed from the final rule. enough, but rather that it requires letterhead, or other public-facing

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materials, or by affirming a religious required references to its Christian marketplace; 12 religiously oriented purpose in response to inquiries from a identity in all external communications; hospitals, senior-living facilities, and member of the public or a government and its employment guidelines hospices may engage in substantial and entity. See 84 FR at 41683. expressly required subscription to frequent financial exchanges; 13 the Again, some commenters stated that particular Christian beliefs. See id. at religious exemption in E.O. 11246 this factor, as described in the NRPM 738–40. Very recently, a district court pertains to government contracting, an and summarized above, was too relaxed held that a Catholic hospital and its economic activity in which most or that OFCCP was proposing to accept affiliates satisfied the requirement when participants are for-profit entities; 14 insufficient evidence. Many of these they held ‘‘themselves out to the public other courts have not considered commenters criticized OFCCP’s as sectarian through their display of dispositive an organization’s for-profit proposal for allowing a contractor to religious symbols in their facilities and or nonprofit status, or the volume or meet this requirement by declaring its through their sectarian mission amount of its financial transactions; religious purpose in response to an statement and values statements Amos left open the question of whether inquiry from a government entity such displayed on [their] public website.’’ for-profit organizations could qualify for as OFCCP itself. Commenters asserted Boydston, 2020 WL 1448112, at *5. In the exemption; and the Supreme Court’s that, as a result, almost any employer the analogous NLRA context, a more recent decision in Hobby Lobby, could designate itself a religious university satisfied the test when, ‘‘in its which held that for-profit organizations organization. Commenters also stated course catalogue, mission statement, can exercise religion, counseled against that taxpayers, employees, and student bulletin, and other public an absolute prohibition on allowing for- applicants therefore would not documents, it unquestionably holds profit organizations to qualify for the necessarily have notice that the itself out to students, faculty, and the exemption. religious exemption could be applied. broader community as providing an OFCCP received a wide variety of Commenters stated that this factor education that, although primarily comments on this aspect of the NPRM. would thus not serve as the ‘‘market secular, is presented in an overtly Some commenters agreed with OFCCP’s check’’ that Judge O’Scannlain religious, Catholic environment.’’ Univ. reasons for declining to require that a envisioned. World Vision, 633 F.3d at of Great Falls, 278 F.3d at 1345. The contractor ‘‘not engage primarily or 735 (O’Scannlain, J., concurring) university also filled its campus, substantially in the exchange of goods (quoting Univ. of Great Falls, 278 F.3d classrooms, and offices ‘‘with Catholic or services for money beyond nominal at 1344). A group of state attorneys icons, not merely as art, but it claims as amounts.’’ For example, a religious general, for example, criticized OFCCP’s an expression of faith.’’ Id. liberties organization commented that proposal for purportedly relaxing Judge In short, a contractor satisfies this federal contractors typically engage in O’Scannlain’s ‘‘ ‘market check’ that requirement when the contractor makes substantial exchanges of goods and would come from requiring an it reasonably clear to the public that it services, and therefore religious organization to hold itself out to the has a religious purpose. As noted in the organizations would be categorically public as religious,’’ which ‘‘could come NPRM, evidence of a religious purpose denied the section 204(c) exemption if at a cost in terms of broader public can come from the contractor’s website, they became federal contractors. Other support.’’ One contractor association publications, advertisements, letterhead, commenters opposed the exclusion of remarked that, under the proposed rule, or other public-facing materials, and in the requirement that a contractor ‘‘not a federal contractor could satisfy this statements to members of the public. engage primarily or substantially in the factor simply by responding to an Evidence can also include religiously exchange of goods or services for money OFCCP inquiry, whereas World Vision inspired logos, mottos, or the like; and beyond nominal amounts.’’ A group of had always identified itself as a religious art, texts, music, or other U.S. Senators commented that the Christian organization, requiring its displays of religion in the workplace. existence of a financial motive descriptor statement on all its Statements to the government in the constitutes strong evidence that the communications. Another contractor ordinary course of business, such as exercise of religion is not the objective association commented: ‘‘Making such a corporate documents or tax filings, can of the entity. Some of these commenters showing [for example, in response to an also be probative. Such statements stated that OFCCP did not persuasively inquiry] is very easy and may or may should be distinguished from statements explain why it was excluding this not actually align with actual corporate to the government made in the course of element from the definition. purpose.’’ an investigation or litigation in which OFCCP declines to restrict the OFCCP appreciates these comments the contractor’s religious purpose is at exemption to those religious entities and, here too, is clarifying its approach issue. No one piece of evidence is that charge little or nothing for their in response. OFCCP agrees that a required or, most likely, sufficient. But services. Contra World Vision, 633 F.3d contractor could not satisfy this factor together the evidence must show that at 724 (per curiam); id. at 747 (Kleinfeld, simply by affirming a religious purpose the contractor is presenting itself to the J., concurring). First, E.O. 11246 governs in response to one public or government outside world as religious. federal contractors, not grantees. inquiry, if that was all the contractor Contractors by definition charge for could put forward as evidence. More f. The Fourth Factor: Operating on a Not-for-Profit Basis would be needed to show that the 12 See Brian J. Grim and Melissa E. Grim, ‘‘The public was on notice of the OFCCP proposed not to adopt the Socio-economic Contribution of Religion to organization’s religious nature. fourth factor set out in World Vision: American Society: An Empirical Analysis,’’ Interdisciplinary Journal of Research on Religion, How much more is a factual question That the entity seeking exemption ‘‘not vol. 12 (2016), article 3, pp. 10, 24, http:// that cannot be defined with complete engage primarily or substantially in the www.religjournal.com/pdf/ijrr12003.pdf. specificity, but the case law provides exchange of goods or services for money 13 See id. at 7. some guideposts. World Vision easily beyond nominal amounts.’’ 633 F.3d at 14 See General Service Administration, System for satisfied this requirement: Its logo was 724 (per curiam). The NPRM proposed Award Management, Advanced Search—Entity (listing 410,021 active for-profit entities and 99,781 a stylized cross; religious artwork and this course for several reasons: Many nonprofit and/or other-not-for-profit entities), texts were displayed throughout its religious entities may operate discount sam.gov/SAM/pages/public/searchRecords/ campus; its communications guidelines retail stores or otherwise engage in the advancedEMRSearch.jsf (last accessed Oct. 2, 2020).

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their goods and services, even if they are Other commenters opposed the Some commenters specifically nonprofits. E.O. 11246’s religious proposal not to make nonprofit status a objected to OFCCP’s reliance on Hobby exemption would be a virtual nullity determinative factor. For example, an Lobby as justifying or requiring the were it restricted to contractors that do anti-bigotry religious organization proposed removal of the nonprofit not charge. Second, OFCCP agrees with emphasized that Judge O’Scannlain’s status factor. Most of these commenters Judge O’Scannlain that nonprofit status concurrence in World Vision focused on stated that Hobby Lobby was is a sufficiently reliable proxy for whether the employer’s purpose is non- inapplicable because it centered not on religious identity,15 without the need to pecuniary, while Judge Kleinfeld’s the Title VII religious exemption but on restrict this factor further to only those analysis focused on whether the RFRA, specifically on that statute’s organizations that do not charge. Judge employer provided services at no cost or definition of ‘‘person.’’ For example, a O’Scannlain explained that nonprofit for a nominal fee. The organization civil liberties organization commented status, and its restrictions on monetary criticized the proposed rule for rejecting that the Supreme Court in Hobby Lobby gain, is reliable evidence that the both factors. Commenters asserted that focused its analysis on the definition of organization has religious aims rather OFCCP’s proposal not to make nonprofit the word ‘‘person’’ in RFRA and offered than purely pecuniary ones, see id. at status a determinative factor would no insight into the definition or scope 734–35 (O’Scannlain, J., concurring), unacceptably broaden the exemption. A of the phrase ‘‘religious corporation’’ in and OFCCP agrees. Plus, the narrower religious organization asserted that the the religious exemption context. A formulation would exclude many bona proposed rule would allow for-profit gender equality advocacy organization fide religious organizations, like certain corporations to exploit faith in order to commented that RFRA goes far beyond hospitals and care facilities, that engage justify discrimination, and that the what is constitutionally required by in substantial and frequent market spirit of religious institutions would be subjecting any laws burdening religious transactions, including by charging diminished if houses of worship were exercise to strict scrutiny and, thus, the sums to beneficiaries of their goods and placed in the same category as for-profit question of RFRA’s application should services. And while religious institutions. not dictate a company’s eligibility for a educational institutions have their own Some commenters stated that the Title VII religious exemption. particular exemption, it would seem proposal would allow discrimination by Some commenters also stated that odd to think that their charging for contractors that should not be entitled Hobby Lobby has not been applied in books, tuitions, and dormitories would to the religious exemption. A labor subsequent Title VII religious call into question their religious status. organization commented that even for- exemption cases. These commenters Third, one of the reasons OFCCP is profit companies, whose primary typically cited Garcia v. Salvation promulgating this rule is to encourage purpose is, by definition, to make a Army, 918 F.3d 997 (9th Cir. 2019). In broader participation in government profit, could protect themselves from that case, the Ninth Circuit found that contracting and subcontracting. discrimination claims by claiming to the Salvation Army satisfied the Restrictions that would unduly restrict have a religious purpose. requirement that it ‘‘not engage the exemption’s availability could affect Some commenters stated that the primarily or substantially in the the size of the pool, to the detriment of proposed removal of the nonprofit exchange of goods or services for money the government’s interests in a requirement was inconsistent with Title beyond nominal amounts’’ both because competitive and diverse field of VII case law interpreting the same term, it is a nonprofit (Judge O’Scannlain’s potential contractors. including Judge O’Scannlain’s own test. approach) and because it gives away or OFCCP also received many comments Many of these commenters stated that charges only nominal fees for its on its proposal to remove the OFCCP had not cited any Title VII cases services (Judge Kleinfeld’s approach). requirement that organizations be in which a court had found a for-profit Id. at 1004. nonprofit to qualify for the exemption. entity to qualify for the religious In addition to distinguishing Hobby As mentioned above, OFCCP has exemption. For example, a contractor Lobby on the ground that it addressed substantially revised this aspect of the association commented that Judge RFRA and not the Title VII religious rule in response to commenters’ O’Scannlain considered non-profit exemption, commenters also stated that concerns. Some commenters agreed status to be an ‘‘especially significant’’ key limitations present in Hobby Lobby with the proposal that it was not consideration, which was consistent were not reflected in OFCCP’s proposal. necessary for a contractor to ‘‘be with the reasoning in numerous Title In particular, they stated, Hobby Lobby nonprofit.’’ For example, a religious VII cases. Some commenters stated that held that only closely held for-profit civil rights organization commended the the proposed removal of the nonprofit corporations could invoke RFRA, but proposal for affirming that the owners of requirement was inconsistent with OFCCP’s proposal included no such for-profit entities do not have to forfeit guidance from the EEOC or was a limitation, and the Court in Hobby their religious convictions. Those reversal of OFCCP’s previous position. Lobby considered harms an exemption commenters agreed with OFCCP’s Many of these commenters stated that would impose on third parties, but explanation that Hobby Lobby counsels OFCCP gave inadequate reasons for the OFCCP did not consider third-party against a stark distinction between deviation. For example, a group of state harms the commenters believed the nonprofit and for-profit corporations. attorneys general commented that the proposal would cause. Commenters also For example, a religious legal proposed reversal was not justified by stated that Hobby Lobby did not address organization commented: ‘‘[A]s the the executive branch’s contracting government contractors. For example, a Supreme Court noted in Hobby Lobby, authority, which ‘‘must be exercised women’s rights advocacy organization a for-profit corporation substantially within the boundaries of Title VII’s commented that, while Hobby Lobby engaged in an exchange of goods and prohibitions.’’ A contractor association dealt with a general requirement on all services can exercise religion.’’ commented that omitting a legal non-grandfathered insurance plans, the requirement because it could be difficult proposed rule deals with businesses that 15 In the next few paragraphs, this preamble to apply does not align with OFCCP’s willingly enter contracts with the explains further why and how OFCCP is limiting the exemption to nonprofit organizations in most stated commitment to follow the rule of federal government. According to the circumstances. law and to apply Title VII principles. organization, ‘‘[a]n entity does not have

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a right to a contract that it is unwilling status as ‘‘especially significant’’ requires that the organization, if for- to perform.’’ because of its evidentiary value. He profit, present ‘‘other strong evidence In consideration of these comments, wrote that nonprofit status ‘‘bolsters a that it possesses a substantial religious OFCCP is revising the definition of claim that [an organization’s] purpose is purpose.’’ This formulation attempts to Religious corporation, association, nonpecuniary,’’ ‘‘provides strong synthesize the various statements in educational institution, or society in the evidence that its purpose is purely World Vision and Amos as to the final rule. OFCCP recognizes that, as nonpecuniary,’’ ‘‘makes colorable a quantum of religious purpose an Judge O’Scannlain observed, nonprofit claim that it is not purely secular in organization must have, and recognizes status is ‘‘strong evidence’’ that an orientation,’’ and ‘‘bolster[s] a their reasoning that nonprofit status organization has a nonpecuniary ‘contention that an entity is not serves as a valuable evidentiary proxy purpose. World Vision, 633 F.3d at 734– operated simply in order to generate for religious purpose. Thus the final rule 35 (O’Scannlain, J., concurring); see also revenues ..., but that the activities requires a for-profit organization to put Amos, 483 U.S. at 344 (1987) (Brennan, themselves are infused with a religious forward strong evidence to demonstrate J., concurring). Nonprofit status also purpose.’ ’’ World Vision, 633 F.3d at that it does indeed have a substantial allows a determination of religious 734–35 (O’Scannlain, J., concurring) religious commitment rather than serve purpose to be made objectively and (quoting Amos, 483 U.S. at 344 solely as a vehicle to facilitate profit- without engaging in a more searching (Brennan, J., concurring)).16 OFCCP making or other secular ends. This inquiry. With that said, OFCCP agrees with these observations, which is formulation recognizes that an recognizes that, in certain rare why it has adopted nonprofit status as organization may have more than one circumstances, an organization might be a sufficient means for satisfying this purpose, but its religious one must be for-profit yet still be fairly considered a factor of the test. substantial. It would not be enough, for religious rather than secular There may be rare situations, instance, that an organization feature a organization. however, where an organization is scriptural quote in marketing materials Thus the final rule adds a fourth legally constituted as a for-profit or make a brief reference to religious requirement: That the contractor either enterprise yet infused with religious values on its ‘‘About Us’’ web page. The ‘‘(A) operates on a not-for-profit basis; or purpose. In those situations, the examples in the regulatory text may be (B) presents other strong evidence that organization would need to come instructive to readers on this point. it possesses a substantial religious forward with strong evidence that its This new regulatory text is also purpose.’’ Paragraph (A) has been goals are religious rather than consistent with Hobby Lobby’s written in a manner that covers federal pecuniary—evidence comparable in observation that a corporation need not contractors that do not have formal tax- probative weight to nonprofit status. choose absolutely between financial exempt status under 26 U.S.C. 501(c)(3) OFCCP has added examples within the objectives and other objectives: but operate in substantial compliance regulatory definition of Religious with 501(c)(3)’s requirements. See corporation, association, educational While it is certainly true that a central World Vision, 633 F.3d at 745 objective of for-profit corporations is to make institution, or society to illustrate some money, modern corporate law does not (Kleinfeld, J., concurring) (noting the of these rare instances, including a require for-profit corporations to pursue need for a small adjustment to the test contractor that provides chaplaincy profit at the expense of everything else, and to cover small groups that do not services to the military and a kosher many do not do so. . . . If for-profit formally incorporate). Paragraph (A) caterer that supplies meals for federal corporations may pursue such worthy meets the goals of certainty and clarity events. OFCCP doubts that an entity that objectives [as supporting charitable causes, in contracting for what OFCCP believes is not closely held could ever satisfy environmental measures, or working will be the vast majority of contractors this requirement, especially since such conditions beyond those required by law], interested in the exemption. Paragraph an entity would have multiple and there is no apparent reason why they may not further religious objectives as well. (B) is a helpful contingency for disparate shareholders. See Hobby situations where a contractor may not Lobby, 573 U.S. at 717 (‘‘[T]he idea that Hobby Lobby Stores, 573 U.S. at 711. satisfy this prong of the test but in all unrelated shareholders—including OFCCP believes that the approach fairness should be considered a institutional investors with their own promulgated here, which has been qualifying religious organization. This set of stakeholders—would agree to run modified from that in the NPRM, is alternative test is consistent with World a corporation under the same religious consistent with Title VII case law. Vision and the more recent Ninth beliefs seems improbable.’’). OFCCP Again, World Vision set out a four-factor Circuit case highlighted by commenters, likewise doubts that an entity could test that, if satisfied, is sufficient for Salvation Army, 918 F.3d 997. World qualify if it predominantly provides organizations to qualify for the Vision’s brief per curiam opinion stated undifferentiated marketplace goods or exemption. But as Salvation Army and that an organization is eligible for the services that are not associated with an other cases show, there are other ways exemption ‘‘at least’’ when it meets the expressly religious purpose or a to qualify for the exemption. See four factors. 633 F.3d at 724 (per charitable, educational, humanitarian, Salvation Army, 918 F.3d 997; EEOC v. curiam) (emphasis added). Judge or other eleemosynary purpose. Townley Eng’g & Mfg. Co., 859 F.2d 610 O’Scannlain’s opinion stated that other OFCCP has also modified the NPRM’s (9th Cir. 1988). In these other cases, factors may be relevant in other cases. definition of Religious corporation, nonprofit or for-profit status has been See id. at 729–30 (O’Scannlain, J., association, educational institution, or treated as an important factor, but not as concurring). In Salvation Army, the society to reflect these considerations. dispositive. That is similar to this final court applied an ‘‘all significant Unlike the proposed rule, which stated rule’s approach. religious and secular characteristics’’ only that a religious organization need For the same reason, OFCCP disagrees standard as well as noted that the not be nonprofit, the final rule now that its approach is an unjustified Salvation Army satisfied the World change in agency position. Until this Vision test. See Salvation Army, 918 16 These varying statements span the range from rulemaking, OFCCP had not set forth the ‘‘not purely secular’’ to ‘‘purely nonpecuniary.’’ specific factors it would use to decide F.3d at 1003–04. OFCCP’s regulatory text attempts to strike a balance In his World Vision concurrence, down the middle, using the phrase ‘‘possesses a which organizations qualify for E.O. Judge O’Scannlain described nonprofit substantial religious purpose.’’ 11246’s religious exemption; rather, in

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withdrawn subregulatory guidance under the religious exemption. Hobby The Supreme Court has applied this OFCCP stated that it would follow Lobby does not demand a result one way principle to allow accommodations that EEOC and court interpretations of Title or the other on that issue, but OFCCP litigants claimed caused significant VII and apply an all-facts-and- has found the case to be an important third-party harms. For example, the circumstances test. To the extent that data point in support of its approach Supreme Court upheld the Title VII withdrawn statement could be here. exemption for religious employers— considered the position of the agency, Regarding commenters’ concerns that discussed in Section 8—despite the for the reasons stated in this preamble, a removal of the nonprofit requirement alleged significant harms of expressly OFCCP now believes such a test is too would unacceptably broaden the permitting discrimination against indeterminate and involves potential exemption, OFCCP has revised the employees on the basis of religion. See legal infirmities, and that a more- regulatory text as described above. Tex. Monthly, 489 U.S. 1, 18 n.8 (1989) defined test will give better clarity to OFCCP does not anticipate many for- (citing Amos). This is consistent with contractors and foster a broader pool of profit organizations seeking to qualify Hobby Lobby, which expressly held that potential contractors and for the exemption, and those that do a burden lawfully may be removed from subcontractors. It is certainly true, as will need to satisfy the other three a religious organization even if it allows commenters asserted, that OFCCP’s prongs—which themselves contain such a religious objector to withhold a general position is to follow Title VII significant evidentiary requirements— benefit from third parties. Hobby Lobby, principles when interpreting E.O. plus provide strong evidence of their 573 U.S. at 729 n.37 (‘‘Nothing in the 11246. For the reasons stated in this religious nature. OFCCP believes this text of RFRA or its basic purposes preamble OFCCP believes its approach test will ensure that only bona fide supports giving the Government an is consistent with Title VII principles religious organizations will qualify. entirely free hand to impose burdens on and Supreme Court case law, and better Finally, regarding comments about so- religious exercise so long as those furthers the goals of this rulemaking. called third-party harms, OFCCP burdens confer a benefit on other The minor differences between the recognizes that Cutter v. Wilkinson individuals.’’). Ultimately, government EEOC’s approach to determining which stated that government must adequately action that removes such a benefit organizations can claim the exemption account for accommodations’ burdens merely leaves the third party in the and OFCCP’s definition of Religious same position in which it would have on others. 544 U.S. 709, 720 (2005). corporation, association, educational been had government not regulated the OFCCP believes it has adequately institution, or society are addressed later religious objector in the first place. accounted for any burdens on others in this preamble. Otherwise, any accommodation could that this rule may cause, and on balance OFCCP also disagrees with be framed as burdening a third party. believes that the vindication of the law’s commenters who argued that Hobby That would ‘‘render[ ] RFRA religious protections, the need for Lobby is irrelevant to this issue. meaningless.’’ Hobby Lobby, 573 U.S. at clarity in this area of contracting, and Certainly Hobby Lobby was not a Title 729 n.37. ‘‘[F]or example, the the potential expansion of the VII case. But Hobby Lobby’s holding that Government could decide that all government’s contracting pool justify for-profit corporations qualify as supermarkets must sell alcohol for the ‘‘persons’’ who can exercise religion any burdens on third parties. See infra convenience of customers (and thereby under RFRA is hard to square with a section III.B.5. exclude Muslims with religious rule that a for-profit entity can never be Further, under controlling Supreme objections from owning supermarkets), a religious organization eligible for E.O. Court precedent, the Establishment or it could decide that all restaurants 11246’s religious exemption. And much Clause allows accommodations that must remain open on Saturdays to give of its reasoning has broader remove a burden of government rules employees an opportunity to earn tips implications. The Supreme Court from religious organizations, reduce the (and thereby exclude Jews with observed that furthering the religious chilling on religious conduct, or reduce religious objections from owning freedom of corporations, whether for- government entanglement. See Amos, restaurants).’’ Id.; see also Attorney profit or nonprofit, furthers individual 483 U.S. at 334–39. Any third party General’s Memorandum, Principle 15, religious freedom. See Hobby Lobby, burdens that might result from such 82 FR at 49670. 573 U.S. at 707. The Supreme Court accommodations are attributable to the Finally, OFCCP views these found no reason to distinguish between organization that benefits from the comments as addressed more to the for-profit sole proprietorships—which accommodation, not to the government, religious exemption itself, which is not had brought Free Exercise claims before and, as a result, do not violate the at issue here, than to this rule. Congress the Supreme Court in earlier cases—and Establishment Clause. Id. at 337 n.15. In decided in enacting Title VII, and the for-profit closely held corporations. See the Sherbert line of Free Exercise Clause President decided in amending E.O. id. at 709–10. And as just stated, the cases that later became the basis of 11246, that preserving the integrity of Supreme Court noted that every U.S. RFRA, dissents and concurrences religious organizations merited an jurisdiction permits corporations to be routinely pointed to such burdens on exemption from the religious-neutrality formed ‘‘for any lawful purpose or third parties but did not persuade the requirements that would otherwise business,’’ id. at 711 (internal quotation majorities of any Establishment Clause apply to their employees. OFCCP does marks omitted), including a religious violation.17 not and could not question those one, see id. at 710–11. judgments. Further, insofar as OFCCP is required to give some 17 See, e.g., Thomas, 450 U.S. at 723 n.1 commenters argued that the test consideration to that language in (Rehnquist, J., dissenting) (citing several burdens on the system and other beneficiaries, including that expands the number of contractors that formulating its own test here. If for- ‘‘[w]e could surely expect the State’s limited funds might qualify for the exemption, that profit corporations can exercise religion allotted for unemployment insurance to be quickly fact alone does not show any third-party and further religious objectives as well depleted’’); Wisconsin v. Yoder, 406 U.S. 205, 240 harm. Indeed, among the rule’s intended as pecuniary ones, then OFCCP should (1972 (White, J., concurring) (outlining the state’s legitimate interest in educating Amish children, purposes is expanding the pool of consider carefully whether they should especially ones that leave their community but be categorically excluded from finding the evidence of harm insufficient); Yoder, that the decision ‘‘imperiled’’ the ‘‘future’’ of the qualification as religious organizations 406 U.S. at 245 (Douglas, J., dissenting) (arguing Amish children, not their parents).

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contractors while avoiding religious defined in the Religious Land Use and above, there is no need for the final rule entanglement. No contractor is Institutionalized Persons Act (RLUIPA), to define the term. RFRA and RLUIPA compelled to seek the exemption, and 42 U.S.C. 2000cc–5(7). RLUIPA, in turn, are well-established laws regarding no contractor so exempted is compelled defines ‘‘religious exercise’’ as including religious freedom that are broadly by receipt of the exemption to take any ‘‘any exercise of religion, whether or not applicable, and they provide a familiar particular employment action. See compelled by, or central to, a system of framework that will assist OFCCP in Amos, 337 n.15. To the contrary, the religious belief.’’ This definition is well- assessing both whether a contractor is Title VII case law confirms that religious established and prevents problematic engaging ‘‘in activity consistent with, employers have flexibility to inquiries into the ‘‘centrality’’ of a and in furtherance of,’’ its religious accommodate employees’ religious religious practice, which are discussed purpose and whether its employment preferences if they so choose. See later in this preamble. However, the action has a religious basis. Kennedy, 657 F.3d at 194. Additionally, phrase ‘‘exercise of religion’’ in the 4. Definition of Sincere OFCCP discusses below, regarding the proposed rule appeared only as part of scope of the exemption, how this rule the proposed definition of Religious The principles discussed above with interacts with other protected classes corporation, association, educational regard to the definition of Exercise of and the proper balance between institution, or society. That definition religion are incorporated in the employers’ and employees’ freedoms has been changed to adhere more definition of Sincere that OFCCP and rights. OFCCP believes it has closely to Judge O’Scannlain’s proposed. In line with court precedent provided an accommodation that concurrence in World Vision, and the and OFCCP’s principles, the critical reasonably addresses these interests. words ‘‘exercise of religion’’ no longer inquiry for OFCCP is whether a appear in that prong of the definition. particular employment decision was in g. Other Features Thus there is no need for regulatory text fact a sincere exercise of religion. The final rule retains two proposed to define them. With that said, OFCCP Consistent with that inquiry, and for the non-determinative features in the will look to general principles of First reasons explained above, the final rule’s definition of Religious corporation, Amendment law and the RFRA– definition of Particular religion specifies association, educational institution, or RLUIPA definition of ‘‘exercise of that the religious tenets the contractor society. Those are the statements that religion’’ when assessing whether an applies to its employees must be the organization ‘‘may or may not’’ organization is engaging ‘‘in activity ‘‘sincere.’’ OFCCP, like courts, ‘‘merely ‘‘have a mosque, church, synagogue, consistent with, and in furtherance of,’’ asks whether a sincerely held religious temple, or other house of worship’’ or its religious purpose, and when belief actually motivated the ‘‘be supported by, be affiliated with, assessing whether its employment institution’s actions.’’ Geary v. identify with, or be composed of action has a religious basis. Therefore, Visitation of Blessed Virgin Mary Parish individuals sharing, any single religion, OFCCP addresses below the comments Sch., 7 F.3d 324, 330 (3d Cir. 1993). The sect, denomination, or other religious received on the proposed definition of religious organization’s burden ‘‘to tradition.’’ With regard to these features, Exercise of religion. explain is considerably lighter than in a some commenters expressed support, Several commenters generally non-religious employer case,’’ since the and other commenters expressed approved of the definition for the organization, ‘‘at most, is called upon to opposition. For example, one religious reasons stated in the NPRM, while explain the application of its own education association commented, in others generally opposed the proposed doctrines.’’ Id. ‘‘Such an explanation is support of the absence of a requirement definition. Those generally opposed no more onerous than is the initial that the contractor ‘‘[h]ave a mosque, asserted that RFRA was not a relevant burden of any institution in any First church, synagogue, temple, or other authority given that it is a different Amendment litigation to advance and house of worship’’ that religious schools statute, that the borrowed provision was explain a sincerely held religious belief that are controlled by a body of religious vague and did not provide clarity but as the basis of a defense or claim.’’ Id.; leaders directly connected to the school rather represented an attempt to ‘‘create see United States v. Seeger, 380 U.S. are no less ‘‘controlled by a religious new law,’’ and that the breadth of the 163, 185 (1965) (holding whether a organization’’ than are schools definition did not provide ‘‘guardrails belief is ‘‘truly held’’ is ‘‘a question of controlled by hierarchical religious for the manner in which employers can fact’’). The sincerity of religious exercise denominations. OFCCP continues to require their employees to adhere to is often undisputed or stipulated. See, believe that requiring these features certain principles.’’ Others commenters e.g., Hobby Lobby, 573 U.S. at 717 (‘‘The could lead the agency to discriminate raised more specific issues. A group of companies in the cases before us are among religions, which could violate state attorneys’ general noted that the closely held corporations, each owned the First Amendment’s Establishment broad definition of religious exercise in and controlled by members of a single Clause. See World Vision, 633 F.3d at RFRA is moderated by its substantial family, and no one has disputed the 732 & n.9 (O’Scannlain, J., concurring). burden requirement, which the sincerity of their religious beliefs.’’); For these reasons and the reasons proposed definition did not include. Holt, 574 U.S. at 361 (‘‘Here, the described in the preamble to the Others noted issues with the term in the religious exercise at issue is the growing proposed rule, see 84 FR at 41684, context of the ‘‘engages in’’ language of a beard, which petitioner believes is OFCCP agrees with the commenters directly preceding it; some believed the a dictate of his religious faith, and the who stated that it is appropriate not to two in tandem were vague and Department does not dispute the require that contractors have these overbroad, while one commenter sought sincerity of petitioner’s belief.’’). features to be deemed religious. specific guidance in the final rule that Further, as the Supreme Court has ‘‘religious speech’’ could be an exercise repeatedly counseled, ‘‘religious beliefs 3. Definition of Exercise of Religion of religion. need not be acceptable, logical, OFCCP proposed to define Exercise of OFCCP has considered these consistent, or comprehensible to others religion as the term is defined for comments and continues to believe that in order to merit First Amendment purposes of RFRA. RFRA, in 42 U.S.C. the RFRA–RLUIPA definition of protection.’’ Church of the Lukumi 2000bb–2(4), defines ‘‘exercise of ‘‘exercise of religion’’ is relevant in this Babalu Aye, Inc. v. City of Hialeah, 508 religion’’ to mean ‘‘religious exercise’’ as context, although, for the reasons stated U.S. 520, 531 (1993) (quoting Thomas,

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450 U.S. at 714) (internal quotation precedent regarding sincerity and the rather than consistency across similarly marks omitted); see also, e.g., United compelling government interest in situated employees, OFCCP cannot States v. Ballard, 322 U.S. 78, 86 (1944) preventing discrimination will survive assess the ‘‘relative severity of (‘‘[People] may believe what they cannot without excessive government [religious] offenses’’ or otherwise weigh prove. They may not be put to the proof involvement. doctrinal matters, for that would of their religious doctrines or beliefs.’’). Many other commenters opposed the ‘‘violate the First Amendment.’’ Curay- To merit protection, religious beliefs proposed, arguing that it would not Cramer v. Ursuline Acad. of must simply be ‘‘sincerely held.’’ E.g., require entities to be internally Wilmington, Del., Inc., 450 F.3d 130, Frazee v. Ill. Dep’t of Emp’t Sec., 489 consistent in applying their self- 139 (3d Cir. 2006). U.S. 829, 834 (1989); Seeger, 380 U.S. at proclaimed religious tenets to various OFCCP will also evaluate any 185. Courts have appropriately relied on groups. For instance, a group of U.S. evidence that indicates an insincere the ‘‘sincerely held’’ standard when Senators asserted that the proposed sham, such as acting ‘‘in a manner evaluating religious discrimination definition ‘‘does not require consistency inconsistent with that belief’’ or claims in the Title VII context. See, e.g., in the application of policy based upon ‘‘evidence that the adherent materially Davis v. Fort Bend Cnty., 765 F.3d 480, religious tenets’’ such that an entity gains by fraudulently hiding secular 485 (5th Cir. 2014); Philbrook v. opposed to body modification, for interests behind a veil of religious Ansonia Bd. of Educ., 757 F.2d 476, instance, could ignore tenets regarding doctrine.’’ Philbrook, 757 F.2d at 482 481–82 (2d Cir. 1985); Redmond v. GAF tattoos but fire a transgender worker for (quoting Int’l Soc’y for Krishna Corp., 574 F.2d 897, 901 n.12 (7th Cir. seeking health care without triggering Consciousness, Inc. v. Barber, 650 F.2d 1978). In such cases, a court must scrutiny. An LGBT rights advocacy 430, 441 (2d Cir. 1981)) (internal ‘‘vigilantly separate the issue of organization echoed this concern. Some quotation marks omitted); cf., e.g., sincerity from the factfinder’s commenters also opposed OFCCP’s Hobby Lobby, 573 U.S. at 717 n.28 (‘‘To perception of the religious nature of the statement that ‘‘the sincerity of religious qualify for RFRA’s protection, an [employee’s] beliefs.’’ EEOC v. Union exercise is often undisputed or asserted belief must be ‘sincere’; a Independiente de la Autoridad de stipulated’’ because, they stated, it corporation’s pretextual assertion of a Acueductos y Alcantarillados, 279 F.3d raised concerns regarding the depth of religious belief in order to obtain an 49, 57 (1st Cir. 2002) (alteration in OFCCP’s inquiry under the proposed exemption for financial reasons would original) (quoting Patrick v. LeFevre, definition. A state civil rights fail.’’); United States v. Quaintance, 608 745 F.2d 153, 157 (2d Cir. 1984)) organization commented, for instance, F.3d 717, 724 (10th Cir. 2010) (Gorsuch, (internal quotation marks omitted). that this portion of the preamble seemed J.) (‘‘[T]he record contains additional, Some commenters opposed requiring to signal that OFCCP will not inquire overwhelming contrary evidence that only that exercise of religion be about sincerity, despite the fact that the [defendants] were running a ‘‘sincere,’’ which they characterized as whether a belief is sincerely held can commercial marijuana business with a broadening the exemption. They warned only be determined by weighing the religious front . . . .’’). OFCCP’s that this expands exercise of religion strength of evidence. Likewise, an application of the religious exemption is beyond its current meaning and that organization that advocates separation described in more detail below. sincerity cannot be reasonably applied. of church and state commented that the Despite these assurances, several For example, a labor union stated that preamble’s discussion, particularly its commenters who opposed the proposed ‘‘sincerity’’ is not a concept that can ‘‘equivocal views’’ on policies aimed at definition said that it is vague or sensibly be applied to organizations, determining the sincerity of an adverse unworkable in practice. For instance, a much less to for-profit businesses that employment action, creates uncertainty group of state attorneys general would be included in the scope of the as to whether OFCCP will actually expressed concern that the definition religious exemption under the Proposed weigh factors intended to determine may increase confusion among Rule. A group of state attorneys general sincerity. An LGBT rights advocacy contractors seeking to claim religious commented that, by requiring only organization expressed substantially exemptions because the question of how sincerity, OFCCP ‘‘seeks to expand identical concerns. a for-profit organization can RFRA’s already broad definition of As noted in the NPRM, in assessing demonstrate the sincerity of its religious ‘exercise of religion.’’’ An individual sincerity, OFCCP will take into account beliefs is largely untested. Thus, commenter wrote that the proposal all relevant facts, including whether the according to the attorneys general, would grant large for-profit government contractor had a preexisting basis for its contractors will have to contend with a contractors a hiring exemption as long employment policy and whether the high level of uncertainty in addition to as they could articulate any strongly policy has been applied consistently to their obligations under Title VII. A held belief. comparable persons, although absolute religious legal organization that Other commenters expressed support uniformity is not required. See Kennedy, otherwise supported the proposed rule for a sincerity test. For example, a 657 F.3d at 194 (noting that the Title VII highlighted the fact that the proposed religious liberties legal organization religious exemption permits religious definition of sincere is ‘‘simply what wrote: ‘‘Attempts to use religion to hide organizations to ‘‘consider some attempt courts determine ‘when ascertaining the discriminatory intent are generally not at compromise’’); LeBoon, 503 F.3d at sincerity of a party’s religious exercise successful.’’ OFCCP agrees with these 229 (‘‘[R]eligious organizations need not or belief.’’’ The commenter expressed commenters. Other commenters also adhere absolutely to the strictest tenets skepticism that courts could arrive at a expressed general support for the of their faiths to qualify for Section 702 concise and uniform test for the proposed definition, stating that it will protection.’’); see also Killinger v. meaning of the term without more help ensure that important protections Samford Univ., 113 F.3d 196, 199–200 specific guidance from OFCCP. against discrimination remain in place (11th Cir. 1997). But despite OFCCP disagrees that ascertaining the while at the same time preventing commenters’ focus on the need for sincerity of an organization’s religious government overreach and protecting ‘‘internal consistency’’ in religious exercise, even a for-profit one, will religious practice. For instance, the organizations’ doctrine—such as a rule foster confusion or that it presents same religious liberties legal that if tattoos are permitted, transgender insurmountable practical difficulties. organization commented that legal medical procedures must be as well— Religious sincerity is a familiar and

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well-developed legal principle. It has head of a religious congregation,’’ nor some adjustments in its explanation been applied in regards to a religious subject to ‘‘a rigid formula for deciding regarding how it views and will apply organization’s decisions under the Title when an employee qualifies as a this definition. These include changing VII religious exemption. See, e.g., Little minister’’). to a motivating factor standard of v. Wuerl, 929 F.2d 944, 946 (3d Cir. For the reasons described above and causation and providing additional 1991) (‘‘Little does not challenge the in the NPRM, and considering the clarification, particularly on the sincerity of the Parish’s asserted comments received, OFCCP finalizes the interaction of the religious exemption religious doctrine.’’). And the Supreme proposed definition without with other protected categories, Court rejected a similar argument ‘‘that modification. including the importance of RFRA. As Congress could not have wanted RFRA 5. Definition of Particular Religion to the regulatory text, the word to apply to for-profit corporations ‘‘sincere’’ has been inserted into the because it is difficult as a practical In the NPRM, OFCCP proposed to phrase ‘‘acceptance of or adherence to matter to ascertain the sincere ‘beliefs’ define Particular religion to clarify that sincere religious tenets as understood by of a corporation.’’ Hobby Lobby, 573 the religious exemption allows religious the employer as a condition of U.S. at 717. Here, as there, questions of contractors not only to prefer in employment,’’ to make clear both the corporate religious beliefs are likely to employment individuals who share requirement of sincerity and, by arise only for closely held corporations, their religion, but also to condition reference to the definition of Sincere, and ‘‘[s]tate corporate law provides a employment on acceptance of or how sincerity is tested. Otherwise the ready means for resolving any conflicts adherence to religious tenets as definition is being finalized as . . . .’’ Id. at 718. understood by the employing proposed. OFCCP also acknowledges the contractor. The NPRM explained that Insofar as OFCCP’s view expressed constitutional and prudential this definition flows directly from the here and in the proposed rule is a limitations on its inquiry that may come broad definition of Religion, discussed change from its prior position as to the into play when religious matters are above, to include all aspects of religious definition of Particular religion under involved. OFCCP will not compare belief, observance, and practice as the exemption and the permissible religious doctrines or practices in understood by the employer, which practices of contractors and evaluating sincerity. See, e.g., Curay- would clarify past statements from subcontractors who qualify as religious Cramer, 450 F.3d at 139 (‘‘[A]ssess[ing] OFCCP suggesting that the exemption organizations, OFCCP believes the the relative severity of [religious] was restricted solely to hiring change is justified for all the reasons offenses . . . would violate the First coreligionists. The NPRM stated that the stated in the proposed rule and directly Amendment.’’); Hall v. Baptist Mem’l proposed definition was consistent with below. A broader view of the religious Health Care Corp., 215 F.3d 618, 626 Title VII case law as well as Supreme exemption is also consistent with one of (6th Cir. 2000) (‘‘[T]he First Amendment Court case law holding that the OFCCP’s primary goals in this does not permit federal courts to dictate government burdens religious exercise rulemaking, which is to increase to religious institutions how to carry out when it conditions benefits on the economy and efficiency in government their religious missions or how to surrender of religious identity. contracting by providing for a broader enforce their religious practices.’’). Nor The NPRM noted that the religious pool of government contractors and will OFCCP require contractors to exemption does not permit religious subcontractors. Issues specific to the adhere to strict, uniform procedures to employers to discriminate on other EEOC’s view on this matter are demonstrate sincerity. See Kennedy, 657 protected bases. The NPRM described discussed further in a separate part of F.3d at 194; LeBoon, 503 F.3d at 229. how courts have used a variety of this preamble. And where ‘‘it is impossible to avoid approaches and doctrines to distinguish a. Burdens on Religious Organizations inquiry into a religious employer’s claims of religious discrimination from in Contracting religious mission or the plausibility of other claims of discrimination while its religious justification for an avoiding entangling inquiries under the As described in the NPRM, OFCCP’s employment decision,’’ then OFCCP First Amendment, and that OFCCP approach here is consistent with will apply the E.O. 11246 religious proposed to do the same. See 84 FR at Supreme Court decisions emphasizing exemption. Curay-Cramer, 450 F.3d at 41679–81. that ‘‘condition[ing] the availability of 141. In a later part of the NPRM describing benefits upon a recipient’s willingness Some commenters objected to the proposed terms Exercise of religion to surrender his religiously impelled OFCCP’s stated commitment to applying and Sincere, OFCCP gave additional status effectively penalizes the free the ministerial exception. For instance, detail on its proposed approach for exercise of his constitutional liberties.’’ a city public advocate observed that applying the religious exemption. The Trinity Lutheran, 137 S. Ct. at 2022 OFCCP’s claim that it will evaluate any NPRM noted that sincerity is the (alterations omitted) (quoting McDaniel factors that indicate insincerity is ‘‘touchstone’’ of religious exercise and v. Paty, 435 U.S. 618, 626 (1978) undermined by the proposed rule’s that OFCCP would take into account all (plurality opinion)). These decisions commitment to the ministerial relevant facts when determining naturally extend to include the right to exception. Nevertheless, OFCCP whether a sincere religious belief compete on a level playing field for respects and must apply the ministerial actually motivated an employment federal government contracts. See id. exception. The ministerial exception is decision. The NRPM also proposed (holding the government burdens an application of the Establishment and applying a but-for standard of causation religious exercise when it so conditions Free Exercise clauses of the First when evaluating claims of ‘‘a benefit or privilege,’’ ‘‘eligibility for Amendment. See Our Lady of discrimination by religious office,’’ ‘‘a gratuitous benefit,’’ or the Guadalupe, 140 S. Ct. at 2060; Hosanna- organizations based on protected ability ‘‘to compete with secular Tabor, 565 U.S. at 189–90 (finding that characteristics other than religion. See organizations for a grant’’ (quoted the ministerial exception bars ‘‘an 84 FR at 41684–85. sources omitted)); accord E.O. 13831 § 1 employment discrimination suit brought OFCCP received comments on all (‘‘The executive branch wants faith- on behalf of a minister’’ and observing these aspects of its proposal. In response based and community organizations, to that the exception ‘‘is not limited to the to the comments, the agency has made the fullest opportunity permitted by

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law, to compete on a level playing field extensive social welfare and charitable adherence to religious tenets—to ensure for . . . contracts . . . and other Federal activities, such as operating soup kitchens their employees are committed to the funding opportunities.’’). and day care centers or providing aid to the religious organization. In some A few commenters praised OFCCP’s poor and the homeless. Even where the instances, as described below, RFRA content of such activities is secular—in the reliance on Trinity Lutheran to establish sense that it does not include religious may also come into play to require the principle that benefits cannot be teaching, proselytizing, prayer or ritual—the accommodations. conditioned on surrendering religious religious organization’s performance of such Regarding the comment that the rule status. For example, a religious public functions is likely to be ‘‘infused with a violates the Establishment Clause by policy women’s organization stated that religious purpose.’’ Amos, 483 U.S. at 342 funding positions that require specific no one should be forced to abandon (Brennan, J., concurring). And churches and religious beliefs or customs, that is a their faith when operating their business other religious entities ‘‘often regard the criticism of the E.O. 11246 religious or participating in government provision of such services as a means of exemption itself, which has been part of fulfilling religious duty and of providing an federal law for nearly twenty years and programs. Similarly, a religious liberty example of the way of life a church seeks to legal organization commented that foster.’’ Id. at 344 (footnote omitted). In other is not at issue in this rulemaking. This religious contractors should be allowed words, the provision of ‘‘secular’’ social is addressed more below. to serve on equal terms as all other services and charitable works that do not b. The Exemption’s Scope: contractors, without having to involve ‘‘explicitly religious content’’ and are Coreligionists compromise their faith-based identities. not ‘‘designed to inculcate the views of a A few commenters stated that Trinity particular religious faith,’’ Bowen v. As explained in the NPRM, the Lutheran and other Supreme Court Kendrick, 487 U.S. 589, 621 (1988), religious exemption is not restricted to cases discussed in the preamble to the nevertheless may well be ‘‘religiously a purely denominational preference. inspired,’’ id., and play an important part in The religious exemption allows NPRM do not support or require the the ‘‘furtherance of an organization’s proposed definition. For example, an religious contractors not only to prefer religious mission.’’ Amos, 483 U.S. at 342 in employment individuals who share organization that advocates separation (Brennan, J., concurring). of church and state commented that their religion, but also to condition 31 O.L.C. 162, 172 172–73 (2007) employment on acceptance of or religious organizations are already Second, this burden exists even when eligible to compete for government adherence to religious tenets as not imposed directly. The Office of understood by the employing contracts, which is all that is required Legal Counsel, in the same opinion, by Trinity Lutheran. In addition, a contractor. This definition flows further recognized that a burden on directly from the broad definition of religious organization commented that religious organizations’ free exercise of ‘‘the rule violates the Establishment Religion, discussed above, to include all religion can occur not only through aspects of religious belief, observance, Clause of the First Amendment by direct imposition of requirements but funding positions which require specific and practice as understood by the through conditions on grants or other employer. It is also consistent with Title religious beliefs and customs.’’ OFCCP benefits, citing many of the same cases believes, however, that its interpretation VII case law holding that ‘‘the cited in Trinity Lutheran for that permission to employ persons ‘of a of the scope of the religious exemption proposition. See 31 O.L.C. at 174–75; is consistent with the principles of particular religion’ includes permission Trinity Lutheran, 137 S. Ct. at 2022. to employ only persons whose beliefs religious freedom articulated in Trinity Those concerns about burdening Lutheran and other Supreme Court and conduct are consistent with the religious exercise through conditions employer’s religious precepts.’’ Little, cases. naturally extend to conditions on First, restricting religious 929 F.2d at 951; see also, e.g., Kennedy, contracts as well. See Office of the Att’y organizations’ ability to employ those 657 F.3d at 194 (‘‘Congress intended the Gen., Memorandum for All Executive aligned with their mission burdens their explicit exemptions to Title VII to Departments and Agencies: Federal Law religious exercise, even when those enable religious organizations to create Protections for Religious Liberty at 2, 6, employees do not engage in expressly and maintain communities composed 8, 14a–16a (Oct. 6, 2017), available at religious activity. As the Supreme Court solely of individuals faithful to their www.justice.gov/opa/press-release/file/ recognized in Amos, the religious doctrinal practices, whether or not every 1001891/download. Third, the exemption’s protection for all activities individual plays a direct role in the definition of Particular religion of religious organizations alleviates the organization’s ‘religious activities.’ ’’ promulgated here attempts to alleviate burden of government interference with (quoting Little, 929 F.2d at 951)); Hall, that burden by permissibly those religious organizations’ missions. 215 F.3d at 624 (‘‘The decision to accommodating religious organizations. See Amos, 483 U.S. at 336. And as the employ individuals ‘of a particular ‘‘[T]he government may (and sometimes Department of Justice’s Office of Legal religion’ under [42 U.S.C.] § 2000e–1(a) must) accommodate religious practices Counsel has concluded: and § 2000e–2(e)(2) has been interpreted and . . . may do so without violating to include the decision to terminate an [T]he Court’s opinion in Amos, together with the Establishment Clause. . . . There is employee whose conduct or religious Justice Brennan’s concurring opinion in the ample room under the Establishment beliefs are inconsistent with those of its case, indicates that prohibiting religious Clause for ‘benevolent neutrality which organizations from hiring only coreligionists employer.’’ (citing, inter alia, Little, 929 can ‘ ‘‘impose a significant burden on their will permit religious exercise to exist F.2d at 951)); Killinger, 113 F.3d at 200 exercise of religion, even as applied to without sponsorship and without (‘‘[T]he exemption [in 42 U.S.C. 2000e– employees in programs that must, by law, interference.’ ’’ Amos, 483 U.S. at 344 1(a)] allows religious institutions to refrain from specifically religious (quoting Walz v. Tax Comm’n, 397 U.S. employ only persons whose beliefs are activities.’ ’’ The .’’ Mem. for Brett 664, 673 (1970)). See also E.O. 13279 consistent with the employer’s when the Kavanaugh, Assoc. Counsel to the Pres., from § 4; 68 FR at 56393 (codified at 41 CFR work is connected with carrying out the Sheldon T. Bradshaw, Deputy Ass’t Att’y 60–1.5(a)(5)). This rule relieves religious Gen., Office of Legal Counsel further institution’s activities.’’). explained:, Re: Section 1994A (Charitable organizations of government This approach is also consistent with Choice) of H.R. 7, The Community Solutions interference by permitting them to take Supreme Court decisions emphasizing Act at 4 (June 25, 2001) .... Many religious into account their employees’ particular that ‘‘condition[ing] the availability of organizations and associations engage in religion—including acceptance of or benefits upon a recipient’s willingness

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to surrender his religiously impelled overly narrow, to include acceptance of further than a coreligionist preference status effectively penalizes the free or adherence to religious tenets as a for several reasons. exercise of his constitutional liberties.’’ condition of employment. Many of these First, a coreligionist preference could Trinity Lutheran, 137 S. Ct. at 2022 commenters agreed with OFCCP that the be construed narrowly, as some (alterations omitted) (quoting McDaniel, definition as proposed was necessary to commenters seemed to urge, as allowing 435 U.S. at 626 (plurality opinion)). ensure that religious organizations religious organizations to prefer those These decisions naturally extend to could carry out their missions without who share a religious identity in name include the right to compete on a level losing their identities. For example, a but nothing more. OFCCP disagrees that playing field for federal government religious school association commented the exemption should be construed to contracts. See id. (holding the that being able to ensure that applicants permit religious employers to prefer government burdens religious exercise and employees concur with its schools’ fellow members of their faith—or people when it so conditions ‘‘a benefit or religion-based conduct expectations is who profess to be members of their privilege,’’ ‘‘eligibility for office,’’ ‘‘a essential to fulfilling the schools’ faith—but forbid requiring their gratuitous benefit,’’ or the ability ‘‘to religious mission. Similarly, a religious adherence to that faith’s tenets in word compete with secular organizations for civil rights organization commented that and deed. Religious employers can a grant’’ (quoted sources omitted)); the entire ‘‘raison d’eˆtre’’ of religious require more than nominal membership accord E.O. 13831 § 1 (‘‘The executive non-profits would be undermined if from their employees, as shown by branch wants faith-based and employees could subvert their religious Amos, where the plaintiffs were community organizations, to the fullest missions. Other commenters, including discharged for failing to qualify for a opportunity permitted by law, to a religious medical organization, a certificate showing that they were compete on a level playing field for . . . religious liberty coalition, and a state members of the employer’s church and contracts . . . and other Federal funding religious public policy organization, met certain standards of religious opportunities.’’). echoed these sentiments in support of conduct. See 483 U.S. at 330 n.4; Amos OFCCP believes this clarification will the proposal. A private religious v. Corp. of Presiding Bishop of Church assist contractors that have looked for university further asserted that the of Jesus Christ of Latter-Day Saints, 594 guidance on the religious exemption in proposed definition would increase F. Supp. 791, 796 (D. Utah 1984) OFCCP’s past statements. These past religious diversity, because its (describing plaintiffs’ failure to meet statements may have suggested that the protections are not limited to hiring church worthiness requirements), rev’d, exemption permits qualifying decisions based on co-religiosity but 483 U.S. 327; see also Killinger, 113 organizations only to prefer members of also allow organizations to hire based their own faith in their employment F.3d at 198–200 (holding despite on applicants’ support for their religious plaintiff’s claim that he subscribed to practices. See, e.g., OFCCP, Compliance missions. Webinar (Mar. 25, 2015), available at university’s ‘‘legitimate religious https://www.dol.gov/ofccp/LGBT/FTS_ Many commenters asserted that the requirements,’’ including the TranscriptEO13672_PublicWebinar_ES_ proposed definition conflicts with the requirement to ‘‘subscribe to the 1963 QA_508c.pdf (‘‘This exemption allows EEOC’s interpretation, OFCCP’s Baptist Statement of Faith and religious organizations to hire only previous interpretation, or both. For Message,’’ he was permissibly removed members of their own faith.’’). OFCCP example, a civil liberties organization from a teaching post in the divinity based such statements on guidance from commented that the EEOC interprets the school ‘‘because he did not adhere to the EEOC, the agency primarily text of the Title VII religious exemption and sometime[s] questioned the responsible for enforcing Title VII. See, to mean that religious organizations may fundamentalist theology advanced by e.g., EEOC, EEOC Compliance Manual give employment preference to members the [school’s] leadership’’ (first § 12–I.C.1 (July 22, 2008) (‘‘Under Title of their own religion. Several alteration in original)). Any other course VII, religious organizations are commenters referred to OFCCP’s would entangle OFCCP in deciding permitted to give employment previous interpretation as reflected in between competing views of a religion’s preference to members of their own its 2015 answers to FAQs regarding the requirements—in essence, deciding for religion.’’). However, with this final E.O. 13672 Final Rule.18 For example, a example, ‘‘who is and who is not a good rule, OFCCP is clarifying that it applies legal think tank noted that in 2015, Catholic.’’ Maguire v. Marquette Univ., the principles discussed above, OFCCP issued guidance mirroring the 627 F. Supp. 1499, 1500 (E.D. Wis. permitting qualifying employers to take EEOC’s interpretation of the Title VII 1986) (holding despite plaintiff’s claim religion—defined more broadly than religious exemption and confirming that to be Catholic, a Catholic religious simply preferring coreligionists—into the plain text of section 204(c) is limited university permissibly declined to hire account in their employment decisions. to religious organizations with hiring her ‘‘because of her perceived hostility The case law makes clear that qualifying preferences for coreligionists and to the to the institutional church and its employers ‘‘need not enforce an across- ministerial exemption. Other teachings’’), aff’d in part, vacated in the-board policy of hiring only commenters, including an LGBT legal part, 814 F.2d 1213 (7th Cir. 1987). coreligionists.’’ LeBoon, 503 F.3d at 230; services organization, a reproductive OFCCP is not permitted to make such Killinger, 113 F.3d at 199–200 (‘‘We are rights organization, and a public policy determinations. See Our Lady of also aware of no requirement that a research and advocacy organization, Guadalupe, 140 S. Ct. at 2068–69 religious educational institution engage made similar points. (‘‘[D]etermining whether a person is a in a strict policy of religious OFCCP appreciates the various ‘co-religionist’ will not always be easy. discrimination—such as always comments received on this topic. After See Reply Brief 14 (‘Are Orthodox Jews preferring Baptists in employment careful consideration, OFCCP disagrees and non-Orthodox Jews coreligionists? decisions—to be entitled to the with the comments arguing that the . . . Would Presbyterians and Baptists exemption.’’). religious exemption should extend no be similar enough? Southern Baptists Some commenters expressed support and Primitive Baptists?’). Deciding such for OFCCP’s proposal to extend the 18 These 2015 FAQs are archived at https:// questions would risk judicial definition beyond preferring web.archive.org/web/20150709220056/http:/ entanglement in religious issues.’’); coreligionists, which they viewed as www.dol.gov/ofccp/LGBT/LGBT_FAQs.html. Hall, 215 F.3d at 626–27 (‘‘If a particular

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religious community wishes to with the precepts of the Lutheran observance and practice as understood differentiate between the severity of community sponsoring the school’’). by the employer,’’ it would permit the violating two tenets of its faith, it is not Beyond compromising the integrity of subjective viewpoint of the employer to the province of the federal courts to say religious organizations, OFCCP would determine what constitutes religion. that such differentiation is be wary of drawing a line here between Similarly, a reproductive rights discriminatory and therefore warrants coreligionist employees and other organization claimed that the proposed Title VII liability.’’ (quoted source employees for other reasons. As rule would expand the scope of the omitted)); Presbyterian Church in U.S. illustrated by the cases declining to exemption in violation of federal law. v. Mary Elizabeth Blue Hull Mem’l decide ‘‘who is and who is not a good As explained above in the discussion Presbyterian Church, 393 U.S. 440, 449– Catholic,’’ OFCCP does not believe it of the definition of Religion, OFCCP has 50 (1969) (‘‘Plainly, the First should or could in disputed cases Amendment forbids civil courts from decide who is a coreligionist. This chosen a definition that is well- playing such a role [in interpreting would be especially difficult when the established in federal law, including in particular church doctrines and their employer has no particular the text of Title VII. See 42 U.S.C. importance to the religion].’’). denomination, as there would be no 2000e(j). And as explained above in the discussion of the definition of Religious In addition, some commenters argued simple denominational match between corporation, association, educational that the religious exemption might the employer and employee. Cases like institution, or society, OFCCP has allow religious employers to require World Vision and Little v. Wuerl show that a religious organization may require significant constitutional and practical faithfulness of a coreligionist employee, that its employees subscribe to certain concerns about substituting its own but the exemption does not permit them precepts regardless of their particular to impose religious requirements on judgment for a contractor’s view—found religious affiliation, if they have any their other employees. OFCCP declines to be sincere—that a particular activity, affiliation at all. OFCCP must, and to so narrow its interpretation of the purpose, or belief has religious meaning. should, treat these religious exemption. The exemption was It bears repeating: Any other course organizations equally with those that expanded decades ago to include would risk ‘‘[t]he prospect of church have a defined denominational employees engaged not just in the and state litigating in court about what membership. See World Vision, 633 organization’s religious activities, but in does or does not have religious meaning F.3d at 731 (O’Scannlain, J., [, which] touches the very core of the any of its activities. And the purpose of concurring). the religious exemption is to preserve constitutional guarantee against OFCCP also views an artificial line religious establishment.’’ Cathedral ‘‘the ability of religious organizations to between coreligionists and non- define and carry out their religious Acad., 434 U.S. at 133. OFCCP will coreligionists as presenting an refrain from resolving disputes between missions.’’ Amos, 483 U.S. at 335. As unwelcome either-or dilemma for employers and employees as to what other commenters stated, some religious religious organizations. By declining to has religious meaning or not, when the organizations hire employees outside draw such a line, a religious employer proves its sincere belief that their faith tradition yet require those organization would be permitted to employees to follow at least some require certain religious practices or something does have religious meaning. religious standards in order to preserve conduct from its coreligionist However, as explained in more detail the organization’s integrity Courts have employees, but not from its non- below, just because an employment recognized the legitimacy of that view. coreligionist employees; yet the practice is religiously motivated does See Kennedy, 657 F.3d at 190–91 religious organization would also be not mean that it is always protected by (holding a religious nursing-care facility permitted to, for instance, decline to the exemption. affiliated with the Roman Catholic hire or promote that same non- This leads to a separate set of issues Church was protected by the religious coreligionist altogether. In other words, raised by commenters. Many exemption when it took action against a religious organization could commenters who opposed the proposed an employee of a different faith who discriminate against a non-coreligionist definition stated that it is inconsistent refused to change her own religiously altogether in hiring or promotion, but with Title VII in one or more respects. inspired garb); Little, 929 F.2d at 951 could not instead offer a job or For example, a group of state attorneys (‘‘[I]t does not violate Title VII’s promotion contingent on adherence to general stated that the proposed prohibition of religious discrimination certain mission-oriented religious definition is contrary to the text of Title for a parochial school to discharge a criteria. Religious organizations should VII and congressional intent. Catholic or a non-Catholic teacher who be, and under this rule continue to be, Specifically, the group pointed out that has publicly engaged in conduct permitted to use this middle ground. the plain language of the exemption regarded by the school as inconsistent See Kennedy, 657 F.3d at 194. covers only employer preferences based with its religious principles.’’ (emphasis on a ‘‘particular religion,’’ meaning that added)). This view is also consistent c. The Exemption’s Scope: Employment religious employers cannot broadly with guidance from the U.S. Department Practices of Justice. See Office of the Att’y Gen., In a related vein, commenters also discriminate on the basis of religion by, Memorandum for All Executive shared their views on not only which for instance, adopting policies such as Departments and Agencies: Federal Law employees should be covered by the ‘‘Jews and Muslims Need Not Apply.’’ Protections for Religious Liberty (Oct. 6, exemption, but also which employment Some commenters stated that the 2017), www.justice.gov/opa/press- practices of religious organizations proposed definition is unsupported by release/file/1001891/download (stating should be protected by the exemption. Title VII case law. For example, a civil that, under the Title VII religious Some of these commenters asserted that liberties organization criticized OFCCP exemption, ‘‘a Lutheran secondary the proposed definition was too broad. for not citing to court decisions holding school may choose to employ only For example, a transgender civil rights that the Title VII exemption is intended practicing Lutherans, only practicing organization commented that, because to shield employers from all religiously Christians, or only those willing to the proposed definition encompasses motivated discrimination, as opposed to adhere to a code of conduct consistent ‘‘all aspects of religious belief, discrimination that is ‘‘on the basis of

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religion alone.’’ 19 A city commented 1(a)] allows religious institutions to connected to the organization’s religious that OFCCP’s reliance on Little, 929 F.2d employ only persons whose beliefs are activities to employees who perform 944; Kennedy, 657 F.3d 189; Hall, 215 consistent with the employer’s when the work connected to any of the F.3d 618; and Killinger, 113 F.3d 196, is work is connected with carrying out the organization’s activities. As the misplaced and misleading because, in institution’s activities.’’); accord Att’y Supreme Court observed, this expansion each of those cases, the courts found Gen., Memorandum for All Executive was aimed toward relieving religious that a religious institution with a Departments and Agencies: Federal Law organizations of the kind of burden substantiated religious purpose could Protections for Religious Liberty (Oct. 6, sought by the commenters: discriminate against an employee 2017), www.justice.gov/opa/press- [I]t is a significant burden on a religious performing work connected in some release/file/1001891/download organization to require it, on pain of manner to the institution’s religious (‘‘[R]eligious organizations may choose substantial liability, to predict which of its mission. to employ only persons whose beliefs activities a secular court will consider The NPRM did not suggest that the and conduct are consistent with the religious. The line is hardly a bright one, and religious exemption would permit organizations’ religious precepts.’’). an organization might understandably be religious organizations to single out concerned that a judge would not understand These cases were grounded in the its religious tenets and sense of mission. other religions for disfavor. No basic principle that these religious employer OFCCP is aware of holds such employment criteria are permitted Amos, 483 U.S. at 336 an exclusionary policy; no commenter because they are necessary for the OFCCP shares the same concerns identified such an employer; and such religious organization’s integrity. See about requiring contractors to justify a policy would run contrary to the Little, 929 F.2d at 950 (‘‘[T]he legislative otherwise-protected employment country’s experience under the Title VII history . . . suggests that the sponsors decisions as additionally furthering the religious exemption, where no litigant of the broadened exception were organization’s mission. Difficulties to OFCCP’s knowledge has asserted solicitous of religious organizations’ could arise were OFCCP to draw such a policy. Instead, the mine run of desire to create communities faithful to distinctions between religiously cases have involved a church, religious their religious principles.’’); Kennedy, motivated employment decisions that educational institution, or religious 657 F.3d at 193 (finding the religious further an employer’s religious mission nonprofit raising the defense that it is organization exemption ‘‘ ‘reflect[s] a and those that do not. Amos observed only requiring employees or decision by Congress that the that difficulty, in which the district applicants—whether strictly defined as court had drawn an at-least questionable coreligionists or not 20—to follow its government interest in eliminating religious discrimination by religious distinction between the termination of a own religiously inspired standards of truck driver at a church-affiliated belief or conduct. The exemption organizations is outweighed by the rights of those organizations to be free workshop (protected) with the historically has been a shield, not a termination of a building engineer at a sword, and it remains so under this rule. from government intervention.’ ’’ (alteration in original) (quoting Little, church-affiliated gymnasium (not OFCCP also believes it has relied protected). See id. at 330, 333 n.13, 336 properly on cases like Little and 929 F.2d at 951)); Killinger, 113 F.3d at 201 (‘‘[F]ederal court[s] must give n.14. The exemption does not require Kennedy. As stated in the NPRM, these such hair-splitting—indeed, it appears cases hold that the religious exemption disputes about what particulars should or should not be taught in theology to forbid it—and OFCCP sees no useful ‘‘includes permission to employ only reason to attempt drawing such persons whose beliefs and conduct are schools a wide-berth. Congress, as we distinctions. See also Little, 929 F.2d at consistent with the employer’s religious understand it, has told us to do so for 951 (‘‘Congress intended the explicit precepts.’’ Little, 929 F.2d at 951; see purposes of Title VII.’’); Hall, 215 F.3d exemptions to Title VII to enable also, e.g., Kennedy, 657 F.3d at 194 at 623 (‘‘In recognition of the religious organizations to create and (‘‘Congress intended the explicit constitutionally-protected interest of maintain communities composed solely exemptions to Title VII to enable religious organizations in making of individuals faithful to their doctrinal religious organizations to create and religiously-motivated employment practices, whether or not every maintain communities composed solely decisions . . . Title VII has expressly individual plays a direct role in the of individuals faithful to their doctrinal exempted religious organizations from organization’s ‘religious activities.’ ’’). practices, whether or not every the prohibition against discrimination individual plays a direct role in the on the basis of religion . . . .’’). That d. The Exemption’s Scope: Other organization’s ‘religious activities.’ ’’) means that the religious employer must Protected Bases (quoting Little, 929 F.2d at 951); Hall, explain how its sincere religious beliefs i. Comments 215 F.3d at 624 (‘‘The decision to translate into particular religious employ individuals ‘of a particular requirements for its employees and As is made clear by the text of section religion’ under [42 U.S.C.] § 2000e–1(a) applicants. Cf. Geary, 7 F.3d at 330 204(c) of E.O. 11246 and the and § 2000e–2(e)(2) has been interpreted (‘‘The institution, at most, is called corresponding regulation at 41 CFR 60– to include the decision to terminate an upon to explain the application of its 1.5(a)(5), the religious exemption itself employee whose conduct or religious own doctrines.’’). But the exemption does not exempt or excuse a contractor beliefs are inconsistent with those of its does not require the religious employer from complying with other applicable employer.’’ (citing, inter alia, Little, 929 to further prove that a particular requirements. See E.O. 11246 § 204(c) F.2d at 951)); Killinger, 113 F.3d at 200 employee or applicant’s adherence to (‘‘Such [religious] contractors and (‘‘[T]he exemption [in 42 U.S.C. 2000e– those religious requirements is subcontractors are not exempted or necessary, in any contested instance, to excused from complying with other 19 This point is addressed more fulsomely in the further the religious organization’s requirements contained in this Order.’’); next section regarding E.O. 11246’s other protected mission. That added burden would be 41 CFR 60–1.5(a)(5) (same). Thus, bases. contrary to the 1972 amendment of the religious employers are not exempted 20 For the reasons discussed earlier, OFCCP does not believe restricting the exemption to a purely Title VII religious exemption, which from E.O. 11246’s requirements coreligionist preference is required or the most expanded the exemption from regarding antidiscrimination and reasonable approach. employees who perform work affirmative action, generally speaking;

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notices to applicants, employees, and reproductive rights organization, cited employee’s sexual orientation and/or labor unions; compliance with OFCCP’s cases in which, they asserted, courts gender identity would prevail under the implementing regulations; the prohibited religious employers from proposed regulations. A pastoral furnishing of reports and records to the discriminating on bases other than membership organization stated that if government; and flow-down clauses to religion. For example, the civil liberties the terms ‘‘sexual orientation’’ and subcontractors. See E.O. 11246 §§ 202– organization commented that courts ‘‘gender identity’’ include conduct, it is 203. have consistently prohibited religious difficult to determine whether the Although Title VII does not contain a organizations from discriminating on prohibition on discrimination based on corresponding proviso, courts have other bases, including sex, even where sexual orientation and gender identity generally interpreted the Title VII that discrimination is motivated by the or the protection for religiously- religious exemption to be similarly organization’s sincere religious beliefs motivated conduct applies. precise, so that religious employers are (citing Rayburn, 772 F.2d at 1166; Many of these commenters criticized not exempted from Title VII’s other Kennedy, 657 F.3d at 192; EEOC v. Pac. the proposal for not clearly stating how provisions protecting employees. See, Press Publ’g Ass’n, 676 F.2d 1272, 1277 OFCCP would resolve the perceived e.g., Kennedy, 657 F.3d at 192; Rayburn (9th Cir. 1982), abrogated on other contradiction between its assertion that v. Gen. Conference of Seventh-Day grounds by Alcazar v. Corp. of Catholic religious contractors would not be Adventists, 772 F.2d 1164, 1166 (4th Archbishop of Seattle, 598 F.3d 668 (9th permitted to discriminate on other Cir. 1985); cf. Hobby Lobby, 573 U.S. at Cir. 2010); Elbaz v. Congregation Beth protected bases and its inclusion in the 733 (rejecting ‘‘the possibility that Judea, Inc., 812 F. Supp. 802, 807 (N.D. proposed definition of ‘‘acceptance of or discrimination in hiring, for example on Ill. 1992); Dolter v. Wahlert High Sch., adherence to religious tenets as the basis of race, might be cloaked as 483 F. Supp. 266, 269 (N.D. Iowa 1980); understood by the employer as a religious practice to escape legal accord McClure v. Salvation Army, 460 condition of employment.’’ For sanction’’); Bob Jones Univ. v. United F.2d 553, 558 (5th Cir. 1972)). example, the legal think tank asserted States, 461 U.S. 574, 604 (1983) (‘‘[T]he Some commenters argued that that OFCCP does not explain how it will Government has a fundamental, religion has long been used as a way to apply these two provisions in cases in overriding interest in eradicating racial justify discrimination. For example, an which they appear to conflict, and discrimination in education . . . .’’). affirmative action professionals observed that the proposed regulatory Many commenters nevertheless association asserted that religious text does not limit its definition of assumed that OFCCP would apply the freedom has historically been invoked ‘‘religious tenets’’ to tenets defined proposed definition to allow religious to defend slavery, the denial of women’s without reference to race, color, sex, contractors to discriminate on bases suffrage, Jim Crow laws, and sexual orientation, gender identity, or other than religion. Most of these segregation. That commenter cited a national origin. A state’s attorney commenters stated that doing so would recent news story in which a mixed-race general asserted that, because the be contrary to E.O. 11246, and they couple was allegedly denied the use of proposed rule fails to define or limit the argued that OFCCP lacks authority to a hall for a wedding because of the type of ‘‘conduct’’ that can form the expand the existing exemption or grant owner’s religious beliefs. basis of permissible discrimination by any new exemption. For example, a Several commenters expressed religious entities, it allows contractors civil liberties organization commented concern specifically about the effect of to discriminate based on any arbitrary that the preamble indicates that OFCCP the proposal on E.O. 11246’s protections characteristic. intends to authorize discrimination from discrimination based on sexual Many supportive commenters based even on other protected bases like orientation and gender identity. For recommended that OFCCP resolve the sex or race, contrary to the text of E.O. example, an LGBT rights advocacy perceived conflict by clarifying that the 11246. Similarly, a group of U.S. organization commented that it was non-discrimination requirements of Senators commented that the proposed troubled by the fact that OFCCP failed Title VII and E.O. 11246 do not apply rule would allow employers to to cite sexual orientation and gender under the corresponding religious discriminate against employees on bases identity in the proposed rule as the exemptions. For example, an other than religion by, for instance, protected characteristics most likely to anonymous commenter suggested that permitting employers to justify sex be impacted by the rule. And a legal OFCCP clarify that religious discrimination based on their religious professional organization expressed organizations are permitted to tenets. concern that OFCCP may interpret E.O. discriminate on the bases of sexual These commenters pointed to the 11246 to allow federal contractors to orientation and gender identity because, second sentence of section 204(c) of discriminate based on sexual orientation in the commenter’s view, an action that E.O. 11246 as supporting their criticism. as long as they cite sincere religious falls within the religious exemption For example, a legal think tank reasons for doing so. would be outside the bounds of Title VII commented that it was unclear how the On the other hand, as noted above, and E.O. 11246, ‘‘regardless of whether proposed rule’s ‘‘expansive definition of other commenters expressed support for it would otherwise be prohibited by ‘particular religion’ ’’ could be the proposal because they believed it other provisions.’’ Other supportive reconciled with its insistence that ‘‘an would exempt religious organizations commenters offered a similar view, employer may not . . . invoke religion from the prohibitions on discrimination stating that the proposed definition to discriminate on other bases protected based on sexual orientation and gender provided helpful clarification. For by law.’’ identify, which would provide them example, a religious liberties legal Other commenters also stated that it protection to staff their organizations organization criticized ‘‘the suggestion would be inconsistent with Title VII consistent with their sincere religious from the Obama administration’’ that case law to allow religious contractors beliefs. the exemption should be limited to to discriminate on bases other than Some commenters requested guidance ‘‘religious people cannot be religion. These commenters, including a to resolve the perceived conflict. For discriminatory for hiring only members legal think tank, a group of state example, an individual commenter of their own religion’’ rather than ‘‘non- attorneys general, a labor union, a civil asked whether protection for a client’s discrimination law does not apply in liberties organization, and a religion or protection for an applicant or religious contexts’’ as provided under

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the Civil Rights Act, and praised the government contractors or because of animus borne of the proposed rule for affirming that subcontractors, they too must comply employee’s country of birth or skin requiring adherence to an employer’s with all of E.O. 11246’s color, would violate E.O. 11246. Courts religious tenets does not constitute nondiscrimination requirements except in the Title VII context have engaged in discrimination. Similarly, a U.S. Senator in some narrow respects under some careful, fact-bound inquiries to commented that the proposed helpfully reasonable circumstances recognized by determine whether a religious clarifies that religious employers that law. This rule provides clarity on those organization’s action was based on contract with the federal government circumstances, consistent with OFCCP’s religion or instead on a prohibited retain the right to hire employees that obligations and desire to also respect basis.22 For instance, courts may inquire support their religious mission, and accommodate the free exercise of whether a plaintiff was subjected to consistent with Title VII. Some religion. adverse employment action because of supportive commenters also noted that his or her sex or because of a violation the proposed definition was consistent ii. Legal Principles of religious tenets. See, e.g., Cline v. with the First Amendment and Title VII OFCCP acknowledges first and Catholic Diocese of Toledo, 206 F.3d case law. For example, a religious legal foremost the United States’ deeply 651, 655–56, 658 (6th Cir. 2000); cf. association and an association of rooted tradition of respect for religion EEOC v. Miss. Coll., 626 F.2d 477, 485– evangelical churches and schools and religious institutions. Religious 86 (5th Cir. 1980) (holding if religious commented that the principle that individuals and organizations operate organization shows that its decision was religious employers should be allowed within and contribute to civil society based on religion, the religious to require their employees to conduct and do not relinquish their religious exemption prohibits a further inquiry themselves in accordance with the freedom protections when they into pretext). To that extent, courts are employers’ code of moral conduct has participate in the public square.21 virtually uniform in the view that the been ‘‘almost universally’’ accepted by With respect to commenters’ concerns religious exemption does not permit courts, who have relied alternatively on and questions here, many relate to the discrimination on bases other than Section 702(a) of Title VII, the First interaction of two well-established Title religion.23 Amendment’s Religion Clauses, and VII principles: First, that religious The question posed here, however, is other considerations recognizing that organizations can take religion into the interaction of those two principles: ‘‘religious organizations may have account when making employment Specifically, the outcome when a legitimate, nondiscriminatory reasons’’ decisions; and second, that religious religion organization’s action is based for practicing their religious beliefs organizations cannot discriminate on on and motivated by the employee’s through employment decisions. other protected bases. Each of those two adherence to religious tenets yet In a joint comment, a religious legal principles taken by itself has clear implicates another category protected by association and an association of answers. Where an employment E.O. 11246. OFCCP concludes, as evangelical churches and schools decision made on the basis of religion explained in detail below, that the commented that Section 204(c) of E.O. also implicates another protected basis, religious exemption itself, as interpreted 11246 should be construed to exempt however, the law is less clear. by the courts, has left the question open, religious organizations from the As to the first principle, virtually all but that such activity would also give nondiscrimination mandates of Section commenters agreed with what the plain rise to an inquiry under RFRA, which 202, except to the extent that a religious text of the exemption provides: That must be assessed based on applicable organization’s employment decision is religious organizations can consider an case law and the specific facts based on race. employee’s particular religion when presented. To address these comments, OFCCP taking employment action. As discussed At the federal appellate court level, here first discusses the applicable Title the question of the religious elsewhere in this rule’s preamble, VII principles established by case law, exemption’s interaction with other commenters disagreed as to the scope of including how those principles may protected bases was left open in, for that exemption—which employees it apply where religious organizations instance, EEOC v. Mississippi College, applies to, and which employer maintain sincerely held beliefs where an EEOC subpoena did ‘‘not actions—but the basic principle was not regarding matters such as marriage and clearly implicate any religious practices disputed. intimacy, which may implicate of the College.’’ 626 F.2d at 487. The As to the second principle, as many protected classes under E.O. 11246. court noted that the college had a commenters recognized, E.O. 11246’s OFCCP then discusses its recognition scripturally rooted policy of hiring only other employment protections apply to that religious organizations in men to teach courses in religion, but religious organizations. Protections on appropriate circumstances will be stated that ‘‘[b]efore the EEOC could the basis of race, color, sex, sexual entitled to relief under the Religious require the College to alter that practice, orientation, gender identity, and Freedom Restoration Act. the College would have an opportunity national origin do not categorically The public should bear in mind that to litigate in a federal forum whether disappear when the employer is a this discussion is restricted solely to [the religious exemption] exempts or the religious organization. Thus the these difficult and sensitive questions first amendment protects that particular raised by commenters. This rule does religious exemption does not permit not affect the overwhelming majority of religious organizations to engage in 22 See below for a more fulsome discussion of federal contractors and subcontractors, prohibited discrimination when there is how courts have determined the applicability of the which are not religious, and OFCCP no religious basis for the action. For religious exemption. 23 remains fully committed to enforcing all instance, a religious organization that This is separate from the question of whether declined to promote a non-ministerial application of Title VII in any particular instance E.O. 11246 nondiscrimination is tolerable under the First Amendment or other requirements, including those employee not for religious reasons, but law, such as where the employee is a minister, see protecting employees from Our Lady of Guadalupe, 140 S. Ct. 2049, or where 21 See Office of the Att’y Gen., Memorandum for the employment relationship is otherwise ‘‘so discrimination on the bases of sexual All Executive Departments and Agencies: Federal pervasively religious’’ that it raises First orientation and gender identity. Even Law Protections for Religious Liberty 1–2 (Oct. 6, Amendment concerns, see DeMarco v. Holy Cross for religious organizations that serve as 2017). High Sch., 4 F.3d 166, 172 (2d Cir. 1993).

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practice.’’ Id. The Seventh Circuit has and as a constitutional matter noted that furthering that interest. [42 U.S.C.] similarly characterized the question of ‘‘[e]liminating the employment policy § 2000bb–1.’’ Id. Moreover, ‘‘[b]ecause whether ‘‘the religious-employer involved here would not interfere with RFRA operates as a kind of super exemptions in Title VII [are] applicable religious belief and only minimally, if at statute, displacing the normal operation only to claims of religious all, with the practice of religion.’’ Id. at of other federal laws, it might supersede discrimination’’ as ‘‘a question of first 1366, 1368. Title VII’s commands in appropriate impression in this circuit.’’ Herx v. The Supreme Court also has not cases. [42 U.S.C.] § 2000bb–3.’’ Id.25 Diocese of Fort Wayne-South Bend, Inc., answered whether an employment Concerns raised by supportive 772 F.3d 1085, 1087 (7th Cir. 2014). action motivated by religion but commenters in this rulemaking have Other courts have indicated that the implicating a protected classification alerted the agency that application of religious exemption may be preeminent violates Title VII. The Court’s cases offer E.O. 11246 may substantially burden in such a situation. See Little, 929 F.2d no clear conclusion whether the their religious exercise, especially if the at 951 (‘‘[T]he permission to employ religious exemption should be read so religious exemption does not clearly persons ‘of a particular religion’ narrowly that its protections are protect their ability to maintain includes permission to employ only overcome by the rest of E.O. 11246’s (or employees faithful to their practices and persons whose beliefs and conduct are Title VII’s) protections when they are beliefs. The ministerial exception offers consistent with the employer’s religious both at issue. For example, in Bostock religious organizations broad freedom in precepts.’’); see also Kennedy, 657 F.3d v. Clayton County, 140 S. Ct. 1731 the selection of ministers, but that is at 194 (‘‘Congress intended the explicit (2020), the Court held that Title VII’s only a subset of their employees. See exemptions to Title VII to enable prohibition on discrimination because generally Our Lady of Guadalupe, 140 religious organizations to create and of sex includes discrimination on the S. Ct. 2049. In contrast, the religious maintain communities composed solely basis of sexual orientation and exemption applies to all of a religious of individuals faithful to their doctrinal transgender status. That holding itself is organization’s employees, but the scope practices.’’ (quoting Little, 929 F.2d at not particularly germane to OFCCP’s of its protections is not settled when 951)). enforcement of E.O. 11246, which has religious tenets implicate other The only two federal appellate-level expressly protected sexual orientation protected classes. Thus, the Department cases with fact patterns involving the and gender identity since 2015. What is should consider RFRA, since in some precise issue are a pair of Ninth Circuit certainly germane is the Court’s circumstances neither the ministerial cases from the 1980s. The first, EEOC v. recognition of the ‘‘fear that complying exception nor the religious exemption Pacific Press Publishing Association, with Title VII’s requirement in cases may alleviate E.O. 11246’s burden on held as a statutory matter that Title VII’s like [Bostock] may require some religious exercise. See Little Sisters of prohibitions on sex discrimination and employers to violate their religious the Poor, 140 S. Ct. at 2383–84 (holding on retaliation applied to a religious convictions’’ and its assurance that it, agencies should consider RFRA when it organization. See 676 F.2d 1272, 1277 too, was ‘‘deeply concerned with is an important aspect of the problem (9th Cir. 1982). But the court preserving the promise of the free involved in the rulemaking). determined that the practice at issue exercise of religion enshrined in our The discussion below addresses in that resulted in sex discrimination Constitution; that guarantee lies at the general terms how OFCCP views its ‘‘does not and could not conflict with heart of our pluralistic society.’’ Id. at obligations under RFRA in the specific [the employer’s] religious doctrines, nor 1753–54. The Court then noted that situation raised by commenters and does it prohibit an activity rooted in Title VII contains ‘‘an express statutory addressed here: Where the religious religious belief.’’ Id. at 1279. Regarding exception for religious organizations,’’ organization takes employment action retaliation, the court held as a but did not explain whether an regarding an applicant or an employee, constitutional matter that Title VII’s employment action motivated by the employment action is motivated anti-retaliation provision should apply religion that implicates a protected solely on the employee’s adherence to a to the religious organization even when classification violates Title VII. Id. at sincere religious tenet, yet that tenet the employee was dismissed for 1754. also implicates an E.O. 11246 protected violating church doctrine that Regardless, OFCCP ultimately does category other than race (which is prohibited members from bringing not need to answer this open question discussed separately). RFRA requires a lawsuits against the church. See id. at on the proper interpretation of the fact-specific analysis, so the discussion 1280. religious exemption in E.O. 11246, and here of necessity can speak only to The second decision, EEOC v. declines to do so, because RFRA can OFCCP’s general approach; specific Fremont Christian School, 781 F.2d guide the agency’s determination if and situations involving specific parties will 1362 (9th Cir. 1986), is less instructive. when a particular case presents a require consideration of any additional, It held in relevant part that Title VII situation where a religiously motivated unique facts. And of course the could be applied to prohibit a employment action implicates a contractor or subcontractor involved religiously grounded health benefits classification protected under the will need to demonstrate its religious program that benefited one sex more Executive Order. As noted in Bostock, sincerity and burden so that it falls than the other. However, as a statutory RFRA ‘‘prohibits the federal government within this rubric. Nonetheless, OFCCP matter, the court held that the religious from substantially burdening a person’s believes its RFRA analysis here will exemption was not implicated because exercise of religion unless it provide clarity for religious contractors the employment practice did not demonstrates that doing so both furthers and subcontractors, regardless of how concern the selection of employees a compelling governmental interest and future cases may interpret the interplay based on their religion—the text of the represents the least restrictive means of of the religious exemption in and of exemption refers to ‘‘employment of itself with other protected classes under 24 agrees that the policy in Fremont would not be individuals of a particular religion’’ — covered by the religious exemption because it did Title VII or E.O. 11246. not pertain to the employee’s particular religion. 24 As explained elsewhere in this preamble, the Nothing about the employee’s religious beliefs or 25 RFRA was not raised before the Court in religious exemption is more than a mere hiring conduct would affect the policy—only his or her Bostock. Thus, the Court left that ‘‘question[ ] for preference for coreligionists. OFCCP nonetheless sex. future cases.’’ 140 S. Ct. at 1754.

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iii. Application of the Religious questions is yes, then the regulation religion exists. While the compulsion Freedom Restoration Act substantially burdens the exercise of may be indirect, the infringement upon ‘‘Congress enacted RFRA in 1993 in religion. free exercise is nonetheless order to provide very broad protection On the first question, noncompliance substantial.’’). Thomas, 450 U.S. at 717– of religious liberty.’’ Hobby Lobby, 573 with the nondiscrimination 18. U.S. at 693. RFRA responded to requirements of E.O. 11246 could have On the second question, the Supreme ‘‘Employment Division v. Smith, 494 substantial adverse consequences on Court emphasized in Hobby Lobby that, U.S. 872 (1990) [in which] the Supreme religious organizations that participate in determining whether compliance Court virtually eliminated the in government contracting. One private with a particular mandate would requirement that the government justify religious university supportive of the substantially burden the objecting burdens on religious exercise imposed proposed rule stated that it is ‘‘a large party’s ability to operate in accordance by laws neutral toward religion’’ under research university with dozens of with its religious beliefs, the federal the First Amendment, and restored by active federal contracts at any given government must ‘‘not presume to statute ‘‘the compelling interest test as time,’’ while another stated that determine the plausibility of a religious set forth in Sherbert v. Verner, 374 U.S. ‘‘religious organizations have long been claim.’’ Hobby Lobby, 573 U.S. at 724 398 (1963) and Wisconsin v. Yoder, 406 significant participants in federal (quoting Smith, 494 U.S. at 887). It is U.S. 205 (1972).’’ 42 U.S.C. procurement programs.’’ not for a court, or for OFCCP, to say 2000bb(a)(4), (b)(1); see Hobby Lobby, Noncompliance with E.O. 11246 can whether a particular set of religious 573 U.S. at 693–95. result in awards of back pay and other beliefs is ‘‘mistaken or insubstantial.’’ Under RFRA, the federal government make-whole relief to affected employees Hobby Lobby, 573 U.S. at 725. may not ‘‘substantially burden a and applicants, cancellation or Furthermore, religious exercise means person’s exercise of religion.’’ 42 U.S.C. suspension of the contract, and even more than being able to express 2000bb–1(a). Government is excepted suspension or debarment. See E.O. particular views—a right to freedom of from this requirement only if it 11246 § 202(7); 41 CFR 60–1.26. That is religion requires the right to act in ‘‘demonstrates that application of the substantial pressure. Indeed, it is a conformance with that religion. See burden to the person—(1) is in substantial burden for the government Espinoza, 140 S. Ct. at 2277 (Gorsuch, furtherance of a compelling to compel someone ‘‘to choose between J., concurring) (‘‘The right to be religious governmental interest; and (2) is the the exercise of a First Amendment right without the right to do religious things least restrictive means of furthering that and participation in an otherwise would hardly amount to a right at all.’’). compelling government interest.’’ Id. available public program.’’ Thomas, 450 It is this right to engage in conduct 2000bb–1(b). U.S. at 716; Sherbert, 374 U.S. at 404 consistent with sincerely held belief— RFRA ‘‘applies to all Federal law, and (‘‘It is too late in the day to doubt that and a right to be free of demands to the implementation of that law, whether the liberties of religion and expression engage in conduct conflicting with those statutory or otherwise, and whether may be infringed by the denial of or sincerely held beliefs—that RFRA adopted before or after November 16, placing of conditions upon a benefit or protects. See Little Sisters of the Poor, 1993,’’ Id. 2000bb–3(a), including privilege.’’). ‘‘Governmental imposition 140 S. Ct. at 2390. agency regulations, see Little Sisters of of such a choice puts the same kind of Compliance with the the Poor, 140 S. Ct. at 2383. As ‘‘Federal burden upon the free exercise of religion nondiscrimination provisions in E.O. law, and the implementation of that as would a fine imposed’’ for engaging 11246, if interpreted to apply when an law,’’ E.O. 11246 fits within that scope in religious action. Sherbert, 374 U.S. at employment action is motivated by as well. 404. ‘‘Where the state conditions receipt religion yet also implicates a protected of an important benefit upon conduct classification, could force religious (1) Substantial Burden proscribed by a religious faith, or where organizations to violate their sincerely The question of whether government it denies such a benefit because of held religious beliefs or to compromise action substantially burdens an conduct mandated by religious belief, their religious integrity or mission by employer’s exercise of religion can be thereby putting substantial pressure on placing substantial pressure on them to separated into two parts. See Hobby an adherent to modify his behavior and violate or modify their religious tenets Lobby, 573 U.S. at 720–26; Little Sisters to violate his beliefs, a burden upon related to their employees and their of the Poor, 140 S. Ct. at 2389 (Alito, J., religious communities. The comments concurring). First, the government must violate its religious beliefs. Instead, substantial on the proposed rule made this clear. pressure on a party to modify its religiously For example, a private religious ask whether the consequences of motivated practice is also sufficient to establish a noncompliance put substantial pressure substantial burden. See, e.g., Archdiocese of Wash. university noted the importance for on the objecting party to comply. See v. Wash. Metro. Area Transit Auth., 897 F.3d 314, religious employers to be able to Hobby Lobby, 573 U.S. at 720–23. 333 (D.C. Cir. 2018) (defining ‘‘substantial burden’’ ‘‘employ[ ] persons whose beliefs and under RFRA as ‘‘substantial pressure on an conduct are consistent with [their] Second, the government must ask adherent to modify his behavior and to violate his whether compliance with the regulation beliefs’’) (quoting Thomas v. Review Bd., 450 U.S. religious precepts.’’ Similarly, a would violate or modify the objecting 707, 718 (1981)); EEOC v. Catholic Univ. of Am., nationwide ecclesiastical organization party’s sincerely-held religious exercise 83 F.3d 455, 467 (D.C. Cir. 1996) (finding that stated in its comment that faith-based government’s interest in eliminating employment organizations should be able to (as the objecting party understands that discrimination at Catholic university was exercise and any underlying beliefs), outweighed by university’s right of autonomy in its ‘‘lawfully prefer for employment those own domain); Jolly v. Coughlin, 76 F.3d 468, 477 who, by word and conduct, accept and including the party’s ‘‘ability . . . to (2d Cir. 1996) (finding that right to free exercise of conduct business in accordance with adhere to that faith as the organization religion is ‘‘substantially burdened’’ within understands it, regardless of the [its] religious beliefs.’’ Hobby Lobby, 573 meaning of RFRA where state puts substantial applicant’s or employee’s religious U.S. at 724; see also Sherbert, 374 U.S. pressure on adherent to modify his behavior and to violate his beliefs); In re Young, 82 F.3d 1407, 1418 affiliation.’’ An association of religious at 405–06.26 If the answer to both (8th Cir. 1996) (‘‘[D]efining substantial burden universities echoed these sentiments, broadly to include religiously motivated as well as stating that ‘‘[o]ur schools are 26 Case law is clear that RFRA’s substantial religiously compelled conduct is consistent with burden test does not insist that a challenged the RFRA’s purpose to restore pre-Smith free committed to upholding their religion- government action require an objecting party to exercise case law.’’). based standards by aligning

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employment expectations exclusively provided leeway under federal religious exemption permits religious with applicants and employees who constitutional and statutory law in organizations to prefer ‘‘coreligionists’’ concur with these expectations. These regulating the sexual conduct of those in in employment decisions. In that case, expectations are essential to fulfilling their employ in keeping with their religious organizations would draw our religious mission.’’ While the religious views’’); Dolter v. Wahlert strict lines by stating that certain commenter explained that generally its High Sch., 483 F. Supp. 266, 270 (N.D. behaviors, beliefs, or statements are associated ‘‘schools do not accept direct Iowa 1980) (‘‘Nor does the court quarrel anathema to the religion and take one government funding,’’ it highlighted the with defendant’s contention that it can outside the religious community. That importance for its members that ‘‘no define moral precepts and prescribe a way, employment action would be more organization should be excluded by the code of moral conduct that its teachers readily identified as resting solely on government from competing for . . . must follow.’’).27 religious grounds as a preference against contracts or other funds simply because Of particular concern here as well is a non-coreligionist. See Mississippi the religious organization is serious that ‘‘[f]ear of potential liability might College, 626 F.2d at 484–85; cf. Amos, about maintaining its religious identity affect the way an organization carried 483 U.S. at 343 (Brennan, J., concurring) and religious practices.’’ out what it understood to be its religious (‘‘A religious organization therefore The case law also indicates that mission.’’ Amos, 483 U.S. at 336; cf. would have an incentive to characterize certain E.O. 11246 obligations may Hosanna-Tabor, 565 U.S. at 197 as religious only those activities about impose a burden on religious (Thomas, J., concurring) (‘‘[U]ncertainty which there likely would be no dispute, organizations. Bostock expressly about whether its ministerial even if it genuinely believe that designation will be rejected, and a acknowledged that enforcing certain religious commitment was important in corresponding fear of liability, may nondiscrimination provisions could performing other tasks as well.’’). Here, cause a religious group to conform its pose challenges for religious employers the religious burden would be beliefs and practices regarding under RFRA. See 140 S. Ct. at 1754. government pressure on how the ‘ministers’ to the prevailing secular And many cases show instances of religious organization defines who is understanding.’’). Here, out of fear of religious employers seeking to apply and who is not a member of its religious violating E.O. 11246’s requirements, a community. religiously inspired codes of conduct religious organization might simply Demonstrating burden is necessarily that pertain to matters of marriage and choose to forsake certain of its religious fact-dependent. There may be instances sexual intimacy. See Little, 929 F.2d at tenets related to employment. That is a where the organization sincerely 946 (upholding termination of employee religious burden in itself. And that believes as a religious matter that it can for violations of ‘‘Cardinal’s Clause,’’ change could in turn result in the tolerate some kinds of religious which included ‘‘entry by the teacher organization hiring and retaining noncompliance from some of its into a marriage which is not recognized employees who, by word or deed, employees without seriously by the Catholic Church’’ (emphasis in undermine the religious organization’s compromising its religious mission or original)); Cline, 206 F.3d at 666 character and purpose—but which the identity. That may be the case especially (holding fact issue remained as to organization would feel compelled to for employees in less prominent roles or whether plaintiff was terminated for accept rather than risk liability. That is who have little interaction with pregnancy or for whether she had a second religious burden, which in students or the public. But there may be ‘‘violated her clear duties as a teacher by particular may pose a risk to smaller or other instances where, in the sincere engaging in premarital sex’’); Boyd v. nontraditional religious groups. Cf. view of the organization, a non- Harding Acad. of Memphis, Inc., 88 Hosanna-Tabor, 565 U.S. at 197 ministerial employee must adhere to the F.3d 410, 414 (6th Cir. 1996) (upholding (Thomas, J., concurring) (noting that a organization’s religious tenets as an district court’s determination that the bright-line test or multifactor analysis important part of furthering the defendant ‘‘articulated a legitimate, non- for the definition of ‘‘minister’’ ‘‘risk[s] organization’s religious mission and discriminatory reason for plaintiff’s disadvantaging those religious groups maintaining its religious identity, and termination when it stated that plaintiff whose beliefs, practices, and where strict enforcement of certain E.O. was fired not for being pregnant, but for membership are outside of the 11246 requirements would substantially having sex outside of marriage in ‘mainstream’ or unpalatable to some,’’ burden those aims. violation of Harding’s code of conduct’’ including by ‘‘caus[ing] a religious and rejecting claim of pretext when (2) Compelling Interest group to conform its beliefs and school’s president ‘‘had terminated at Many courts have recognized the practices regarding ‘ministers’ to the least four individuals, both male and importance of the government’s interest prevailing secular understanding’’). female, who had engaged in extramarital Alternatively, to avoid this problem, in enforcing Title VII’s sexual relationships that did not result the religious organization might nondiscrimination provisions. See, e.g., in pregnancy’’); Gosche v. Calvert High consider drawing stricter lines around Rayburn, 772 F.2d at 1169; Pacific Sch., 997 F. Supp. 867, 872 (N.D. Ohio those it considers ‘‘coreligionists,’’ for Press, 676 F.2d at 1280. The following 1998) (dismissing Title VII claim of even the narrowest reading of the RFRA analysis does not address plaintiff fired for having affair and OFCCP’s enforcement program broadly, concluding that ‘‘[w]hatever Plaintiff’s 27 Amos also implicated such facts. The appellee including the context of a religious own post-hoc claims may be regarding had been discharged for failing to ‘‘qualify for a organization’s discriminating on the the relevance of her sexual conduct to temple recommend, that is, a certificate that he is basis of a protected characteristic other her employment at a Catholic school, it a member of the Church and eligible to attend its than religion for non-religious reasons. temples,’’ which ‘‘are issued only to individuals is clear that the Diocese and Parish who observe the Church’s standards in such matters OFCCP will continue to fully enforce considered her sexual conduct to be as regular church attendance, tithing, and E.O. 11246’s requirements in those relevant to her employment’’); Ganzy v. abstinence from coffee, tea, alcohol, and tobacco.’’ contexts. Rather, the compelling-interest Allen Christian Sch., 995 F. Supp. 340, Amos, 483 U.S. at 330 & n.4. The plaintiffs below analysis here focuses solely on the had alleged that those standards necessitated 359–60 (E.D.N.Y. 1998) (noting in case employer inquiries into their ‘‘sexual activities’’ questions raised by commenters with similar facts and holding as Cline and ‘‘moral cleanliness and purity.’’ Amos, 594 F. regarding a situation in which a that ‘‘[r]eligious institutions . . . are Supp. at 830. religious organization takes employment

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action based solely on sincerely held 2000bb–1(a))). When ‘‘[t]he proffered Sandy and Katrina,’’ 28 and OFCCP has religious tenets that also implicate a objectives are not pursued with respect granted temporary exemptions from protected classification. to analogous nonreligious conduct,’’ some E.O. 11246 requirements in To satisfy RFRA, OFCCP must do those exceptions suggest that ‘‘those response to more recent national more than assert a generalized interests could be achieved by narrower disasters. OFCCP has similarly granted compelling interest on a ‘‘categorical’’ ordinances that burdened religion to a an exemption during the COVID–19 basis. O Centro, 546 U.S. at 431. Instead, far lesser degree.’’ Holt, 574 U.S. at 367. pandemic. See OFCCP, National Interest ‘‘RFRA requires the Government to The President has granted OFCCP Exemptions, https://www.dol.gov/ demonstrate that the compelling interest broad authority and discretion to agencies/ofccp/national-interest- test is satisfied through application of exempt contracts from the requirements exemption. And the National Interest the challenged law ‘to the person’—the of E.O. 11246. Most prominent is Exemptions that OFCCP has granted can particular claimant whose sincere section 204(a) of E.O. 11246, which be quite broad, applying, for example, to exercise of religion is being authorizes the Secretary of Labor to all new contracts providing coronavirus substantially burdened.’’ Id. at 430–31 grant exemptions from any or all of the relief during the applicable time period. (quoting 42 U.S.C. 2000bb–1(b)). This equal opportunity clause’s requirements See OFCCP, Coronavirus National requires ‘‘look[ing] beyond broadly ‘‘when the Secretary deems that special Interest Exemption Frequently Asked formulated interests justifying the circumstances in the national interest so Questions, https://www.dol.gov/ general applicability of government require.’’ This is not the kind of agencies/ofccp/faqs/covid-19#Q1. mandates and scrutiniz[ing] the asserted language government typically uses OFCCP has also issued a final rule harm of granting specific exemptions to when it seeks a policy of absolute effecting a permanent exemption from particular religious claimants.’’ Id. at enforcement. Rather, it is the kind of all OFCCP authority for healthcare 431. language government uses when providers that participate in the Thus OFCCP must demonstrate that it granting highly discretionary power. Cf. TRICARE program and have no has a compelling governmental interest Webster v. Doe, 486 U.S. 592, 600 (1988) otherwise covered contracts. The final in enforcing a nondiscrimination (removing an employee ‘‘whenever the rule expressed OFCCP’s view that a requirement against ‘‘particular Director ‘shall deem such termination 2011 statute removed whatever religious claimants’’ (e.g., particular necessary or advisable in the interests of authority OFCCP may have had over contractors who qualify for the religious the United States’ ’’ is a standard that TRICARE providers and did not replace exemption) when doing so places a ‘‘fairly exudes deference to the Director’’ it with a separate nondiscrimination substantial burden on the ability of (quoting National Security Act § 102(c)). provision; Congress’ action indicates those particular contractors to freely The Executive Order contains many that OFCCP’s interest is less than exercise their religion. Id. This statutory other exceptions as well. Section 204(b) compelling interest. See 85 FR 39834, requirement is reflected in OFCCP’s authorizes the Secretary to exempt 39837–39 (July 2, 2020). Additionally, current RFRA policy, under which contracts that are to be performed the final rule exempted TRICARE ‘‘OFCCP will consider’’ a contractor’s outside the United States, contracts that providers on the alternative ground of a request for ‘‘an exemption to E.O. 11246 are for standard commercial supplies or national interest exemption, citing its pursuant to RFRA . . . based on the raw materials, contracts that do not concern that ‘‘the prospect of exercising facts of the particular case.’’ OFCCP, meet certain thresholds (dollar amounts authority over TRICARE providers is Religious Employers and Religious or numbers of employees), and affecting or will affect the government’s Exemption, www.dol.gov/agencies/ subcontracts below a specified tier. ability to provide health care to ofccp/faqs/religious-employers- Section 204(d) authorizes the Secretary uniformed service members, veterans, exemption. As explained below, OFCCP and their families,’’ a determination that has determined on the basis of several to exempt a contractor’s facilities that ‘‘pursuing enforcement efforts against independent reasons that it has less are separate and distinct from activities TRICARE providers is not the best use than a compelling interest in enforcing related to the performance of the of its resources’’ given a history of nondiscrimination requirements— contract, as long as ‘‘such an exemption litigation and legal uncertainty in the except for protections on the basis of will not interfere with or impede the area, and the need to ‘‘provide race—when enforcement would effectuation of the purposes of this uniformity and certainty in the health seriously infringe the religious mission Order.’’ OFCCP’s implementing care community with regard to legal or identity of a religious organization. regulations contain exemptions as well. Exceptions provided other OFCCP has implemented section 204(b) obligations concerning participation in contractors. OFCCP’s general interest in to the maximum extent possible by TRICARE.’’ Id. at 39839. enforcing E.O. 11246 is less than exempting all contracts and The various exemptions that OFCCP compelling in the religious context subcontracts for work performed outside can and does provide in secular settings addressed here, given the numerous the United States by employees not show that its interest in enforcing E.O. exceptions from its nondiscrimination recruited in the United States. See 41 11246’s requirements can give way to requirements it has authority to grant, CFR 60–1.5(3). OFCCP’s regulations also other considerations. Many of those and has granted, in nonreligious contain a religious exemption for same considerations exist here, so contexts. Granting accommodations in religious educational institutions and OFCCP’s enforcement interest should nonreligious contexts strongly suggests permit a preference for ‘‘Indians living similarly give way to religious that OFCCP does not have a compelling on or near an Indian reservation in accommodation. For example, many of interest in disfavoring religious connection with employment the same reasons underlying OFCCP’s contractors by refusing to grant opportunities on or near an Indian exemption for TRICARE providers apply accommodations in religious contexts. reservation.’’ 41 CFR 60–1.5(6)–(7). here as well: Conservation of resources See O Centro, 546 U.S. at 436 (‘‘RFRA On several occasions OFCCP has used in an area that could lead to protracted operates by mandating consideration, its power to exempt contracts ‘‘in the national interest.’’ ‘‘Prior 28 OFCCP, ‘‘Coronavirus National Interest under the compelling interest test, of Exemption Frequently Asked Questions,’’ Question exceptions to ‘rule[s] of general administrations granted [national #12, https://www.dol.gov/agencies/ofccp/faqs/ applicability.’ ’’ (quoting 42 U.S.C. interest exemptions] for Hurricanes covid-19#Q12.

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litigation; the need to bring clarity to a that also implicate a protected (emphasis added) (quoting Hosanna- group of potential contractors under a classification, other than race. OFCCP Tabor, 565 U.S. at 186 (opinion for the cloud of legal uncertainty; and a goal of has determined that, in these court)); see also Hosanna-Tabor, 565 improving the government’s access to circumstances, it should instead U.S. at 197 (Thomas, J., concurring) certain services. In the TRICARE rule, appropriately accommodate religion, (‘‘These are certainly dangers that the the goal was to foster access to care for especially when doing so (as with First Amendment was designed to guard veterans and their families. In this rule, national interest exemptions) would against.’’). In essence, such an approach it is the goal of fostering the equal foster a more competitive pool of could have the unfortunate consequence participation of religious organizations government contractors. See Boyle v. of pushing religious organizations to in government contracting and United Techs. Corp., 487 U.S. 500, 506 extremes to avoid liability. Religious subcontracting in order to increase the (1988) (noting that ‘‘the Federal organizations could do so either by contracting pool’s competition and Government’s interest in the forsaking their religiously based diversity and thus improve economy procurement of equipment is requirements for employment, or by and efficiency in procurement. Likewise implicated’’ where ‘‘[t]he imposition of engaging in more definitive religious OFCCP’s limited exemptions during liability on Government contractors’’ actions to demonstrate their religious emergencies and the pandemic will cause the contractors to ‘‘decline to disassociation from someone who demonstrate the agency’s judgment that manufacture’’ a good or to ‘‘raise its breaches a religiously based securing services for the government price’’). requirement for employment. OFCCP can override aspects of E.O. 11246’s Establishment Clause concerns. also has concerns about inter-religious obligations. Here, too, a limited OFCCP’s interest in enforcing E.O. discrimination, since some bona fide religious accommodation may 11246 is attenuated when doing so religious organizations require encourage religious organizations to seriously risks violating the adherence to a common set of beliefs or begin or continue participating in Establishment Clause. But as noted tenets but do not have a formal government contracting and earlier, strict application of all E.O. membership structure, see World subcontracting. And like those other 11246 requirements to religious Vision, 633 F.3d at 728 (O’Scannlain, J., exemptions, a religious accommodation organizations could, in some instances, concurring), so they may have more here would be limited. It would be chill their protected religiously based difficulty than traditional churches in limited to employment action grounded requirements for employment out of fear showing that an employee or applicant in a sincere religious belief with respect of liability. It could also chill religious is not (or is no longer) a coreligionist. to the employee’s religion. It would not organizations from taking employment OFCCP cannot avoid this excuse religious organizations from action despite an employee, by word or Establishment Clause problem by their antidiscrimination obligations deed, undermining the religious attempting to determine whether a otherwise and never on the basis of race, organization’s tenets and purposes. religious organization’s decision to nor from their affirmative-action Alternatively, it could incentivize deem someone a non-coreligionist was obligations, reporting requirements, or religious organizations, because of the motivated by discriminatory animus other requirements under E.O. 11246. risk that the government might rather than a sincere application of E.O. 11246’s many available misunderstand the organization’s religious tenets. Unlike the fact-finding exemptions, and OFCCP’s history of motivations, to draw stricter lines to determine the reason for an recognizing exemptions, also undercuts around who it considers a coreligionist. employment decision, which does not the idea that individualized religious In this situation, the religious always raise Establishment Clause exemptions would undermine the organization would first take some form concerns, this would be fact-finding to agency’s overall enforcement of E.O. of purely religious action against an determine the reason for a religious 11246 or that their denial would be employee to designate the employee as decision on community membership. equitable to religious organizations. See no longer a part of the religious Testing the basis of that decision would Holt, 574 U.S. at 368 (‘‘At bottom, this community, and then take employment most likely violate the First argument is but another formulation of action, so that employment action Amendment. It would violate the the ‘classic rejoinder . . . : If I make an would be more readily identified as religious organization’s right to choose exception for you, I’ll have to make one resting solely on grounds of religious its membership free of government for everybody, so no exceptions.’ We preference. And it poses a risk to influence, and the process of inquiry have rejected a similar argument in smaller or nontraditional religious alone into such a sensitive area ‘‘would analogous contexts, and we reject it groups, whose membership practices risk judicial entanglement in religious again today.’’) (internal citations may not be as readily understood by the issues.’’ Our Lady of Guadalupe, 140 S. omitted) (quoting O Centro, 546 U.S. at government. Cf. Hosanna-Tabor, 565 Ct. at 2069; see Catholic Bishop, 440 436); Fraternal Order of Police Newark U.S. at 197 (Thomas, J., concurring). U.S. at 502. Lodge No. 12 v. City of Newark, 170 Such government pressure on The absence of a clear command. F.3d 359, 365 (3d Cir. 1999) (‘‘[W]e religious organizations’ membership Finally, a compelling interest ought to conclude that the Department’s decision and doctrinal decisions would raise be one that is clearly spelled out by the to provide medical exemptions while serious concerns under not only the government. For instance, in his refusing religious exemptions is Free Exercise Clause, but the concurrence in Little Sisters of the Poor, sufficiently suggestive of discriminatory Establishment Clause as well. ‘‘[T]he Justice Alito observed that it was highly intent so as to trigger heightened Religion Clauses protect the right of significant that Congress itself had not scrutiny.’’). churches and other religious institutions treated free access to contraception as a Recognizing the value that religious to decide matters ‘of faith and doctrine’ compelling government interest. See contractors provide, OFCCP has without government intrusion. . . . Little Sisters of the Poor, 140 S. Ct. at determined that it has less than a [A]ny attempt by government to dictate 2392–93 (Alito, J., concurring). Here, compelling interest in enforcing E.O. or even to influence such matters would however, the scope of the religious 11246 when a religious organization constitute one of the central attributes of exemption is unsettled. As discussed takes employment action solely on the an establishment of religion.’’ Our Lady above, courts have consistently basis of sincerely held religious tenets of Guadalupe, 140 S. Ct. at 2060 interpreted the religious exemption to

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prohibit religious organizations from employment actions based on sincere center of the Harris case was not a discriminating on bases other than religious tenets; employees remain religious organization. See 884 F.3d at religion. But Bostock left open the scope protected from discrimination 581. Unlike the religious employers that of the exemption’s protection for motivated by animus or any other non- are OFCCP’s focus here, the funeral religious discrimination, and only two religious reason, and employment home had ‘‘virtually no religious federal court of appeal decisions have actions based on race always remain characteristics,’’ id. at 582: No addressed a fact pattern in which a prohibited. religiously inspired code of conduct, no religious organization’s religious tenets doctrinal statement, and no other conflicted with a non-religious Title VII (4) The Harris Case religious requirement for employees. protection. See Fremont, 781 F.2d at OFCCP does not view the Sixth Nor did the funeral home through its 1368 (finding challenged religious Circuit’s opinion in EEOC v. R.G. &. work seek to advance the values of a practice outside the scope of the G.R. Harris Funeral Homes, Inc., 884 particular religion. See id. Indeed, the religious exemption and changing the F.3d 560 (6th Cir. 2018), aff’d, Bostock funeral home was clearly outside the practice would pose little interference v. Clayton Cnty., 140 S. Ct. 1731 (2020), scope of OFCCP’s religious exemption— with the organization’s religious belief as requiring a different analysis here. In which exists to prevent E.O. 11246’s and practice); Pacific Press, 676 F.2d at that case (one of three consolidated in nondiscrimination provisions from 1279 (determining that the EEOC’s Bostock), an employee of a funeral home interfering with a religious action ‘‘does not and could not conflict informed the funeral home’s owner of organization’s freedom to employ with [the employer’s] religious the employee’s intention to present as a ‘‘individuals of a particular religion’’— doctrines, nor does it prohibit an member of the opposite sex while at and furthermore the funeral home’s own activity rooted in religious belief’’). work. The owner stated that he would testimony indicated that its conduct was Without stronger legal evidence that the violate his religious beliefs were he to motivated by commercial rather than religious exemption’s protections are permit the employee to do so and religious concerns. See id. at 576 n.5, cabined by E.O. 11246’s other terminated the employee. See id. at 568– 586, 589 n.10. protections (and thus may seriously 69. In the ensuing litigation, the funeral Bearing those key factual differences infringe religious freedom), OFCCP is home raised a RFRA defense. The Sixth in mind, OFCCP disagrees that, at least hesitant to describe that theory as Circuit held that Title VII as applied to religious organizations furthering a compelling government discrimination claims ‘‘will necessarily regulated by OFCCP, ‘‘tolerating’’ interest. defeat’’ RFRA defenses to such employee conduct that is contrary to the organization’s sincerely held religious (3) Least Restrictive Means discrimination. Id. at 595. The court addressed each element of RFRA. tenets can never constitute a substantial In the third step of the RFRA analysis, Regarding substantial burden, the court burden under RFRA, as the court held OFCCP assesses whether its application held in relevant part that the employer’s in Harris. Id. at 588. That holding is, at of the religious burden to the person ‘‘is mere toleration of the employee’s the very least, in tension with Little the least restrictive means of furthering conduct to comply with Title VII is not Sisters of the Poor, Hobby Lobby, and that compelling government interest.’’ an endorsement of it, so it was not a the Free Exercise Clause precedents 42 U.S.C. 2000bb–1(b)(2). Because substantial burden. Regarding the they rested on. See Hobby Lobby, 573 OFCCP believes that it has less than a furtherance of a compelling interest, the U.S. at 723–25; see also Little Sisters of compelling interest in enforcing E.O. court held that failure to enforce Title the Poor, 140 S. Ct. at 2383 (‘‘[In Hobby 11246 in the circumstances VII would result in the employee Lobby,] we made it abundantly clear contemplated for purposes of this suffering discrimination, ‘‘an outcome that, under RFRA, the Departments general RFRA analysis it need not directly contrary to the EEOC’s must accept the sincerely held consider whether that foreclosed compelling interest in combating complicity-based objections of religious enforcement would be by the least discrimination in the workforce.’’ Id. at entities.’’); id. at 2390 (Alito, J., restrictive means. When the Supreme 592. Regarding least-restrictive means, concurring) (observing that ‘‘federal Court has found a regulation violated the court held that enforcement of Title courts have no business addressing RFRA, the Court has permitted the VII is itself the least-restrictive means whether the religious belief asserted in regulatory agency to determine the for eradicating employment a RFRA case is reasonable,’’ including correct remedy. See, e.g., Hobby Lobby, discrimination on the basis of sex. See religious beliefs underlying complicity- 573 U.S. at 726, 731, 736; 79 FR 51118 based objections). When government id. at 593–97. (Aug. 27, 2014) (proposed modification requires conduct proscribed by religious The defendant in Harris did not raise in light of Hobby Lobby). As a result, faith on pain of substantial penalty, the RFRA issue to the Supreme Court, OFCCP has discretion to determine an there is a burden upon religious but the Court in Bostock nonetheless appropriate accommodation without exercise. See Sherbert, 374 U.S. at 404. having to also determine the least observed that, ‘‘[b]ecause RFRA operates Additionally, the burden is even restrictive alternative. As Justice Alito as a kind of super statute . . . it might clearer for an objecting religious recently explained, RFRA ‘‘does not supersede Title VII’s commands in 29 organization than it was for the funeral require . . . that an accommodation of appropriate cases.’’ Bostock, 140 S. Ct. home in Harris. Unlike a secular religious belief be narrowly tailored to at 1754. To the extent Harris remains employer, a religious organization has a further a compelling interest. . . . good law, OFCCP does not view the religious foundation and purpose and Nothing in RFRA requires that a Sixth Circuit’s RFRA analysis as may select its employees on the basis of violation be remedied by the narrowest applicable here, as the facts of the case their religious adherence. Requiring permissible corrective.’’ Little Sisters of are readily distinguishable from this religious employers to maintain the Poor, 140 S. Ct. at 2396 (Alito, J., rule’s protections for religious employees who disregard the concurring). OFCCP further believes the organizations. The funeral home at the organization’s religious tenets thus more RFRA approach outlined here is an seriously threatens to undermine the 29 The Court also observed that ‘‘other employers appropriate accommodation, which in other cases may raise free exercise arguments organization’s mission and integrity. applies only to bona fide religious that merit careful consideration.’’ Bostock, 140 S. This gives even more credence to a employers and which permits only Ct. at 1754. claim that forcing a religious employer

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to maintain such an employee would religious accommodations may be important governmental objectives and substantially burden its religious necessary in certain other contexts must be substantially related to exercise. regarding considerations of sex, achievement of those objectives.’’); id. at OFCCP also does not view Harris’s ‘‘discrimination on the basis of race, 218 (Rehnquist, J., dissenting) (referring treatment of the compelling-interest ‘odious in all aspects, is especially to the majority approach as prong of RFRA as persuasive when pernicious in the administration of ‘‘intermediate’’ scrutiny), and the applied to religious organizations justice.’ ’’ Id. (quoting Rose v. Mitchell, ‘‘rational-basis scrutiny’’ that the Court regulated by OFCCP. First, because the 443 U.S. 545, 555 (1979)). has sometimes applied to classifications defendant was not a religious The Supreme Court has elsewhere based on sexual orientation, see organization, the Harris court did not recognized the government’s unique Lawrence v. Texas, 539 U.S. 558, 578 consider the antecedent question of interest in eradicating racial (2003); Romer v. Evans, 517 U.S. 620, whether the government has a discrimination. In Hobby Lobby, the 631–32 (1996). The Supreme Court has compelling interest in applying Court considered ‘‘the possibility that further recognized that traditional views nondiscrimination laws to a religious discrimination in hiring, for example on on marriage do not suggest bigotry or organization when doing so would the basis of race, might be cloaked as invidious discrimination but instead are threaten to compromise the religious practice to escape legal held ‘‘in good faith by reasonable and organization’s integrity or mission, with sanction,’’ but explained that ‘‘[t]he sincere people here and throughout the its attendant more-severe infringements Government has a compelling interest in world.’’ Obergefell v. Hodges, 576 U.S. on religious free exercise and providing an equal opportunity to 644, 657 (2015).30 The Constitution, as establishment problems. As discussed participate in the workforce without interpreted by the Supreme Court, is above, there are instances where that regard to race, and prohibitions on more protective of race than other could occur, so accordingly in that racial discrimination are precisely protected classifications. Thus, the situation the RFRA analysis is different. tailored to achieve that critical goal.’’ Court’s long-established Equal Additionally, E.O. 11246 contains 573 U.S. at 733. In Bob Jones University, Protection jurisprudence supports the additional and discretionary exceptions the Court similarly concluded that the conclusion that although the that Title VII does not have, which government had a ‘‘compelling’’ government has an interest in further alter the compelling-interest interest—described as ‘‘a fundamental eradicating discrimination on the bases balance. overriding interest’’—‘‘in eradicating of all protected classes, the racial discrimination,’’ and further (5) OFCCP’s Compelling Interest in governmental interest in eradicating explained the ‘‘governmental interest’’ Prohibiting Racial Discrimination racial discrimination is particularly in eradicating racial discrimination strong. This final rule is consistent with In response to commenters who raised ‘‘substantially outweighs whatever that framework. the issue, OFCCP reiterates here that it burden’’ the government action in that has a compelling interest in eradicating case ‘‘place[d] on petitioners’ exercise of e. Application of the Religious racial discrimination, even as against their religious beliefs.’’ Bob Jones, 461 Exemption religious organizations. To be sure, U.S. at 604; see also Newman v. Piggie As explained in the proposed rule, OFCCP is currently unaware of any Park Enters., Inc., 390 U.S. 400, 402 n.5 when evaluating allegations of contractor contending that its religious (1968) (describing as ‘‘patently discrimination on bases other than beliefs required it to take employment frivolous’’ the argument that a religion against employers that are actions that implicate race, and prohibition on racial discrimination entitled to the Title VII religious commenters supplied no evidence of ‘‘was invalid because it contravenes the exemption, courts carefully evaluate that occurring. Nonetheless, in response will of God and constitutes an whether the employment action was to commenters’ broader concerns, interference with the free exercise of the permissibly based on the ‘‘particular OFCCP makes clear here that its Defendant’s religion’’) (internal religion’’ of the employee. The overwhelming interest in eradicating quotation marks omitted). particulars vary. In the absence of direct racial discrimination would defeat The government’s heightened interest evidence of discrimination on a RFRA claims in the context addressed in eradicating racial discrimination is protected basis other than religion, in this section of the rule’s preamble. further exhibited by the Supreme courts generally invoke the burden- OFCCP will enforce E.O. 11246 against Court’s jurisprudence regarding the shifting framework of McDonnell any contractor or subcontractor that Equal Protection Clause of the Douglas Corp. v. Green, 411 U.S. 792 takes employment actions on the basis Fourteenth Amendment. In Equal (1973), to determine whether a religious of race, even if religiously motivated. At Protection Clause cases, the Court employer’s invocation of religion (or a least one commenter that strongly applies ‘‘strict scrutiny’’ to instances of religiously motivated policy) in making supported the proposed rule likewise race-based classifications, meaning that an employment decision was genuine recognized that the religious exemption ‘‘all racial classifications, imposed by or, instead, was merely a pretext for should not protect ‘‘a religious whatever federal, state, or local discrimination prohibited under Title organization’s employment decision governmental actor . . . are VII. See Cline, 206 F.3d 651; Boyd, 88 . . . based on racial status.’’ constitutional only if they are narrowly F.3d 410; cf. Geary, 7 F.3d 324 (applying OFCCP treats racial discrimination as tailored measures that further McDonnell Douglas in assessing unique because the Constitution does as compelling governmental interests.’’ religious-exemption defense to claim well. The Supreme Court recognizes Adarand Constructors, Inc. v. Pena, 515 under the Age Discrimination in that ‘‘[r]acial bias is distinct.’’ Pena- U.S. 200, 227 (1995). Strict scrutiny Employment Act). At least one other Rodriguez v. Colorado, 137 S. Ct. 855, presents a more pressing standard than 868 (2017). Indeed, a long history of the the ‘‘intermediate scrutiny’’ that the 30 Cf. Masterpiece Cakeshop, 138 S. Ct. at 1727 Court’s ‘‘decisions demonstrate that Court applies in Equal Protection Clause (stating that a clergy member’s refusal to perform racial bias implicates unique historical, cases to instances of sex-based a gay marriage ‘‘would be well understood in our constitutional order as an exercise of religion, an constitutional, and institutional classifications, see, e.g., Craig v. Boren, exercise that gay persons could recognize and concerns.’’ Id. (emphasis added). 429 U.S. 190, 197 (1976)) accept without serious diminishment to their own Although this final rule recognizes that (‘‘[C]lassifications by gender must serve dignity and worth’’).

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case has noted that ‘‘[o]ne way’’ to show (internal quotation mark omitted); cf., (quoting Serbian E. Orthodox Diocese v. discriminatory intent using e.g., Hobby Lobby, 573 U.S. at 117 n.28 Milivojevich, 426 U.S. 696, 720 (1976))). circumstantial evidence ‘‘is through the (‘‘To qualify for RFRA’s protection, an Some commenters, such as a religious burden-shifting framework set out in asserted belief must be ‘sincere’; a legal association and an association of McDonnell Douglas,’’ but another way is corporation’s pretextual assertion of a evangelical churches and schools, to ‘‘show enough non-comparison religious belief in order to obtain an agreed with OFCCP that governmental circumstantial evidence to raise a exemption for financial reasons would inquiry into religious employers’ reasonable inference of intentional fail.’’); Quaintance, 608 F.3d at 724 practices could violate the First discrimination.’’ Hamilton v. Southland (Gorsuch, J.) (‘‘[T]he record contains Amendment. A religious legal Christian Sch., Inc., 680 F.3d 1316, 1320 additional, overwhelming contrary organization commended OFCCP for (11th Cir. 2012). evidence that the [defendants] were deferring to religious organizations on In undertaking this evaluation, running a commercial marijuana matters of doctrine and religious OFCCP, like courts, ‘‘merely asks business with a religious front.’’). observance, and commented that doing whether a sincerely held religious belief Other decisions have not used the otherwise could lead to unconstitutional actually motivated the institution’s McDonnell Douglas framework, entanglement with religion. These are actions.’’ Geary, 7 F.3d at 330. The particularly when an inquiry into the constitutional concerns that likewise religious organization’s burden ‘‘to purported pretext would risk entangling constrain courts’ analyses when an employer makes an employment explain is considerably lighter than in a the court in the internal affairs of a decision based on religious criteria, yet non-religious employer case,’’ since the religious organization or require a court organization, ‘‘at most, is called upon to the employee disputes the religious or jury to assess religious doctrine or the explain the application of its own criteria. In those situations, courts have relative weight of religious doctrines.’’ Id. ‘‘Such an explanation is stated that ‘‘if a religious institution . . . considerations. See Geary, 7 F.3d at no more onerous than is the initial presents convincing evidence that the 330–31 (discussing cases). Depending burden of any institution in any First challenged employment practice on the circumstances, such an inquiry Amendment litigation to advance and resulted from discrimination on the explain a sincerely held religious belief by a court or an agency could basis of religion, § 702 deprives the as the basis of a defense or claim.’’ Id.; impermissibly infringe on the First EEOC of jurisdiction to investigate see Seeger, 380 U.S. at 185 (holding Amendment rights of the employer. further to determine whether the whether a belief is ‘‘truly held’’ is ‘‘a This arises most prominently in the religious discrimination was a pretext question of fact’’). The sincerity of context of the ministerial exception, a for some other form of discrimination.’’ religious exercise is often undisputed or judicially recognized exemption Little, 929 F.2d at 948 (quoting stipulated. See, e.g., Hobby Lobby, 573 grounded in the First Amendment from Mississippi College, 626 F.2d at 485). U.S. at 717 (‘‘The companies in the case employment-discrimination laws for Courts have noted the constitutional before us are closely held corporations, decisions regarding employees who dangers of ‘‘choos[ing] between parties’ each owned and controlled by a single ‘‘minister to the faithful.’’ Hosanna- competing religious visions’’ and family, and no one has disputed the Tabor, 565 U.S. at 189; see also Our entangling themselves in deciding sincerity of their religious beliefs.’’); Lady of Guadalupe, 140 S. Ct. at 2060. whether the employer or the employee Holt, 574 U.S. at 361 (‘‘Here, the The exemption ‘‘is not limited to the has the better reading of doctrine, or religious exercise at issue is the growing head of a religious congregation,’’ nor which tenets an employee must follow of a beard, which petitioner believes is subject to ‘‘a rigid formula for deciding or believe to remain in employment. a dictate of his religious faith, and the when an employee qualifies as a Geary, 7 F.3d at 330; see Curay-Cramer, Department does not dispute the minister.’’ Hosanna-Tabor, 565 U.S. at 450 F.3d at 141 (‘‘While it is true that sincerity of petitioner’s belief.’’). In 190; see also Our Lady of Guadalupe, the plaintiff in Little styled her assessing sincerity, OFCCP takes into 140 S. Ct. at 2067. ‘‘The interest of allegation as one of religious account all relevant facts, including society in the enforcement of discrimination whereas [this plaintiff] whether the contractor had a preexisting employment discrimination statutes is alleges gender discrimination, we do not basis for its employment policy and undoubtedly important. But so too is the believe the difference is significant in whether the policy has been applied interest of religious groups in choosing terms of whether serious constitutional consistently to comparable persons, who will preach their beliefs, teach their questions are raised by applying Title although absolute uniformity is not faith, and carry out their mission.’’ VII. Comparing [plaintiff] to other required. See Kennedy, 657 F.3d at 194 Hosanna-Tabor, 565 U.S. at 189. The Ursuline employees who have (noting that the Title VII religious ministerial exception thus bars ‘‘an committed ‘offenses’ against Catholic exemption permits religious employment discrimination suit brought doctrine would require us to engage in organizations to ‘‘consider some attempt on behalf of a minister.’’ Id.; see also just the type of analysis specifically at compromise’’); LeBoon, 503 F.3d at Our Lady of Guadalupe, 140 S. Ct. at foreclosed by Little.’’); Little, 929 F.2d at 229 (‘‘[R]eligious organizations need not 2073. In such a situation, it is 949 (‘‘In this case, the inquiry into the adhere absolutely to the strictest tenets dispositive that the employee is a employer’s religious mission is not only of their faiths to qualify for Section 702 minister; there is no further inquiry into likely, but inevitable, because the protection.’’); see also Killinger, 113 the employer’s motive. See Hosanna- specific claim is that the employee’s F.3d at 199–200. OFCCP will also Tabor, 565 U.S. at 706 (‘‘By imposing an beliefs or practices make her unfit to evaluate any factors that indicate an unwanted minister, the state infringes advance that mission. It is difficult to insincere sham, such as acting ‘‘in a the Free Exercise Clause . . . and the imagine an area of the employment manner inconsistent with that belief’’ or Establishment Clause’’); see, e.g., relationship less fit for scrutiny by ‘‘evidence that the adherent materially Rayburn, 772 F.2d at 1169 (‘‘In secular courts.’’); Maguire, 627 F. Supp. gains by fraudulently hiding secular ‘quintessentially religious’ matters, the at 1507 (‘‘Despite [plaintiff’s] protests interests behind a veil of religious free exercise clause of the First that she is a Catholic, ‘of a particular doctrine.’’ Philbrook, 757 F.2d at 482 Amendment protects the act of decision religion,’ the determination of who fits (quoting Barber, 650 F.2d at 441) rather than a motivation behind it.’’ into that category is for religious

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authorities and not for the government applied in the mine run of Title VII of a religious organization’s community; to decide.’’). cases. In line with those cases, there are whether some religious offenses or Some commenters criticized OFCCP’s indeed aspects of the discrimination requirements are more important than description of the extent to which it inquiry that are necessarily and rightly others and should merit particular would be permissible to inquire into nuanced and fact-dependent, and there employment responses; whether the whether a religious employer’s adverse are aspects where inquiry can infringe employer’s sincerely held religious view employment action was based on upon religious organizations’ autonomy is internally consistent or logically religion or on another protected and are either prohibited or must be appealing; and similar issues. characteristic. Many of these performed with care. The principles set Fifth, OFCCP believes these commenters believed OFCCP’s proposed out in those cases are reiterated below. principles will cover the vast majority of approach is inconsistent with courts’ First, if a contractor raises the defense scenarios, but there may be rare inquiry in Title VII cases. For example, that an employee or applicant is covered instances where an inquiry by a court or a group of state attorneys general by the ministerial exception, OFCCP can an agency into employment practices asserted that, unlike the definition in inquire whether that is in fact so. But if otherwise threatens First Amendment the proposed rule, Title VII so, then that is the end of the inquiry. rights. See DeMarco v. Holy Cross High jurisprudence and case law has required OFCCP will not apply the executive Sch., 4 F.3d 166, 172 (2d Cir. 1993) nuanced and fact-dependent inquiry order in those circumstances. See Our (‘‘There may be cases involving lay into whether a religious employer Lady of Guadalupe, 140 S. Ct. at 2060– employees in which the relationship discriminated against a worker based on 61; Hosanna–Tabor, 565 U.S. at 194–95. between employee and employer is so his or her ‘‘particular religion’’ or on Second, when the ministerial pervasively religious that it is another protected basis. An LGBT rights exception does not apply and the impossible to engage in an age- advocacy organization criticized OFCCP employee or applicant suffers adverse discrimination inquiry without serious for rejecting the traditional burden- employment action by a contractor that risk of offending the Establishment shifting framework set forth in is entitled to the religious exemption, Clause.’’). Commenters argued that this McDonnell Douglas and instead placing OFCCP will apply traditional Title VII final caveat detracted from the clarity of the burden on workers. Some of these tools to ascertain whether the action the proposed rule. OFCCP disagrees. commenters stated that OFCCP’s was impermissible discrimination. In This observation merely notes, as have proposed inquiry would not be the absence of direct evidence of courts, that there may be instances adequately rigorous. For example, a discrimination on a protected basis outside the ministerial exception where civil liberties and human rights legal other than religion, this will typically a discrimination case might involve the advocacy organization asserted that involve application of the familiar kinds of questions prohibited by the OFCCP’s approach as described in the McDonnell Douglas framework, in First Amendment. See id. (finding preamble ‘‘allows religion to serve as a which (1) OFCCP must establish a prima employee’s failed religious duties were pretext for discrimination, and creates facie case of discrimination on a ‘‘easily isolated and defined,’’ so a trial roadblocks for individuals seeking to protected basis other than religion; (2) could be conducted ‘‘without putting bring claims of discrimination against the employer can respond with a into issue the validity or truthfulness of federal contractors.’’ An organization nondiscriminatory reason, such as an Catholic religious teaching’’). Instructive that advocates separation of church and explanation that its action was here are the sorts of questions found state asserted that a more rigorous permitted under the religious exemption constitutionally offensive by the inquiry would not violate the First as pertaining to the individual’s Supreme Court in Catholic Bishop, in Amendment and stated that OFCCP’s particular religion; and (3) OFCCP, to which a hearing officer tested a concerns about impermissible find a violation, must rebut that witness’s memory and knowledge of entanglement are overblown and cannot explanation as a mere pretext. See Catholic liturgies and masses. See justify its refusal to engage in any McDonnell Douglas, 411 U.S. 792. Catholic Bishop, 440 U.S. at 502 & n.10; investigation of religious employers at Third, ascertaining whether unlawful id. at 507–08 (appendix); see also Great all. An anti-bigotry religious discrimination motivated an employer’s Falls, 278 F.3d at 1343. OFCCP believes organization similarly asserted that a action requires consideration of all these cases provide sufficient principles more rigorous inquiry would not violate relevant facts and circumstances. for the agency to properly guide its RFRA, citing Hobby Lobby, 573 U.S. at OFCCP will consider all available inquiry if and when needful. 733. evidence as to whether a religious Some commenters believed the organization’s employment action was f. Causation proposal did not clearly describe the in fact sincerely motivated by the OFCCP proposed to apply a but-for inquiry that OFCCP would undertake to applicant’s or employee’s particular standard of causation when evaluating determine whether an adverse action religion—such as, for instance, their claims of discrimination by religious was based on religion or another adherence to the organization’s religious organizations based on protected protected characteristic. For example, a tenets—or whether that was a mere characteristics other than religion. legal think tank commented that pretext for impermissible Specifically, where a contractor that is OFCCP’s failure to meaningfully address discrimination. entitled to the religious exemption various cases discussing the issue of Fourth, while OFCCP can inquire into claims that its challenged employment pretext on the basis that they ‘‘turn on the sincerity of the employer’s religious action was based on religion, OFCCP their individual facts’’ contravenes belief, it is constitutionally prohibited proposed finding a violation of E.O. OFCCP’s stated goal of ‘‘bringing clarity from refereeing internal religious 11246 only if it could prove by a and certainty to federal contractors.’’ matters of contractors that are entitled to preponderance of the evidence that a OFCCP disagrees with these the religious exemption. Thus OFCCP protected characteristic other than commenters’ characterization of the cannot decide, when the matter is religion was a but-for cause of the NPRM, but reiterates—and to the extent disputed, whether the employer or the adverse action. See Univ. of Tex. Sw. necessary, clarifies for their benefit— employee has the better reading of Med. Ctr. v. Nassar, 570 U.S. 338, 362– that OFCCP intends to apply the religious doctrine; whether an employee 63 (2013); Gross v. FBL Fin. Servs., Inc., religious exemption as it has been should be considered a faithful member 557 U.S. 167, 180 (2009). OFCCP stated

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that this approach was necessary in interpreting the nondiscrimination discrimination claims based on situations where a religious requirements of E.O. 11246 in a manner identical conduct would be evaluated organization, acting on a sincerely held consistent with Title VII principles. For according to different standards of belief, took adverse action against an instance, a national reproductive rights proof.’’ employee on the basis of the employee’s organization commented that, for Considering the comments received, religion. OFCCP believed that decades, courts have resolved claims of OFCCP will apply the motivating-factor application of the motivating factor employment discrimination by religious analysis to all claims of discrimination, framework in such cases might result in organizations without implicating the including discrimination by religious inappropriate encroachment upon the concerns OFCCP cites. The organization organizations based on protected organization’s religious integrity. added that OFCCP’s concerns about characteristics other than religion. However, the NPRM recognized that in impermissible entanglement are OFCCP agrees that it can avoid prior notice-and-comment rulemaking overblown and unsupported by case impermissible entanglement while implementing Executive Order 13665, law. A transgender legal professional applying a motivating-factor standard of 79 FR 20749 (Apr. 11, 2014) (amending organization expressed similar causation. See, e.g., Curay-Cramer, 450 E.O. 11246 to include pay transparency concerns. F.3d at 139 (‘‘[A]s long as the plaintiff nondiscrimination), OFCCP rejected Relatedly, a number of commenters did not challenge the validity or comments stating that a but-for opposed the proposed but-for standard plausibility of the religious doctrine causation standard was required and on the basis that it conflicts with Title said to support her dismissal, but only instead adopted the motivating factor VII and related case law. Several of questioned whether it was the actual framework as expressed in the Title VII these commenters criticized OFCCP’s motivation, excessive entanglement post-1991 Civil Rights Act for analyzing reliance on Nassar, 570 U.S. at 362–63, questions were not raised.’’) (citing causation. See 80 FR 54934, 54944–46 and Gross, 557 U.S. at 180, and argued Geary, 7 F.3d at 330); DeMarco, 4 F.3d (Sept. 11, 2015). that these cases do not bridge the gap at 170–71)). Where there is a dispute as A few commenters encouraged between the proposed but-for standard to whether an employment action was OFCCP to adopt the proposed but-for and Title VII principles. For instance, a motivated by the employee’s adherence causation standard because they felt it contractor association commented: ‘‘The to religious tenets, or instead was would reduce government Supreme Court has adopted the ‘but for’ motivated by impermissible encroachment on religious autonomy. standard for retaliation claims under discrimination—a ‘‘one or the other’’ For instance, a private religious Title VII (Nassar) and for ADEA claims scenario—OFCCP will apply the university commented that the proposed (Gross); it has not done so for principles just discussed in subsection but-for standard is in line with statutory discrimination claims under Title VII.’’ II.A.5.e, ‘‘Application of the Religious and First Amendment jurisprudence Similarly, an LGBT rights advocacy Exemption.’’ Where instead an requiring the use of the least restrictive organization commented the two cases employment action is motivated by the means to achieve government objectives cited by OFCCP did not adopt a but-for employee’s adherence or non-adherence that impinge on the exercise of religion. causation requirement for Title VII or to religious tenets that implicate another Another private religious university E.O. 11246 cases. protected category, OFCCP will assess echoed this sentiment and added that Additionally, multiple commenters the action on a case-by-case basis in the proposed but-for standard would expressed concern that the proposed accordance with the general RFRA enable religious entities to make but-for standard would run contrary to analysis discussed earlier. The approach employment decisions consistent with E.O. 11246’s prohibition on adopted in this final rule is consistent their sincerely held religious beliefs discrimination and/or OFCCP’s core with OFCCP’s longstanding policy and while still participating fully in the mission of enforcing the Executive practice as well as Title VII principles marketplace. Order. For instance, a group of state and case law. However, the majority of commenters attorneys general commented that the who addressed the proposed but-for proposed but-for standard is contrary to f. Conclusion standard opposed it, and many law and exceeds OFCCP’s authority For the reasons described above and recommended that OFCCP instead because it impermissibly interprets the in the NPRM, and considering the continue to apply the motivating-factor Executive Order’s anti-discrimination comments received, OFCCP finalizes the standard of causation to all claims of provisions. And a national health policy proposed definition of Particular discrimination under E.O. 11246. These organization commented: ‘‘The new religion without modification. commenters cited a wide variety of proposed rule threatens to jeopardize concerns related to the proposed but-for the very mission of OFCCP and the B. Section 60–1.5 Exemptions standard. original intent of the E.O. 11246 to This rule proposed to add paragraph Several commenters stated that the protect workers from discrimination (e) to 41 CFR 60–1.5 to establish a rule proposed standard would be too . . . .’’ of construction for subpart A of 41 CFR deferential to employers and/or impose Finally, several commenters raised part 60–1 that provides for the broadest too heavy a burden on employees. For practical objections to the proposed but- protection of religious exercise instance, a national interfaith for standard. For instance, an atheist permitted by the Constitution and laws, organization commented that, as long as civil liberties organization commented including RFRA. This rule of an employer can cite another plausible that applying different causation construction is adapted from RLUIPA, reason for its actions, an employee standards to cases involving similarly 42 U.S.C. 2000cc–3(g). Significantly, cannot prove that discrimination situated employers would ‘‘make it RFRA applies to all government occurred. The organization noted that challenging for contractors seeking to conduct, not just to legislation or under this standard, employees are far comply with federal law, resulting in regulation. 42 U.S.C. 2000bb–1. less likely to prevail. extra expense and legal confusion for Paragraph (e) is clarifying, since the Other commenters expressed workers and employers.’’ An Constitution and federal law, including skepticism at OFCCP’s proffered organization that advocates separation RFRA, already bind OFCCP. rationale for departing from its of church and state expressed similar Some commenters expressed general established policy and practice of concerns, arguing that ‘‘status-based support for the proposed rule of

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construction based on the importance of create any new legal obligation or promote one interpretation of one protecting religious freedom, including proscription on the rights of workers, religion—namely, evangelical constitutional protections. For example, but rather sought only to reaffirm Christianity—at the expense of religious a religious leadership and policy existing protections found in federal law liberty more broadly. Some commenters organization approved of the fact that that already apply to OFCCP. The stated that the proposal would allow the proposal gives religious freedom due parallel rule of construction in RLUIPA contractors to compel employees to deference by advocating for a broad and has been in place for nearly 20 years follow their religious practices, which robust interpretation of its protections. and has proved to be a workable legal they argued directly violates Title VII In a joint comment, a religious legal standard. OFCCP emphasizes that this and even the Constitution. A group of association and an association of rule of construction provides for broad state attorneys general commented that, evangelical churches and schools protection of both employers’ and under the proposed rule, employers’ commented that the proposed rule of employees’ religious exercise. Moreover, religious freedom would come at the construction reflects longstanding by its terms, the provision limits the cost of the loss of the religious freedom religious freedom principles recognized agency’s interpretation of this protection of employees forced to abide by their by Congress and protected by the First to what is permitted under the U.S. employers’ religious beliefs. A legal Amendment. A pastoral membership Constitution, RFRA, and other professional organization commented organization commented that the applicable laws. It thus reflects the that the proposed rule would protect proposed rule of construction gives Supreme Court’s recognition that, for-profit or nominally religious religious exercise the special protection within the religion clauses of the First employers’ right to require employees to required by the constitutional text and Amendment, there is ‘‘room for play in participate in prayer or other religious history. A religious professional the joints productive of a benevolent practices. A religious organization education association commented that neutrality which will permit religious commented that employers could the proposed rule of construction exercise to exist without sponsorship invoke the religious exemption to coerce provided clarity regarding the meaning, and without interference.’’ Walz, 397 their workers into participating in scope, and application of the religious U.S. at 669. Accordingly, for the reasons certain religious practices under the exemption. Additional supportive described above and in the NPRM, threat of termination. Several other commenters, including an evangelical considering the comments received, commenters, including a legal chaplains’ advocacy organization, stated OFCCP finalizes the proposed rule of professional association, an organization that the rule of construction is construction without modification. that advocates separation of church and consistent with executive orders and the C. Severability state, an anti-bigotry religious Attorney General’s memorandum on organization, and a migrants’ rights religious liberty. The Department has decided to organization, expressed general concern Other commenters opposed the include severability provisions as part that the proposed rule would weaken proposed rule of construction for a of this final rule. To the extent that any religious liberty. variety of reasons, including arguing provision of this final rule is declared that its application in this context invalid by a court of competent OFCCP believes that the final rule’s would actually be inconsistent with the jurisdiction, the Department intends for overall effect will be to promote U.S. Constitution and federal laws. For all other provisions that are capable of religious liberty. See, e.g., Hobby Lobby, example, a labor organization operating in the absence of the specific 573 U.S. at 707 (‘‘[P]rotecting the free- commented that the interpretation goes provision that has been invalidated to exercise rights of corporations like beyond the Constitution and law, remain in effect. Severability clauses Hobby Lobby, Conestoga, and Mardel including RFRA. An anti-bigotry have been added at the end of 41 CFR protects the religious liberty of the religious organization further noted, 60–1.3 and as a new paragraph, 41 CFR humans who own and control those with regard to RFRA, the Supreme 60–1.5(f). companies.’’). The Supreme Court has Court’s holding in Hobby Lobby that described the expansion of the Title VII ‘‘anti-discrimination prohibitions are III. Other Comments religious exemption as ‘‘lifting a the least restrictive means of achieving Numerous commenters raised a regulation that burdens the exercise of the government’s compelling interest in variety of other general points about the religion.’’ Amos, 483 U.S. 327, 338 providing equality in the workplace,’’ proposed rule. (1987). As described above, the proposed definitions have been altered and commented that this principle A. Religious Liberty for Employees applied with greater force to in the final rule to respond to employment by federal contractors. Several commenters opposed the commenters’ concerns that nominally Other commenters, including a group of proposed rule as undermining or failing religious employers might qualify for state attorneys general and a transgender to promote religious liberty. For the exemption, as well as to clarify the advocacy organization, cautioned that instance, a group of U.S. Senators steps OFCCP will take in analyzing construing the religious exemption commented that the proposed rule will claims of discrimination by religious broadly would ‘‘exceed[ ] statutory and allow employers to refuse to interview contractors. To the extent that judicial limits’’ and conflict with the even highly qualified candidates simply commenters believe that the religious purpose and text of federal equal because they do not regularly attend exemption itself increases employers’ employment laws to provide maximum religious services in their employer’s religious liberty at the expense of nondiscrimination protections for faith. According to the Senators, this employees’ religious liberty, OFCCP workers. A talent management could create a situation in which reiterates that it is required to assessment company commented that religious employers are allowed to administer the religious exemption as the ‘‘maximum extent permitted by discriminate against workers ‘‘who part of E.O. 11246. The President, law’’ standard was vague and left too practice their faith differently—a following Congress’s lead, has already much discretion to the agency charged fundamental right guaranteed by the decided how to balance the religious with enforcement. Constitution.’’ A religious women’s liberty of religious employers and their OFCCP did not intend, in proposing organization echoed this concern and employees, and OFCCP cannot modify the rule of construction at § 60–1.5(e), to also stated that the proposed rule would that. Additionally, claiming the

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religious exemption and taking Other commenters supported the discrimination among religions, or employment action under its proposed rule as consistent with prone to entanglement with religious protections is purely optional for constitutional principles. These activity. See, e.g., Mitchell v. Helms, 530 employers; the government does not commenters stated, among other things, U.S. 793, 828 (2000) (plurality opinion); require any employment action that may that the proposal appropriately respects Colo. Christian Univ. v. Weaver, 534 be protected by the exemption. freedom of religion, helpfully clarifies F.3d 1245, 1261–62 (10th Cir. 2008); B. Establishment Clause and Other that religious hiring protections apply Great Falls, 278 F.3d at 1342–43. We Constitutional Questions even when federal funding is involved, address these points in more detail next. and is consistent with the Establishment 1. Neutrality Toward Religion Several commenters stated that the Clause. A religious liberties legal proposal violates constitutional organization commented, for instance, The rule does not impermissibly favor prohibitions on aiding private actors that the proposed rule adheres to the religion. In Bowen v. Kendrick, 487 U.S. that discriminate. This concern was traditional understanding that ‘‘the 589 (1988), the Supreme Court held that shared by an affirmative action Constitution [does not] require complete a religious organization is not professionals association, a civil separation of church and state; it disqualified from government programs liberties organization, a professional affirmatively mandates accommodation, that fund religious and nonreligious organization of educators, and an not merely tolerance, of all religions, entities alike on a neutral basis. A organization that advocates separation and forbids hostility toward any’’ ‘‘neutral basis’’ means that the criteria of church and state, among others. The (quoting Lynch v. Donnelly, 465 U.S. are neutral and secular, with no civil liberties organization commented, 668, 668 (1984)). A religious leadership preference for religious institutions for instance, that the proposed rule and policy organization commented that because of their religious character. Id.; would permit contractors to the proposal reflects an accurate see also Rosenberger v. Rector & Visitors discriminate with federal funds, thus understanding of the free exercise of of Univ. of Va., 515 U.S. 819 (1995) (‘‘A putting the government’s imprimatur on religion and ‘‘its place in our society.’’ central lesson of our decisions is that a discrimination in violation of the Equal significant factor in upholding Protection and Establishment Clauses. OFCCP agrees with the commenters governmental programs in the face of A variety of commenters opposed the who stated that the proposal is Establishment Clause attack is their proposed rule on the basis that it consistent with constitutional violates the Establishment Clause and/ principles. As noted in the NPRM and neutrality towards religion.’’); U.S. Dep’t or general church-state separation above, OFCCP believes that the final of Justice, Office of Legal Counsel, principles. For instance, an atheist civil rule is supported by recent Supreme Religious Restrictions on Capital liberties organization commented that Court decisions that protect religion- Financing for Historically Black the proposed rule will violate the exercising organizations and individuals Colleges and Universities, 2019 WL Constitution’s religion clauses by under the U.S. Constitution and federal 4565486 (Aug. 15, 2019) (‘‘Religious involving the government in religious law. See, e.g., Little Sisters of the Poor, Restrictions’’) (‘‘The neutrality principle practice, promoting dominant religious 140 S. Ct. 2367; Espinoza, 140 S. Ct. runs throughout the Court’s decisions, practices, burdening unpopular 2246; Our Lady of Guadalupe, 140 S. Ct. and is broadly consistent with a religious practices, and harming third 2049; Masterpiece Cakeshop, 138 S. Ct. tradition of federal support for religious parties. Similarly, a labor union raised 1719; Trinity Lutheran, 137 S. Ct. 2012; institutions that dates from the time of concerns that the rule crosses into Hobby Lobby, 573 U.S. 682; Hosanna- the Founding.’’). territory proscribed by the Tabor, 565 U.S. 171. These decisions This rule is motivated by legitimate Establishment Clause by authorizing make clear, among other constitutional secular purposes: To expand the eligible federal contractors to advance their principles, that ‘‘condition[ing] the pool of federal contractors to include religious preferences and practices availability of benefits upon a religious organizations, so that the through the receipt of federal funds and recipient’s willingness to surrender his federal government may choose from the performance of public functions. religiously impelled status effectively among competing vendors the best Other commenters stated that the penalizes the free exercise of his combination of price, quality, reliability, proposed rule violates separation of constitutional liberties.’’ Trinity and other purely secular criteria; to powers. For instance, an LGBT rights Lutheran, 137 S. Ct. at 2022 (alterations clarify the law for religious advocacy organization stated that since omitted) (quoting McDaniel, 435 U.S. at organizations and thus reduce 2001, Congress has repeatedly rejected 626 (plurality opinion)); see also compliance burdens; to correct any efforts to extend the Title VII exemption Espinoza, 140 S. Ct. at 2256. OFCCP misperception that religious to government-funded entities. believes that the final rule achieves organizations are disfavored in Likewise, a consortium of federal consistency with these landmark government contracting; and ‘‘to contractors and subcontractors asserted Supreme Court decisions and is alleviate significant governmental that it would be inappropriate for constitutionally valid. Moreover, the interference with the ability of religious OFCCP to regulate the religious definitions and rule of construction organizations to define and carry out exemption without direct and actual adopted in the final rule will help their religious missions,’’ Amos, 483 legislative or constitutional guidance. OFCCP avoid the ‘‘constitutional U.S. at 336, by appropriately protecting Finally, several commenters, minefield’’ into which some courts have their autonomy to hire employees who including an anti-bigotry religious fallen when adjudicating Title VII will further their religious missions. The organization and a civil liberties and claims against religious organizations. final rule also has a religion-neutral human rights legal advocacy World Vision, 633 F.3d at 730 effect. Under the final rule, both organization, raised concerns that the (O’Scannlain, J., concurring). The final religious and secular organizations will proposal violates a variety of other rule will enable OFCCP to apply the retain the ability to bid on government constitutional principles, including the religious exemption without engaging in contracts. Proposed vendors will have to no-religious-tests clause, the free speech an analysis that would be inherently compete solely on the basis of secular clause, and the constitutional right of subjective and indeterminate, outside its criteria. The use of sectarian criteria privacy. competence, susceptible to remains forbidden; nothing in the

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proposed rule sanctions the use of government’ secular contracting to compete on equal footing for federal sectarian criteria for contract awards. requirements. Espinoza, 140 S. Ct. at dollars. See Religious Restrictions, 2019 225. The rule simply allows religious WL 4565486. As an initial matter, OLC 2. Secular and Sectarian Activities organizations to compete with secular explained that ‘‘[t]he Establishment Nothing in the final rule sanctions organizations on the basis of secular Clause permits the government to direct federal funding of religious criteria without being forced to include religious institutions, along activities. In Kendrick, the Court forbade compromise their religious purpose. with secular ones, in a generally such direct funding of religious activity Commenters objecting on this basis are available aid program that is secular in but upheld a statute authorizing dissatisfied with the existence of the content. There is nothing inherently payments to religious organizations that exemption. religious in character about loans for sought to eliminate or reduce the social capital improvement projects; this is not 3. Respecting the First Amendment and economic problems caused by a program in which the government is teenage sexuality because the services to Of great significance to OFCCP, the ‘dol[ing] out crosses or Torahs to [its] be provided under the statute were ‘‘not rule’s clarifications and citizens.’ ’’ Id. at *6 (citing Am. Atheists, religious in character.’’ Kendrick, 487 accommodations better comport with Inc. v. City of Detroit Downtown Dev. U.S. at 605; see also U.S. Dep’t of the Free Exercise Clause by affording Auth., 567 F.3d 278, 292 (6th Cir. Justice, Office of Legal Counsel, religious organizations an appropriate 2009)). Because the capital-financing Department of Housing and Urban level of autonomy in their hiring program at issue was a secular, neutral Development Restrictions on Grants to decisions while still permitting them to aid program, it did not violate the Religious Organizations that Provide engage in federal contracting. As the Establishment Clause. On the other Secular Social Services, 12 Op. O.L.C. Court explained in Trinity Lutheran, hand, the government would violate the 190, 199 (1998) (concluding that the 137 S. Ct. at 2022, the government Free Exercise Clause by denying loans government can fund a religious violates the Free Exercise Clause when to an institution ‘‘in which a substantial organization’s secular activities if they it conditions a generally available portion of its functions is subsumed in can be meaningfully and reasonably public benefit on an entity’s giving up a religious mission,’’ because such a separated from the sectarian activities). its religious character, unless that restriction ‘‘discriminates based on the Likewise here, in the relatively rare condition withstands the strictest religious character of an institution.’’ circumstances in which a proposed scrutiny. ‘‘[D]enying a generally OLC concluded that the appropriate vendor both qualifies as a religious available benefit solely on account of balance was to deny loans under the organization and receives a federal religious identity imposes a penalty on program only for facilities that are contract, the federal funds will pay the the free exercise of religion that can be predominantly used for devotional organization to fulfill the terms of the justified only by a state interest of the religious activity, or for facilities that secular contract, not to pray or to highest order.’’ Id.; see also Locke v. offer only programs of instruction proselytize. Davey, 540 U.S. 712 (2004) (holding devoted to vocational religious Moreover, the Establishment Clause government may not deny generally education. does not forbid the federal government available funding to a sectarian Here, some commenters made clear from contracting with religious institution because of its religious that the federal government’s current organizations for a secular purpose, character); Trinity Lutheran, 137 S. Ct. practice presented religious even if the receipt of the contract at 2021 (‘‘The Department’s policy organizations with a dubious choice: incidentally helps the religious expressly discriminates against They may participate in the government organization advance its sectarian otherwise eligible recipients by contracting process or retain their purpose. As Kendrick explained, disqualifying them from a public benefit religious integrity, but not both. As one ‘‘Nothing in our previous cases prevents solely because of their religious commenter noted, ‘‘If the best service Congress from . . . recognizing the character. . . . [S]uch a policy imposes provider or subcontractor happens to be important part that religion or religious a penalty on the free exercise of religion a religious entity, they are often organizations may play in resolving that triggers the most exacting scrutiny.’’ unwilling to comply with the federal certain secular problems. . . . To the (citing Lukumi, 508 U.S. at 546)). When anti-discrimination laws for fear that extent that this congressional the government conditions a program in they will no longer be able to preserve recognition has any effect of advancing this way, the government ‘‘has punished the integrity of their organizations. This religion, the effect is at most ‘incidental the free exercise of religion. ‘‘To is a direct result of the uncertainty in and remote.’ ’’ 487 U.S. at 607; see, e.g., condition the availability of benefits the applicability of the religious Roemer v. Bd. of Pub. Works of Md., 426 . . . upon [a recipient’s] willingness to exemption under the current law.’’ U.S. 736 (1976) (‘‘[R]eligious . . . surrender[] his religiously impelled Similarly, another commenter, an institutions need not be quarantined [status] effectively penalizes the free association of medical professionals, from public benefits that are neutrally exercise of his constitutional liberties.’’ recently surveyed health professional available to all.’’); Barnes-Wallace v. Id. at 2022 (quoting McDaniel, 435 U.S. members working in faith-based City of San Diego, 704 F.3d 1067 (9th at 626 (plurality opinion)); cf. Trinity organizations overseas and found that Cir. 2012) (finding no Establishment Lutheran, 137 S. Ct. at 2022 (citing Ne. almost half, 49%, feel that the U.S. Clause violation where city leased land Fla. Chapter, Associated Gen. government is not inclined to work with to both secular and sectarian Contractors of Am. v. Jacksonville, 508 faith-based organizations. The final rule organizations). Here, as in Kendrick, U.S. 656, 666 (1993) (‘‘[T]he ‘injury in thus removes any such concerns raised nothing in the final rule ‘‘indicates that fact’ is the inability to compete on an by contractors and instead provides a significant proportion of the federal equal footing in the bidding process, not appropriate religious accommodation. funds will be disbursed to ‘pervasively the loss of a contract.’’)). sectarian’ institutions.’’ Kendrick, 487 In a recent opinion, the Department of 4. Use of Federal Funds U.S. at 610. There are also no concerns Justice’s Office of Legal Counsel Some commenters expressed concern that funds will be used for an concluded that the government violates that the rule would allow employers to ‘‘essentially religious endeavor’’; rather, the Free Exercise Clause by denying use federal funds to discriminate against funds will be used to fulfill the sectarian organizations an opportunity job applicants and employees on the

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basis of religion. That is a critique of the barrier to participation by eroding their identity out of fear of discrimination, E.O. 11246 religious exemption itself, ability to hire members of their and that the proposal would exacerbate not this rule. OFCCP cannot and does particular faith. Generally speaking, this issue. Commenters wrote that not by this rule reopen that then, OFCCP, in line with case law from effects might include LGBTQ determination by the President. Amos to Trinity Lutheran, views this individuals being less inclined to seek Additionally, as noted earlier, claiming rule as merely providing permissible HIV care and services for the aging, as the religious exemption and taking accommodation rather than well as facing increased vulnerability to employment action under its impermissibly establishing religion. trafficking. Others stated that the proposal would permit contractors to protections is purely optional for 5. Effects on Applicants and Employees employers; the government does not discriminate against people in same-sex require any employment action that may Finally, several commenters opposed relationships, including refusing to hire be protected by the exemption. the proposed rule on the basis that it applicants, terminating employees when would increase discrimination against Regardless, as the Department of they marry someone of the same sex, or contractors’ employees and applicants. Justice’s Office of Legal Counsel has denying spousal benefits. Several Some cited historical discrimination pointed out, the federal government has commenters stated that even LGBTQ against disadvantaged groups, warning repeatedly permitted religious people of faith would be discriminated that the proposal would cause a organizations to receive federal funds against. regression in civil rights protections, while also maintaining autonomy over Commenters also asserted that the and stated that religion has often been proposed rule could increase their hiring practices. See 31 O.L.C. 162, used as a way to justify discrimination. discrimination against women and 185–86 (2007); accord Office of the Att’y For example, an affirmative action pregnant people based on religious Gen., Memorandum for All Executive professionals association asserted that beliefs about work, family roles, and Departments and Agencies: Federal Law employment discrimination permitted reproduction. This included the Protections for Religious Liberty at 6 by the proposed rule could eliminate possibility of discrimination against (Oct. 6, 2017), available at the civil rights protections that women for becoming pregnant outside www.justice.gov/opa/press-release/file/ minorities and women have enjoyed for of marriage, using contraception, using 1001891/download. Likewise, the decades. in vitro fertilization, seeking abortions, proposed rule does not run afoul of the Commenters also gave examples of or getting divorced. An organization Establishment Clause merely because of how potential discrimination could play combatting hunger wrote that even the possibility that, in some rare out. For example, an organization facially neutral practices may instance, a court may determine that a advocating for the separation of church ‘‘disproportionately’’ harm women, particular contract award to a religious and state commented that, for instance, because when an employer opposes organization impermissibly endorses an evangelical Christian might refuse to ‘‘sexual practices out of wedlock, those religion. ‘‘[W]hile religious hire a gay man, but agree to hire a twice- who bear the physical evidence— discrimination in employment might be divorced, thrice-married man, even pregnancy—are going to be the ones that germane to the question whether an though both homosexuality and divorce get fired.’’ Several commenters also organization’s secular and religious are prohibited by evangelical stated that employers may discriminate activities are separable in a government- Christianity. An LGBT civil rights against women based on religious funded program, that factor is not organization argued that even a beliefs that women should not work legally dispositive.’’ U.S. Dep’t of construction company, janitorial outside the home. For example, a Justice, Office of Legal Counsel, service, or low-level healthcare provider women and family rights advocacy Memorandum for William P. Marshall could claim a religious mission and organization commented that some from Randolph D. Moss at 20 (Oct. 12, refuse to hire or provide services to employers may refuse to hire women 2000), available at justice.gov/olc/page/ single parents or individuals who altogether, and that women may also be file/936211/download. To the contrary, become pregnant outside marriage or denied health insurance, professional if the government ‘‘is generally within a same-sex relationship. growth opportunities, or other benefits indifferent to the criteria by which a Many commenters warned that because of an employer’s belief that private organization chooses its adoption of the proposed rule would women are not the ‘‘head of the employees and to the identity and increase discrimination against lesbian, household’’ and therefore do not need characteristics of those employees, there gay, bisexual, transgender, and queer such benefits. Additionally, an would be less likelihood that the (LGBTQ) individuals, specifically. Some interfaith policy and advocacy government could reasonably be commenters alleged that the proposed organization commented that an perceived to endorse the organization’s rule was part of a concerted effort to roll employer could cite a belief that women use of religious criteria in employment back the rights of LGBTQ individuals should not be alone with men they are decisions.’’ Id. at 25. And in some and other disadvantaged groups. Several not married to in order to deny female situations, the religious exemption commenters stated that transgender employees access to mentorship, ‘‘might be a permissible religious employees in particular already face training opportunities, and senior accommodation that alleviates special high rates of discrimination and leadership positions in the workplace. burdens rather than an impermissible poverty, and that this proposal would Commenters also asserted that the religious preference.’’ Id. at 30. For leave them even more vulnerable. A proposal would increase discrimination instance, the Office of Legal Counsel transgender civil rights and advocacy against religious minorities and/or concluded that RFRA in one instance organization commented specifically atheists. Many stated that federal required the Department’s grant-making that transgender people are already far contractors should not be permitted to arm to exempt a religious organization more likely to be unemployed, and that categorically exclude applicants of a from the religious nondiscrimination approximately 1 in 4 earn less than particular religion. A transgender civil provisions of Title VII. See id.; see also $24,000 per year. A women and family rights and advocacy organization 31 O.L.C. 162, 190 (2007). Here, several rights advocacy organization wrote that, commented that the proposed rule religious organizations commented that currently, almost half of LGBTQ would promote sectarianism by the current contracting rules erect a workers report actively concealing their allowing people of different faiths to

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discriminate against one another. A organizations maintain, for instance, departure’’ from OFCCP’s previous EEO number of commenters, including a sincerely held religious tenets regarding enforcement. A civil liberties civil liberties advocacy group and an matters such as marriage and intimacy organization commented that the interfaith policy and advocacy which may implicate certain protected ‘‘Department itself has previously organization, commented: ‘‘Federal classes under E.O. 11246. acknowledged the harms of contractors should not be allowed to Some commenters argued that the discrimination to the country as a hang a sign that says ‘Jews, Sikhs, proposed rule would violate the whole, but ignores them entirely in the Catholics, Latter-day Saints need not Establishment Clause specifically Proposed Rule.’’ An LGBT legal services apply.’ ’’ because of the increased discrimination organization commented that the Many commenters asserted that the they believed it would permit. Most of proposed rule indicates that OFCCP will proposal could allow racial these commenters argued that potential not enforce the relevant protections discrimination as well. An organization discrimination will unconstitutionally sufficiently. combatting hunger claimed that burden third parties, including Some commenters noted more discrimination would occur by citing a employees, applicants, and beneficiaries specifically that they believe the 2014 study in their comment which of contracting services. A labor union proposal is inconsistent with the found that only 10% of Americans were wrote that granting employers a broad agency’s rule implementing E.O. 13672, comfortable permitting a small business religious exemption would harm which added sexual orientation and to refuse service to African-Americans employees and applicants based on gender identity to the bases protected by based on a religious reason. their own religious beliefs and practices E.O. 11246. For example, a legal think Commenters including an LGBTQ (or lack thereof), in violation of the tank commented that, in its rule on wellness organization also warned that, Establishment Clause. sexual orientation and gender identity, under the proposal, a religious As noted above, the Supreme Court OFCCP took into account the benefits of contractor will be permitted to upheld Title VII’s religious exemption, nondiscrimination—meaning that it discriminate against interracial couples on which E.O. 11246’s exemption is would be arbitrary and capricious for if it believes that marriage should be modeled, against an Establishment OFCCP to ignore these benefits of non- between a man and a woman of the Clause challenge. Amos, 483 U.S. at discrimination ‘‘in the present same race. A legal think tank 330. It did so in spite of the fact that the rulemaking.’’ A watchdog organization commented that employers could application of the exemption ‘‘had some wrote that ‘‘undoing these protections require employees to join a majority- or adverse effect on those holding or could have adverse long-term effects on exclusively-white church, for instance, seeking employment with those the federal contracting system, or to share particular religious beliefs organizations.’’ Tex. Monthly, Inc. v. including lower-quality goods and that have racial implications and/or are Bullock, 489 U.S. 1, 18 n.8 (1989); cf. services, and impaired federal programs more common among white Christians. Amos, 483 U.S. at 338–39 (rejecting the and missions.’’ Some commenters argued that federal claim that the religious exemption Commenters also criticized the funds should not be used by contractors ‘‘offends equal protection principles by proposal as purportedly inconsistent who may commit hiring discrimination. giving less protection to the employees with OFCCP’s 2016 sex discrimination For example, a transgender advocacy of religious employers than to the rule. A civil liberties organization organization commented that people employees of secular employers’’ in part commented that, in that rule, the agency should not be legally compelled to because the exemption had ‘‘a cited social science research supporting financially support entities that would permissible purpose of limiting the need for effective nondiscrimination refuse to employ them because of their governmental interference with the enforcement. Similarly, a legal think identities, and noted that religious exercise of religion’’). If the E.O. 11246 tank wrote that, in its sex discrimination employers who seek to employ only religious exemption similarly affects rulemaking, OFCCP specifically cited ‘‘their own kind’’ should seek out non- some third parties, it does so to research indicating that employment federal funding. Other commenters ‘‘prevent[ ] potentially serious discrimination against transgender stated that U.S. federal government encroachments on protected religious workers is pervasive. These commenters contracting serves as a model for the freedoms.’’ Texas Monthly, 489 U.S. at asserted that OFCCP ignored such private sector or foreign nations, which 18 n.8. statistics in proposing the current rule. may emulate discriminatory practices Some commenters stated that what OFCCP continues to believe that permitted by this proposal. they viewed as the proposal’s failure to discrimination by federal contractors As explained above, the religious consider the effects of increased generally has a negative impact on the exemption generally speaking does not discrimination made the proposed rule economy and efficiency of government excuse a contractor from complying inconsistent with OFCCP’s previous contracting. Indeed, that is one of the with E.O. 11246’s requirements rulemakings. Multiple commenters primary justifications for E.O. 11246. regarding antidiscrimination and stated that previous rulemakings However, it has long been recognized affirmative action; notices to applicants, identified discrimination as wasteful of that a religious exemption in the employees, and labor unions; taxpayers’ money, and that this proposal Executive Order is also warranted, compliance with OFCCP’s failed to address this issue. For Congress has determined that implementing regulations; the example, a state civil liberties accommodations under RFRA are furnishing of reports and records to the organization commented that, in prior sometimes required, and OFCCP’s government; and flow-down clauses to rules, OFCCP has consistently stated policy is to respect the religious dignity subcontractors. See E.O. 11246 §§ 202– that discrimination in government of employers and employees to the 203. Religious organizations that serve contracting wastes taxpayer funds by maximum extent permissible by law. as government contractors must comply preventing the hiring of the best talent, Further, OFCCP believes that this rule with all of E.O. 11246’s increasing turnover, and decreasing will have a net benefit to the economy nondiscrimination requirements except productivity. In addition, several and efficiency of government in some narrow respects, under some commenters, including a women and contracting. For those current and narrow and reasonable circumstances family rights advocacy organization, potential federal contractors and recognized under law, where religious referred to the rule as an ‘‘abrupt subcontractors interested in the

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exemption, this rule will help them employment opportunity for American either, which notes that ‘‘[t]he religious understand its scope and requirements workers. OFCCP rejects the idea that organization exemption under Title VII and may encourage a broader pool of this rule would undermine that does not mention nonprofit and for- organizations to compete for longstanding and constructive profit status’’ and states that ‘‘[w]hether government contracts and more of them, partnership. The EEOC reviewed the a for-profit corporation can constitution which will inure to the government’s proposed rule and this final rule. This a religious corporation under Title VII is benefit. final rule applies only to government an open question.’’ 33 The EEOC’s 2008 Commenters’ concerns here are also contractors and subcontractors, not the guidance states that the exception is exaggerated. As explained above, broader swath of U.S. employers that only for organizations that are primarily OFCCP does not anticipate this rule will the EEOC regulates. Within that smaller religious. Its recently proposed guidance affect the vast majority of contractors or segment of employers, it applies only to describes the inquiry as one into the agency’s regulation of them, since that small minority of contractors and ‘‘whether an entity is religious.’’ 34 they do not and would not seek to subcontractors that qualify or may seek OFCCP’s test also seeks to identify qualify for the religious exemption. As to qualify for the religious exemption. organizations that are primarily commenters noted, religious Among that group, they would need to religious—through an appropriately organizations do not appear to be a large have 15 or more employees to be guided, reliable, and objective inquiry. portion of federal contractors. And even covered by the EEOC. And within that The EEOC’s 2008 guidance (and its for them, adherence to E.O. 11246’s group, there would still need to be a proposed guidance) suggests an open- nondiscrimination provisions is situation in which any differences ended set of non-dispositive factors, required except in those circumstances between the views of OFCCP and EEOC while this final rule uses a set of clearly well-established under law, including would cause a different result. In short, defined factors that are sufficient for the religious exemption, the ministerial OFCCP doubts this rule will create any non-profit entities; regarding for-profit exception, and RFRA. OFCCP also systemic disharmony between the entities, additional evidence compatible reemphasizes that the proposed agencies’ enforcement programs. with some of the additional factors definitions have been altered in the final For the small universe of employers listed by the EEOC’s 2008 guidance may rule to respond to commenters’ remaining as defined above, the come into play. Insofar as any difference concerns that nominally religious differences that may exist are minor. At still remains between this final rule and employers might qualify for the the outset, OFCCP notes that EEOC does EEOC’s 2008 guidance, OFCCP believes exemption, as well as to clarify the steps not have substantive rulemaking that difference is tolerable when OFCCP will take in analyzing claims of authority under Title VII, see EEOC v. weighed against the subsequent discrimination by religious contractors. Arabian Am. Oil Co., 499 U.S. 244, 257 developments in the case law, the As explained in more detail in the (1991), and the EEOC statements on this reasoning of which OFCCP finds Regulatory Procedures section below, issue are in nonbinding subregulatory persuasive, and OFCCP’s desire for a OFCCP has considered the possible guidance. As to the specifics of that more structured test, especially given adverse effects of the rule and believes guidance, the differences that do exist OFCCP’s unique contract-based they will be minimal and will be are small. OFCCP has revised its regulatory structure. outweighed by the benefits. approach in the final rule to adopt a Regarding OFCCP’s definition of motivating-factor standard of causation, Particular religion, the same EEOC C. The Equal Employment Opportunity so a difference there, assuming there guidance documents from 2008 state Commission was one, no longer exists. Regarding that the religious exemption ‘‘only Some commenters raised concerns OFCCP’s definition of Religious allows religious organizations to prefer about this rule’s compatibility with the corporation, association, educational to employ individuals who share their positions of the EEOC. Different aspects institution, or society, the EEOC’s religion.’’ It then addresses two of this concern have been described and current subregulatory guidance on this religiously based views that are not addressed in earlier parts of this topic has not been updated since 2008, protected by the exemption: Racial preamble. OFCCP consolidates those before World Vision and Hobby Lobby discrimination and differences in fringe concerns and addresses them here as were decided.31 Contrary to some benefits between men and women. This well. Those concerns included general commenters’ assertions, this guidance final rule is fully compatible with both concerns that the proposed rule would treats for-profit status as a significant those examples. As discussed earlier in undermine the EEOC’s efforts by taking factor, but not as dispositive; this final this preamble, OFCCP always has a positions contrary to the EEOC or that rule does the same. Notably, the EEOC compelling interest in enforcing the proposed rule would introduce very recently issued a proposal to prohibitions on racial discrimination, confusion by subjecting federal update its compliance manual on and OFCCP endorses the result in contractors to conflicting or at least religious discrimination.32 This rule is Fremont, 781 F.2d 1362. This final rule, different legal regimes. Commenters also not inconsistent with the proposal however, does provide an exemption objected to specific aspects of the rule broader than a mere coreligionist hiring on grounds that they differed from the 31 See EEOC, Questions and Answers: Religious preference. OFCCP believes, for the EEOC’s position, including the Discrimination in the Workplace (July 22, 2008), reasons stated earlier in this preamble, www.eeoc.gov/laws/guidance/questions-and- proposed rule’s inclusion of for-profit answers-religious-discrimination-workplace; EEOC, that that view is sufficiently supported entities as among those able to qualify EEOC Compliance Manual § 12–I.C.1 (July 22, by the Title VII case law, and in fact is for the religious exemption, the 2008), www.eeoc.gov/laws/guidance/section-12- the more persuasive view of the law. proposed rule’s disagreement that the religious-discrimination. The EEOC’s website states OFCCP also believes that a broader view for both these documents that, ‘‘[a]s a result of the exemption’s scope is limited to a Supreme Court’s decision in Our Lady of is more likely to encourage religious coreligionist preference, and the Guadalupe School v. Morrissey-Berru, we are organizations to enter the pool of proposed rule’s but-for causation currently working on updating this web page.’’ Id. competitors for government contracts, standard. 32 See EEOC, ‘‘PROPOSED Updated Compliance which benefits the government. For OFCCP has a decades-long Manual on Religious Discrimination’’ (Nov. 17, 2020), https://beta.regulations.gov/document/ partnership with the EEOC and works EEOC-2020-0007-0001 (last accessed November 18, 33 Id. at 21. closely with it to ensure equal 2020). 34 Id. at 20.

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these reasons, OFCCP believes that any is, entities that are organized for religious the regulation to impose the least issues arising from any differences with purposes and engage in activity consistent burden on society, consistent with the EEOC’s views as stated in with, and in furtherance of, such purposes— obtaining the regulatory objectives; and subregulatory guidance from 2008 are have an express statutory exemption from in choosing among alternative Title VII’s prohibition on religious outweighed by the benefits of adopting discrimination in employment. Under that regulatory approaches, select those a broader view of the exemption. exemption, religious organizations may approaches that maximize net benefits. Additionally, OFCCP believes any choose to employ only persons whose beliefs E.O. 13563 recognizes that some differences on this issue may be and conduct are consistent with the benefits are difficult to quantify and resolved in the near future. The EEOC’s organizations’ religious precepts. For provides that, where appropriate and proposed guidance is even more example, a Lutheran secondary school may permitted by law, agencies may consistent with OFCCP’s final rule. The choose to employ only practicing Lutherans, consider and discuss qualitatively proposed guidance states that ‘‘the only practicing Christians, or only those values that are difficult or impossible to willing to adhere to a code of conduct exemption allows religious consistent with the precepts of the Lutheran quantify, including equity, human organizations to prefer to employ community sponsoring the school. Indeed, dignity, fairness, and distributive individuals who share their religion, even in the absence of the Title VII impacts. defined not by the self-identified exemption, religious employers might be able This final rule is an E.O. 13771 religious affiliation of the employee, but to claim a similar right under RFRA or the deregulatory action because it is broadly by the employer’s religious Religion Clauses of the Constitution. expected to reduce compliance costs observances, practices, and beliefs.’’ 35 Id. at 6; see also id. at 12a–13a and potentially the cost of litigation for The guidance goes on to state that ‘‘[t]he regulated entities. IV. Regulatory Procedures prerogative of a religious organization to 1. The Need for the Regulation employ individuals ‘‘ ‘of a particular A. Executive Order 12866 (Regulatory religion’ . . . has been interpreted to Planning and Review), Executive Order As discussed in the preamble, OFCCP include the decision to terminate an 13563 (Improving Regulation and received numerous comments employee whose conduct or religious Regulatory Review), and Executive addressing the need for the regulation. Some commenters stated the proposal beliefs are inconsistent with those of its Order 13771 (Reducing Regulation and 36 was necessary to ensure religious employer.’’ Controlling Regulatory Costs) OFCCP also believes some entities could contract with the federal commenters mischaracterize any Under Executive Order 12866 (E.O. government without compromising their differences between the OFCCP and 12866), OMB’s Office of Information religious identities or missions. Some EEOC in this area as presenting and Regulatory Affairs (OIRA) commenters also agreed with OFCCP’s contractors with conflicting liability. determines whether a regulatory action observation that religious organizations OFCCP’s final rule is at least as, or is significant and, therefore, subject to have been reluctant to participate as more, protective of religious the requirements of E.O. 12866 and federal contractors because of the lack of organizations than the view stated in the OMB review. Section 3(f) of E.O. 12866 clarity or perceived narrowness of the EEOC’s guidance. A contractor can defines a ‘‘significant regulatory action’’ E.O. 11246 religious exemption. choose to adhere to the view articulated as an action that is likely to result in a OFCCP also received comments by the EEOC in 2008 and be in full rule that: (1) Has an annual effect on the objecting to the proposal because they compliance under the view of both economy of $100 million or more, or claimed it would permit taxpayer- or agencies. adversely affects in a material way a government-funded discrimination. Finally, OFCCP must balance its sector of the economy, productivity, Commenters argued that the coordination with the EEOC with its competition, jobs, the environment, Government should not allow federal need to follow directives from the public health or safety, or State, local or contractors to fire or refuse to hire President and the U.S. Department of tribal governments or communities (also qualified individuals because they do Justice. Section 4 of Executive Order referred to as economically significant); not regularly attend religious services or 13798 states that ‘‘[i]n order to guide all (2) creates serious inconsistency or adhere to the ‘‘right’’ religion. agencies in complying with relevant otherwise interferes with an action Additionally, commenters expressed Federal law, the Attorney General shall, taken or planned by another agency; (3) skepticism about religious as appropriate, issue guidance materially alters the budgetary impacts organizations’ reluctance to participate interpreting religious liberty protections of entitlement grants, user fees, or loan as federal contractors. Many of these in Federal law.’’ The Attorney General programs, or the rights and obligations commenters stated that OFCCP issued such guidance on October 6, of recipients thereof; or (4) raises novel provided no evidence to support its 2017, ‘‘to guide all administrative legal or policy issues arising out of legal claim or asserted that the proposed rule agencies and executive departments in mandates, the President’s priorities, or would increase rather than reduce the executive branch.’’ Office of the the principles set forth in E.O. 12866. confusion. In addition, several Att’y Gen., Memorandum for All This final rule has been designated a commenters cited a report from a Executive Departments and Agencies: ‘‘significant regulatory action’’ although progressive policy institute concluding Federal Law Protections for Religious not economically significant, under that faith-based organizations that had Liberty at 1 (Oct. 6, 2017), available at section 3(f) of E.O. 12866. The Office of objected to the lack of an expanded www.justice.gov/opa/press-release/file/ Management and Budget has reviewed religious exemption in E.O. 13672 1001891/download. This rule is fully this final rule. Pursuant to the continued to be awarded government compatible with that guidance: Congressional Review Act (5 U.S.C. 801 contracts. et seq.), OIRA designated this rule as not OFCCP disagrees with commenters’ Religious corporations, associations, a ‘‘major rule,’’ as defined by 5 U.S.C. characterization of the rule as educational institutions, and societies—that 804(2). discriminatory. OFCCP is committed to Executive Order 13563 (E.O. 13563) enforcing all of E.O. 11246’s protections, 35 EEOC, ‘‘PROPOSED Updated Compliance Manual on Religious Discrimination’’ at 24. directs agencies to adopt a regulation including those protecting employees 36 Id. (citing Hall, 215 F.3d at 625; Little, 929 F.3d only upon a reasoned determination from discrimination on the basis of at 951). that its benefits justify its costs; tailor religion. OFCCP emphasizes again that

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this rule will have no effect on the within that definition and thus Entities registered in the SAM database overwhelming majority of federal evaluates the impacts using data for the consist of contractor firms and other contractors. Even for religious entire contractor universe despite the entities (such as state and local organizations that serve as government fact this number significantly overstates governments and other organizations) contractors, they too must comply with the number of religious contractors. that are interested in federal contracting all of E.O. 11246’s nondiscrimination Prior to publication of the NPRM, opportunities and other forms of federal requirements except in some narrow OFCCP surveyed the list of contractors financial assistance. The total number of respects under some narrow and in the General Service Administration’s entities in the SAM database fluctuates reasonable circumstances recognized System for Award Management (SAM) and is posted on a monthly basis. The under law. This rule provides clarity on to identify organizations whose North current database includes those circumstances, consistent with American Industry Classification approximately 435,000 entities. Thus, OFCCP’s obligations to also respect and System (NAICS) descriptions or names OFCCP determines that 435,000 entities accommodate the free exercise of included the word ‘‘religious,’’ is a reasonable representation of the religion. ‘‘church,’’ ‘‘mosque,’’ etc. This survey number of entities that may be affected OFCCP agrees with the comments was not a useful or appropriate proxy by the final rule.38 OFCCP recognizes stating that the religious exemption for the number of potentially affected that this SAM number likely results in contained in section 204(c) of E.O. entities for several reasons. First, not all an overestimation for two reasons: The 11246 is necessary to ensure religious organizations with ‘‘religious’’ NAICS system captures firms that do not meet organizations can contract with the codes or names would qualify for the the jurisdictional dollar thresholds for federal government without exemption, given that any formulation the three laws that OFCCP enforces, and compromising their religious identities of the religious-organization test is fact- it captures contractor firms for work or missions. The fact that some faith- intensive and requires much more than performed outside the United States by based organizations have been willing to that the organization simply have (what individuals hired outside the United enter into federal contracts does not is commonly understood to be) a States, over which OFCCP does not have mean that other faith-based religious term in its name. This holds authority. Further, because this rule organizations have not been reluctant to true under any formulation of the test, only applies to religious contractors, do so. Indeed, a few commenters offered whether that used in a case like LeBoon OFCCP is confident that this estimate evidence that religious organizations or the test set out in the NPRM and overstates the true universe of have been reluctant to contract with or refined in the final rule. Second, and contractors affected by the rule. receive grants from the federal similarly, many religious organizations OFCCP anticipates three main groups government because of the lack of that could qualify for the religious that potentially will be impacted: clarity regarding religious exemptions in employer exemption at issue here may Religious organizations that decide to federal law. In addition, although some not include one of those three specific become federal contractors because of commenters objected to the provision of descriptors in their NAICS description this final rule’s clarity on the scope and any religious exemption for federal much like many religious organizations application of the religious exemption, contractors, the religious exemption is do not include one of those three words religious organizations that are already part of E.O. 11246 that OFCCP is in their legal names. Third, the religious federal contractors, and all current obligated to administer and enforce and exemption is an optional federal contractors. OFCCP is unable to has been part of the Executive Order for accommodation. Organizations that reasonably quantify the costs, benefits, nearly two decades. qualify for it may choose to use it, or and transfers for these three groups of OFCCP is publishing this final rule to not, and OFCCP has no reliable way of organizations, but provides the clarify the scope and application of the following qualitative analysis. Though religious exemption. The intent is to determining which will do so. Fourth, OFCCP believes that, as a government religious organizations new to federal provide certainty and make clear that contracting will likely incur upfront the exemption includes not only agency, it would be a fraught matter for it to search for potentially religious costs and compliance costs associated churches but employers that are with becoming a federal contractor, it is organized for religious purpose, hold organizations based on its own view of what sorts of terms are religious, assess reasonable to assume they believe that themselves out to the public as carrying becoming a federal contractor will out a religious purpose, and engage in the results in the abstract, and attempt to attribute religious characteristics to further their goals, which will result in activity consistent with and in benefits to the organization (whether furtherance of that religious purpose. the organizations found. This rule elsewhere rejects that sort of approach. increased revenues, more financial OFCCP believes that the rule will stability, or better market access). In promote consistency in OFCCP’s For all these reasons, OFCCP has chosen to use broader estimates of the addition, if the new potential administration and that it will be clearer contractors are awarded government for contractors to follow. Further, contractor universe. Further, OFCCP anticipates that many contracts, the government and the OFCCP believes it will help achieve public will receive better quality or consistency with the administration contractors would affirmatively disclaim any religious basis and thus lower-cost services because most federal policy to enforce federal law’s robust contracts are rewarded through protections of religious freedom. OFCCP recognizes that the following analysis will be an overestimate, but competitive bidding which selects 2. Discussion of Impacts uses it out of an abundance of caution. (generally speaking) either the lowest In this section, OFCCP presents a OFCCP determined that there are 38 summary of the costs associated with approximately 435,000 entities While the final rule may result in more 37 religious corporations, associations, educational the new definitions in § 60–1.3 and the registered in the SAM database. institutions or societies entering into federal new rule of construction in § 60–1.5. contracting or subcontracting, there is no way to While this rule will only apply to 37 U.S. General Services Administration, System estimate the volume of increase. As noted above, for Award Management, data released in monthly OFCCP does not anticipate that the number of federal contractors that are religious, files, available at https://sam.gov. The SAM religious contractors will grow to be equal to non- OFCCP lacks data to determine the database is an estimate with the most recent religious contractors, but uses this estimate due to number of contractors that would fall download of data occurring November 2020. the lack of data.

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cost per unit or highest quality unit at 3. Public Comments to address the economic and non- a specific price. As the number of In this section, OFCCP addresses the economic costs to employees in the potential federal contractors rises, the public comments specifically received form of lost wages and benefits, out of competitive process should result in on the Regulatory Impact Analysis. pocket medical expenses, job searches, better quality and prices for goods and One commenter, a public policy and negative mental and physical health services which will enhance the societal research and advocacy organization, consequences of discrimination. Two benefits of federal contracting. If total asserted that OFCCP underestimated the commenters, a civil liberties costs from contracting with the new wage rate of the employees who would organization and a labor union, organization are lower than the status likely review the rule. The commenter mentioned that there are 25 states quo, the result will be a transfer to asserted that the employee would likely without explicit statutory protections taxpayers. be an attorney rather than a human barring employment discrimination Religious organizations which are resource manager. The commenter based on gender identity and sexual already federal contractors will see a suggested that most contractors would orientation and asserted that workers in minimal cost for rule familiarization consult in-house or outside counsel to these states are not otherwise covered and compliance and will continue to help with rule familiarization. The by statutory protections. The commenters who made these assertions efficiently provide services to the U.S. commenter also provided an alternate provided no additional information or government. The clear boundaries of the fully loaded hourly compensation rate data to support their assertions. religious exemption may permit these for Lawyers (SOC 23–1011). OFCCP Additionally, given Bostock’s holding contractors to more freely seek the acknowledges that some contractors that Title VII’s prohibition on sex religious exemption with assurance that may have in-house counsel review the discrimination includes discrimination they are complying with their legal final rule. However, some contractors do on the basis of sexual orientation and obligations under Executive Order not have in-house counsel, and their transgender status, these concerns seem 11246, and they may revisit their review will be conducted by human lessened. employment practices accordingly. resource managers. Taking into OFCCP cannot determine quantitatively OFCCP has reviewed these comments consideration this comment, OFCCP has and notes that any attempt to project the direction or magnitude of any adjusted its wage rate to reflect review changes in employment but believes the costs to employees would necessarily by either in-house counsel or human require OFCCP to speculate that certain overall effects will be quite small at resource managers. workers will face discrimination only these organizations, as most employees Several commenters addressed the once this rule is finalized. Further, the at them were likely attracted to them time needed for a contractor to become commenters ignore the possibility that because of a shared sense of religious familiar with the final rule. These contractors may choose to hire mission, and extremely small when commenters asserted that the estimate of individuals of greater religious diversity considering the entire contractor one half-hour was too low. One as a result of this rule because their universe or the economy as a whole. On commenter provided no additional incentive to only hire coreligionists will one hand, religious employers may feel information or alternative calculation. be diminished. Absent data regarding more free to hire those that are not The remaining two provided alternative the number of individuals who are not denominational coreligionists, given estimates ranging from 1.5 hours to 2.5 discriminated against in the status quo this final rule’s explanation, consistent hours to become familiar with the final but would be discriminated against with law, that an organization does not rule. OFCCP acknowledges that the when this rule is finalized, and non- forfeit the exemption when it hires precise amount of time each company coreligionist individuals who will be outside strict denominational will take to become familiar with hired by a contractor as a result of this boundaries, and that an organization understanding the new regulations is rule that OFCCP cannot assess the mere may require acceptance of or adherence difficult to estimate. However, the possibility that some workers could face to particular religious tenets as part of elements that OFCCP uses in its different costs. Likewise, OFCCP lacks the employment relationship regardless calculation take into account the length data for the number of new contractors of employees’ denominational and complexity of the final rule. The that may enter the market and the membership. On the other hand, given final rule adds definitions to the number of employees that work for such this clarity, religious employers may existing regulations implementing E.O. companies. As such, OFCCP does not also feel more confident in their ability 11246 and clarifies the exemption estimate the benefits to the employees of to hire and retain employees based on contained in section 204(c) of E.O. those new contractors. religious criteria. Additionally, OFCCP 11246. As such, the final rule clarifies Commenters also said that OFCCP believes these assurances for religious requirements and reduces burdens on failed to address the costs to taxpayers organizations will result in reduced contractors trying to understand their in the form of a restricted labor pool, legal costs for both the religious obligations and responsibilities of decreased productivity, employee contractors and OFCCP. complying with E.O. 11246. Thus, turnover, and increased health care All current federal contractors may OFCCP has decided to retain its initial costs related to employment face additional competition as new estimate of one half-hour for rule discrimination and increased social potential competitors enter the market. familiarization. This estimate accounts stigma. In addition, some commenters Since the total amount of available for the time needed to read the final rule mentioned that OFCCP did not account government contracts is not anticipated or participate in an OFCCP webinar for intangible costs related to reductions to change, the increased competition about the final rule. in equity, fairness, and personal may provide better prices for the Many commenters asserted that freedom that would result from allowing government, but may also result in a OFCCP did not address the potential businesses and organizations receiving reallocation of the contracts. Should this costs of the final rule on employees, taxpayer dollars to opt out of critical occur, it is possible that revenues will taxpayers, and minority groups, nondiscrimination provisions that be transferred between various including LGBT individuals, women, protect employees based on gender government contractors or from current and religious minorities. The identity and sexual orientation. The contractors to new entrants. commenters asserted that OFCCP failed commenters who made these assertions

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provided no additional information or One individual commenter asserted that it does not anticipate any costs data to support their assertions. Further, that OFCCP did not properly determine beyond rule familiarization for the commenters provide no additional the rule’s economic significance. The contractors. support for their assertion that the rule commenter asserted that the Regulatory Taking the Regulatory Impact will increase costs to taxpayers and Impact Analysis in the NPRM did not Analysis comments into consideration, ignore the possibility that the rule will take into account ‘‘the actual monetary OFCCP has assessed the costs and expand the pool of federal contractors, impact of the regulation.’’ Using all benefits of the final rule as follows. thereby saving taxpayers money. available information and data, OFCCP OFCCP believes that either a Human Similarly, several commenters has addressed the quantifiable and addressed the potential impact of the Resource Manager (SOC 11–3121) or a qualitative costs and benefits of this Lawyer (SOC 23–1011) would review rule on state and local governments. final rule as required. It provides an Three commenters, a city attorney, a the final rule. OFCCP estimates that assessment of the costs associated with state’s attorney, and a civil liberties and 50% of the reviewers would be human rule familiarization and concludes that human rights legal advocacy resource managers and 50% would be the addition of definitions and organization, mentioned that state and in-house counsel. Thus, the mean local governments may lose important clarification of an exemption do not hourly wage rate reflects a 50/50 split tax revenue if people relocate or choose create additional burdens for the between human resource managers and to withdraw from the workforce because regulated community. As stated in the lawyers. The mean hourly wage of of the final rule. Another commenter preamble, the intent of the final rule is human resource managers is $62.29 and mentioned that state and local to clarify the scope of the religious the mean hourly wage of lawyers is governments that serve victims of exemption and promote consistency in $69.86.39 Therefore, the average hourly discrimination will need to contribute OFCCP’s administration of it. The wage rate is $66.08 (($62.29 + $69.86)/ to, provide, and administer more public commenter also asserted that OFCCP 2). OFCCP adjusted this wage rate to benefits programs for vulnerable did not account for the impact on larger reflect fringe benefits such as health populations. These comments are contractors. The Regulatory Flexibility insurance and retirement benefits, as assume that the rule will impose costs Act requires agencies to consider the well as overhead costs such as rent, on workers and that those costs will in impact of a regulation on a wide range utilities, and office equipment. OFCCP turn be imposed upon the communities of small entities, including small used a fringe benefits rate of 46% 40 and in which those workers live. None of businesses, nonprofit organizations, and an overhead rate of 17%,41 resulting in these commenters provided additional small governmental jurisdictions. It a fully loaded hourly compensation rate information or data to support their does not address larger corporations. of $107.71 ($66.08 + ($66.08 × 46%) + statements. However, OFCCP’s assessment reflects ($66.08 × 17%)).

TABLE 1—LABOR COST

Average Fringe benefit Overhead Fully loaded Major occupational groups hourly wage rate rate hourly rate (%) (%) compensation

Human Resources Managers and Lawyers ...... $66.08 46 17 $107.71

4. Cost of Regulatory Familiarization sessions to identify any specific materials provided by OFCCP, or challenges contractors believe they face, participate in an OFCCP webinar to OFCCP acknowledges that 5 CFR or may face, when complying with the learn the new requirements.42 1320.3(b)(1)(i) requires agencies to new regulations. OFCCP notes that such Consequently, the estimated burden for include in the burden analysis the informal compliance guidance is not rule familiarization would be 217,500 estimated time it will take for binding. hours (435,000 contractor firms × 1⁄2 contractors to review and understand OFCCP believes that human resource hour). OFCCP calculates the total the instructions for compliance. In order managers or lawyers at each contractor estimated cost of rule familiarization as to minimize the burden, OFCCP will firm would be the employees $23,426,925 (217,500 hours × $107.71/ publish compliance assistance responsible for understanding the new hour) in the first year, which amounts materials, such as fact sheets and regulations. OFCCP further estimates to a 10-year annualized cost of answers to frequently asked questions. that it will take a minimum of one half- $2,666,359 at a discount rate of 3% OFCCP may also host webinars for hour for a human resource professional (which is $6.13 per contractor firm) or interested persons that describe the new or lawyer at each contractor firm to read $3,117,259 at a discount rate of 7% regulations and conduct listening the rule, read the compliance assistance (which is $7.17 per contractor firm).

TABLE 2—REGULATORY FAMILIARIZATION COSTS

Total number of contractors ...... 435,000. Time to review rule ...... 30 minutes.

39 BLS, Occupational Employment Statistics, worked in 2017, while benefit costs averaged 42 OFCCP believes that contractor firms that may Occupational Employment and Wages, May 2019, $11.26, which is a benefits rate of 46%. be potentially affected by the rule may take more https://www.bls.gov/oes/current/oes_nat.htm. 41 Cody Rice, U.S. Environmental Protection time to review the final rule, while contractor firms 40 BLS, Employer Costs for Employee Agency, ‘‘Wage Rates for Economic Analyses of the that may not be affected may take less time, so the Toxics Release Inventory Program’’ (June 10, 2002), Compensation, https://www.bls.gov/ncs/data.htm. one half-hour reflects an estimated average for all https://www.regulations.gov/document?D=EPA-HQ- contractor firms. Wages and salaries averaged $24.26 per hour OPPT-2014-0650-0005.

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TABLE 2—REGULATORY FAMILIARIZATION COSTS—Continued Human resources manager and lawyer fully loaded hourly compensation ...... $107.71. Regulatory familiarization cost ...... $23,426,925. Annualized cost with 3% discounting ...... $2,666,359. Annualized cost per contractor with 3% discounting ...... $6.13. Annualized cost with 7% discounting ...... $3,117,259. Annualized cost per contractor with 7% discounting ...... $7.17.

5. Cost Savings to E.O. 11246. It also increases religious contract with the government after the OFCCP expects that contractors freedom for religious employers. religious exemption is clarified. impacted by the rule will experience The final rule increases clarity for A further benefit of this rule would be cost savings. Specifically, the clarity federal contractors. This impact most that some religious contractors will provided in the new definitions and the likely yields a benefit to taxpayers (if increase the diversity of their workforce. interpretation provided will reduce the contractor fees decrease because they do Under some prior interpretations, the risk of noncompliance to contractors not need to engage third-party religious exemption was only provided and the potential legal costs that representatives to interpret OFCCP’s to contractors who hired co-religionists findings of noncompliance with requirements). While some commenters (e.g., a Catholic company hiring only OFCCP’s requirements might impose. expressed concern that the rule was not Catholics; a Latter-day Saint contractor One mass mail campaign of commenters clear, OFCCP believes that the rule is hiring only Latter-day Saints; etc.) and asserted that allowing religious sufficiently consistent with Title VII thus religious contractors were organizations to continue to provide a case law and principles and that it will incentivized to limit their hiring to only variety of services, such as assisting promote consistency in administration. co-religionists. Once this rule is victims of sexual abuse, the hungry, and Furthermore, by increasing clarity for finalized, such religious contractors will the homeless, is effective because it both contractors and for OFCCP no longer be required to limit their saves taxpayer dollars through enforcement, the final rule may reduce hiring. The likely outcome of this contracting instead of expanding the number and costs of enforcement change is that the workforces of government bureaucracy. proceedings by making it clearer to both religious employers will become more Some commenters argued that the sides at the outset what is required diverse. rule will decrease clarity and will thus under the regulations. This would also B. Regulatory Flexibility Act and increase costs for contractors, especially most likely represent a benefit to Executive Order 13272 (Consideration if those contractors believe their taxpayers (since fewer resources would of Small Entities) obligations under the EEOC conflict be spent in OFCCP administrative The agency did not receive any public with their obligations under the final litigation). rule. First, OFCCP believes that the E.O. comments on the Regulatory Flexibility 11246 nondiscrimination obligations it OFCCP notes that some commenters Analysis. enforces remain in force and that the asserted that OFCCP did not provide The Regulatory Flexibility Act of 1980 rule is sufficiently consistent with Title evidence that faith-based organizations (RFA), 5 U.S.C. 601 et seq., establishes VII case law and principles and that it have been reluctant to contract with the ‘‘as a principle of regulatory issuance will promote consistency in federal government because of the lack that agencies shall endeavor, consistent administration. Second, even assuming of certainty about the religious with the objectives of the rule and for purposes of this analysis that exemption. The fact that some small applicable statutes, to fit regulatory and contractors’ obligations under EEOC and number of faith-based organizations informational requirements to the scale E.O. 11246 differ (e.g., that the have been willing to enter into federal of the businesses, organizations, and exemption in E.O. 11246 permits an contracts does not mean that other faith- governmental jurisdictions subject to action forbidden under the EEOC’s view based organizations have not been regulation.’’ Public Law 96–354, 2(b). of Title VII), a contractor remains reluctant to do so. OFCCP believes that The RFA requires agencies to consider obligated to abide by Title VII and any providing clarity to the religious the impact of a regulation on a wide exemption from E.O. 11246 simply exemption currently included under range of small entities, including small prevents additional liability before E.O. 11246 will promote clarity and businesses, nonprofit organizations, and OFCCP for the same action. certainty for all contractors. Moreover, a small governmental jurisdictions. Accordingly, only those contractors that few commenters confirmed OFCCP’s Agencies must review whether a final wish to rely on the E.O. 11246 observation that religious organizations rule would have a significant economic exemption need consider it, and we have been reluctant to participate as impact on a substantial number of small expect that the additional costs incurred federal contractors because of the lack of entities. See 5 U.S.C. 603. If the rule by such organizations to understand the clarity or perceived narrowness of the would, then the agency must prepare a exemption beyond their existing E.O. 11246 religious exemption. One regulatory flexibility analysis as compliance costs will be minimal. individual commenter described his described in the RFA. See id. However, experience with religious organizations’ if the agency determines that the rule 6. Benefits reluctance to contract or subcontract would not be expected to have a E.O. 13563 recognizes that some rules with the federal government, and two significant economic impact on a have benefits that are difficult to other commenters offered examples or substantial number of small entities, quantify or monetize but are important, evidence of religious organizations’ then the head of the agency may so and states that agencies may consider reluctance to participate in other certify and the RFA does not require a such benefits. This final rule improves contexts, such as federal grants. Thus, regulatory flexibility analysis. See 5 equity and fairness by giving contractors OFCCP expects that the number of new U.S.C. 605. The certification must clear guidance on the scope and contractors may increase because provide the factual basis for this application of the religious exemption religious entities may be more willing to determination.

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OFCCP does not expect the final rule governments; however, the agency institution of learning, including to have a significant economic impact believes that these effects will be neither acceptance of or adherence to sincere on a substantial number of small entities direct nor substantial. Thus, OFCCP has religious tenets as understood by the and does not believe the final rule has determined that it does not have employer as a condition of employment, any recurring costs. The regulatory ‘‘federalism implications.’’ This rule whether or not the particular religion of familiarization cost discounted at a 7% will not ‘‘have substantial direct effects an individual employee or applicant is rate of $50.33 per contractor or $7.17 on the States, on the relationship the same as the particular religion of his annualized is a de minimis cost. between the national government and or her employer or prospective Therefore, the first year and annualized the States, or on the distribution of employer. burdens as a percentage of the smallest power and responsibilities among the * * * * * employer’s revenue would be far less various levels of government.’’ Religion includes all aspects of than 1%. Accordingly, OFCCP certifies F. Executive Order 13175 (Consultation religious observance and practice, as that the final rule would not have a well as belief. significant economic impact on a and Coordination With Indian Tribal * * * * * substantial number of small entities. Governments) Religious corporation, association, That is consistent with the Department’s This final rule does not have tribal educational institution, or society. (1) analysis in the NPRM. implications under Executive Order Religious corporation, association, 13175 that would require a tribal C. Paperwork Reduction Act educational institution, or society summary impact statement. The final means a corporation, association, The Paperwork Reduction Act of 1995 rule will not ‘‘have substantial direct educational institution, society, school, requires that OFCCP consider the effects on one or more Indian tribes, on college, university, or institution of impact of paperwork and other the relationship between the Federal learning that: information collection burdens imposed Government and Indian tribes, or on the (i) Is organized for a religious on the public. See 44 U.S.C. 3507(d). An distribution of power and agency may not collect or sponsor the purpose; responsibilities between the Federal (ii) Holds itself out to the public as collection of information or impose an Government and Indian tribes.’’ information collection requirement carrying out a religious purpose; unless the information collection List of Subjects in 41 CFR Part 60–1 (iii) Engages in activity consistent with, and in furtherance of, that instrument displays a currently valid Civil rights, Employment, Equal religious purpose; and OMB control number. See 5 CFR employment opportunity, Government (iv)(A) Operates on a not-for-profit 1320.5(b)(1). contracts, Government procurement, basis; or OFCCP has determined that there is Investigations, Labor, and Reporting and (B) Presents other strong evidence that no new requirement for information recordkeeping requirements. collection associated with this final its purpose is substantially religious. rule. The final rule provides definitions Craig E. Leen, (2) Whether an organization’s and a rule of construction to clarify the Director, OFCCP. engagement in activity is consistent with, and in furtherance of, its religious scope and application of current law. For the reasons set forth in the purpose is determined by reference to The information collections contained preamble, OFCCP revises 41 CFR part the organization’s own sincere in the existing E.O. 11246 regulations 60–1 as follows: are currently approved under OMB understanding of its religious tenets. Control Number 1250–0001 PART 60–1—OBLIGATIONS OF (3) To qualify as religious a (Construction Recordkeeping and CONTRACTORS AND corporation, association, educational Reporting Requirements) and OMB SUBCONTRACTORS institution, society, school, college, Control Number 1250–0003 university, or institution of learning (Recordkeeping and Reporting ■ 1. The authority citation for part 60– may, or may not: Have a mosque, Requirements—Supply and Service). 1 continues to read as follows: church, synagogue, temple, or other house of worship; or be supported by, Consequently, this final rule does not Authority: Sec. 201, E.O. 11246, 30 FR require review by the Office of 12319, 3 CFR, 1964–1965 Comp., p. 339, as be affiliated with, identify with, or be Management and Budget under the amended by E.O. 11375, 32 FR 14303, 3 CFR, composed of individuals sharing, any authority of the Paperwork Reduction 1966–1970 Comp., p. 684, E.O. 12086, 43 FR single religion, sect, denomination, or Act. 46501, 3 CFR, 1978 Comp., p. 230, E.O. other religious tradition. 13279, 67 FR 77141, 3 CFR, 2002 Comp., p. (4) The following examples apply this D. Unfunded Mandates Reform Act of 258 and E.O. 13672, 79 FR 42971. definition to various scenarios. It is 1995 ■ 2. Amend § 60–1.3 by assumed in each example that the For purposes of the Unfunded ■ a. Adding in alphabetical order the employer is a federal contractor subject Mandates Reform Act of 1995, 2 U.S.C. definitions of ‘‘Particular religion,’’ to Executive Order 11246. 1532, this final rule does not include ‘‘Religion,’’ ‘‘Religious corporation, (i)(A) Example. A closely held for- any federal mandate that may result in association, educational institution, or profit manufacturer makes and sells excess of $100 million in expenditures society,’’ and ‘‘Sincere,’’ and metal candlesticks and other decorative by state, local, and tribal governments in ■ b. Adding paragraph (a) and adding items. The manufacturer’s mission the aggregate or by the private sector. and reserving paragraph (b). statement asserts that it is committed to The revisions read as follows: providing high-quality candlesticks and E. Executive Order 13132 (Federalism) similar items to all of its customers, a OFCCP has reviewed this final rule in § 60–1.3 Definitions. majority of which are churches and accordance with Executive Order 13132 * * * * * synagogues. Some of the manufacturer’s regarding federalism. OFCCP recognizes Particular religion means the religion items are also purchased by federal that there may be some existing costs of a particular individual, corporation, agencies for use during diplomatic that may shift from the federal association, educational institution, events and presentations. The government to state or local society, school, college, university, or manufacturer regularly consults with

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ministers and rabbis regarding new its emails and other communications, the business’s customers are private designs to ensure that they conform to the contractor holds itself out as a individuals or museums interested in any religious specifications. The religious organization to its employees, the items as display pieces or for their manufacturer also advertises heavily in applicants, and clients. Finally, cultural value. The business’s marketing predominantly religious publications notwithstanding that the contractor materials include examples of religious and donates a portion of each sale to collects a placement fee similar to iconography and artifacts from a variety charities run by churches and nonreligious staffing companies, it is of world religions, as well as various synagogues. organized as a non-profit. cultural and artistic items. (B) Application. The manufacturer (iii)(A) Example. A small catering (B) Application. The business likely likely does not qualify as a religious company provides kosher meals does not qualify as a religious organization. Although the primarily to synagogues and for various organization. Its mission statement manufacturer provides goods events in the Jewish community, but references an arguably religious predominantly for religious other customers, including federal purpose, namely perpetuating the communities, the manufacturer’s agencies, sometimes hire the caterer to world’s religious legacy, but in context fundamental purpose is secular and provide meals for conferences and other that appears to have more to do with pecuniary, not religious, as evidenced events. The company’s two owners are religion’s historic value rather than by its mission statement. Because the Hasidic Jews and its six employees, manufacturer lacks a religious purpose, while not exclusively Jewish, receive evidencing a religious conviction of the it cannot carry out activity consistent instruction in kosher food preparation business or its owner. Similarly, it is at with that (nonexistent) religious to ensure such preparation comports best unclear whether the business is purpose. And while the manufacturer with Jewish laws and customs. This engaging in activities in furtherance of advertises heavily in religious additional work raises the company’s this purpose when most of its sales publications and consults with religious operating costs higher than were it to serve no religious purpose. Finally, functionaries on its designs, the provide non-kosher meals. The while the business displays some manufacturer does not identify itself, as company’s mission statement, which religious items, these appear to be a opposed to its customers, as religious. has remained substantially the same minor part of the business’s overall Finally, given that the manufacturer is since the company was organized, presentation and do not convey that the a for-profit entity, it would need to describes its purpose as fulfilling a business has a religious identity. The make a strong evidentiary showing that religious mandate to strengthen the factors to qualify as a religious it is a religious organization, which it Jewish community and ensure Jewish organization do not appear to be met, has not. persons can participate fully in public especially given that the business as a (ii)(A) Example. A nonprofit life by providing kosher meals. The for-profit entity would need to make a organization enters government company’s ‘‘about us’’ page on its strong evidentiary showing that it is a contracts to provide chaplaincy services website states that above all else, the religious organization. to military and federal law-enforcement company seeks to ‘‘honor G-d’’ and * * * * * organizations around the country. The maintain the strength of the Jewish Sincere means sincere under the law contractor is organized as a non-profit, religion through its kosher meal applied by the courts of the United but it charges the military and other services. The company also donates a States when ascertaining the sincerity of clients a fee, similar to fees charged by portion of its proceeds to charitable a party’s religious exercise or belief. other staffing organizations, and its projects sponsored by local Jewish manager and employees all collect a congregations. In its advertising and on * * * * * market-rate salary. The organization’s its website, the company prominently (a) Severability. Should a court of articles of incorporation state that its includes religious symbols and text. competent jurisdiction hold any purpose is to provide religious services (B) Application. The company likely provision(s) of this section to be invalid, to members of the same faith wherever qualifies as a religious organization. The such action will not affect any other they may be in the world, and to company’s mission statement and other provision of this section. educate other individuals about the materials show a religious purpose. Its (b) [Reserved] faith. Similar statements of purpose predominant business activity of appear on the organization’s website providing kosher meals directly furthers ■ 3. Amend § 60–1.5 by adding and in its bid responses to government and is wholly consistent with that self- paragraphs (e) and (f) to read as follows: requests for proposals. All employees identified religious purpose, as are its receive weekly emails, and occasionally hiring and training practices. Through § 60–1.5 Exemptions. videos, about ways to promote faith in its advertising and website, the * * * * * the workplace. The employee handbook company holds itself out as a religious (e) Broad interpretation. This subpart contains several requirements regarding organization. Finally, although the shall be construed in favor of a broad personal and workplace conduct to company operates on a for-profit basis, protection of religious exercise, to the ensure ‘‘a Christian atmosphere where the other facts here show strong maximum extent permitted by the U.S. the Spirit of the Lord can guide the evidence that the company operates as Constitution and law, including the organization’s work.’’ a religious organization. Religious Freedom Restoration Act of (B) Application. Under these facts, the (iv)(A) Example. A for-profit collector 1993, as amended, 42 U.S.C. 2000bb et contractor likely qualifies as a religious business sells a wide variety of artistic, seq. organization. The contractor’s cultural, religious, and archeological organizing documents expressly state items. The government purchases some (f) Severability. Should a court of that its mission is primarily religious in of these from time to time for research competent jurisdiction hold any nature. Moreover, the contractor or aesthetic purposes. The business’s provision(s) of this section to be invalid, exercises religion through its business mission statement provides that its such action will not affect any other activities, which is providing purpose is to curate the world’s provision of this section. chaplaincy services, and through its treasures to perpetuate its historic, [FR Doc. 2020–26418 Filed 12–8–20; 8:45 am] hiring and training practices. Through cultural, and religious legacy. Most of BILLING CODE 4510–45–P

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