DOL Returns to Longstanding Policy on Religious Exemptions for Federal Contractors

Update Applicable to:
All federal contractors.

What happened?
On March 31, the Office of Federal Contract Compliance Programs (OFCCP) rescinded a Trump Administration rule that provided a faith-based carve-out exempting federal contractors from compliance with certain anti-discrimination obligations.

What are the details?
Federal law has long recognized a religious exemption to anti-discrimination obligations for federal contractors. The Trump Administration rule, enacted on January 8, 2021, expanded this faith-based carve-out. The rescission of the 2021 rule, published in the Federal Register on March 1, returns OFCCP to its pre-2021 religious exemption rule.

Opponents of the 2021 rule challenged it when it was formally proposed in August 2019. Critics argued that the rule undermined the rights of individuals frequently subjected to religious discrimination, including members of the LGBTQ community. Opponents also argued that the rule would permit taxpayer-funded discrimination and that the new rule would increase rather than decrease confusion regarding the application of the religious exemption.

In response to this criticism, on March 1, the Biden Administration published the rescission of the 2021 final rule. The Department of Labor noted that the rescission returns to OFCCP’s longstanding practice of using the nine-factor LeBoon test to determine whether an employer’s purpose and character are primarily religious and, thus, whether the employer qualifies for the exemption. DOL added that the rescission preserves Executive Order 11246’s religious exemption, and the rescission reestablishes OFCCP’s long-established view that the exemption does not permit qualifying employers to discriminate based on race, color, sex, sexual orientation, gender identity, or national origin, even if such discrimination is religiously motivated.

The rescission went into effect on March 31.

For more information, please see the links below:

Equal Opportunity Clause’s Religious Exemption Rule

Religious Exemption Final Rule Frequently Asked Questions

Former Trump Administration Rule

Nine-factor LeBoon Test

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What do employers need to do?
Federal contractors should review the links provided above and should revisit their policies to ensure that they are compliant with OFCCP rules now that the 2021 rule has been rescinded.