The U.S. Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP) has announced a rescission of the final rule “Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption,” which has been in effect since January 8, 2021. The rescission of the 2020 religious exemption rule was published in the Federal Register on March 1 and is effective on March 31, 2023.
Importantly, the rescission does not remove the religious exemption contained in Executive Order (E.O.) 11246 and allows religious entities the ability to pursue federal contracts, but religious exemptions will once again be determined consistent with the test for religious exemptions under Title VII of the Civil Rights Act of 1964.
Under Title VII case law, an employer can qualify for a religious exemption if its purpose and character are primarily religious, and if, said religious organization makes decisions about employing individuals based on adherence to a particular religion. However, these organizations are not permitted to make employment decisions that amount to discrimination based on protected characteristics, other than religion, such as race or sex.
Next Steps for Employers
Employers who have relied on being religiously exempt under the 2020 standard should review their status against the Title VII standard to ensure that they would still be considered exempt. In addition, qualifying employers should ensure that they are focusing on ensuring equal opportunity as it relates to other protected characteristics under Title VII.
Employers who need additional guidance about their exempt status should consult with their legal counsel.