Proposed change to Executive Order would promote unlawful discrimination

This week, Gender Justice submitted a comment in response to a proposed change to Executive Order 11246 titled "Implementing Legal Requirements Regarding the Equal Opportunity Clause's Religious Exemption."

Read our full comment, below.

To Whom It May Concern:

We appreciate this opportunity to submit a comment in response to the Notice of Proposed Rulemaking titled “Implementing Legal Requirements Regarding the Equal Opportunity Clause’s Religious Exemption.” Gender Justice is a Minnesota-based 501(c)(3) organization that advances gender equity through the law. Our clients include individuals who have experienced discrimination based on their sex, gender, sexual orientation or gender identity in a variety of settings – at work or school, in health care or public accommodations.

We are deeply concerned about the proposed regulations regarding the religious exemption from the anti-discrimination requirements of Executive Order 11246, and urge the Office of Federal Contract Compliance Programs not to adopt them. Given our extensive work with, and on behalf of, people who have faced employment discrimination, we find no reason to permit commercial businesses organized for profit to receive public dollars through federal contracts, while allowing them to fire single mothers, women who use birth control, LGBTQ people, Jewish, Christian or other workers, based solely on their boss’s personal beliefs.

As it stands, religiously affiliated non-profit employers have been able to fire employees for reasons that are irrelevant to their ability to perform their job duties, such as not holding specific Christian beliefs, attending a concert, dressing too modestly, and getting re-married. This practice is already unfair to workers, and it should not be permitted to spread. The proposed rule will allow for-profit commercial businesses, that would not be given a religious exemption under Title VII’s employment discrimination laws, to claim religious exemptions when receiving government contracts. This will not only promote unlawful discrimination, but it will also strip the government of the tools provided in Executive Order 11246 to root out discrimination and enforce the mandates of Title VII. This places the heavy burden of enforcing Title VII’s non-discrimination mandates back on individual employees and applicants, even though the employer in question is a government contractor receiving taxpayer dollars.

We urge the Agency to affirm that businesses that choose to enter into contracts with the government may not discriminate in employment because of race, color, religion, sex, sexual orientation, gender identity, or national origin.

A. The Agency’s Proposed Rule Undermines The Executive Order By Resting On A Flawed Interpretation Of Caselaw Regarding Religious Exemptions As They Relate to Employment Discrimination

According to the notice of the proposed rule, the Agency has received letters from religious organizations indicating that confusion over the scope of the religious exemptions contained in Executive Order 11246 has resulted in a reluctance to enter into contracts with the federal government.(1) The Agency’s stated intent in amending Executive Order 11246 is to provide “clarity regarding the scope and application of the religious exemption” contained in the Order consistent with developments in caselaw.(2) The caselaw cited by the Agency in support of its proposed changes predominantly addresses Title VII employment discrimination claims.

Title VII and Executive Order 11246 share a similar purpose.(3) That is to “to improve the economic and social conditions of minorities and women by providing equality of opportunity in the work place. These conditions were part of a larger pattern of restriction, exclusion, discrimination, segregation, and inferior treatment of minorities and women in many areas of life.”(4) The identification of the problem stemmed from “extensive analyses of the higher unemployment rate, the lesser occupational status, and the consequent lower income levels of minorities and women.” (5) Executive Order 11246, which requires employers seeking federal contracts to make affirmative efforts to identify and prevent discrimination, is consistent with Congress’s effort to encourage “employers, labor organizations, and other persons subject to Title VII…to act on a voluntary basis to modify employment practices and systems which constituted barriers to equal employment opportunity, without awaiting litigation or formal government action.”6

The proposed rule does not provide clarity to applicants for federal contracts because it brings the Executive Order completely out of step with current caselaw regarding Title VII employment anti-discrimination laws and religious exemptions. The proposed rule provides far more leeway for employers seeking government contracts to consider themselves the beneficiaries of religious exemptions, and to unlawfully discriminate against employees and applicants. Permitting anti-discrimination guidelines for federal contractors to be more lax than what would be permitted under Title VII, shifts the burden of rooting out discrimination and enforcing anti-discrimination laws from the government and the employers vying for taxpayer dollars, to the employees and applicants. This is contrary to the purpose of the Executive Order, which is to ensure that employers who choose to contract with the federal government make affirmative efforts towards equal employment opportunities.(7) The result is more unlawful discrimination and less enforcement of anti-discrimination laws.

Under the current version of the Executive Order, an employer may not discriminate against employees and applicants because of race, color, religion, sex, sexual orientation, gender identity, and national origin.(8). The order includes a religious exemption from the anti-discrimination clauses. The exemption applies to:

  1. a government contractor that is “a religious corporation, association, educational institution, or society”

  2. “with respect to the employment of individuals of a particular religion”

  3. “to perform work connected with the carrying on…of its activities”(9)

The Agency asserts that it will provide greater guidance for employers by expressly defining the following terms: a) religion; b) religious corporation, association, educational institution, society; c) exercise of religion; d) particular religion; and e) sincere.(10) The Agency claims that the definitions are derived from the current state of Title VII caselaw.(11) The Agency’s legal analysis is flawed.

The Executive Order would permit commercial businesses to claim a religious exemption when they apply for government contracts, even where they are admittedly out of compliance with Title VII. Under the Agency’s new definitions, the exemption would apply to an expressly for-profit business, regardless of whether that business is affiliated with any religion, and regardless of whether that business is composed of individuals sharing any single religion, sect, denomination, or other religious tradition.(12) All the employer has to do to qualify is to assert that its business is organized for a religious purpose, to hold itself out as having a religious purpose, and to engage in an exercise of religion, broadly defined, in furtherance of that purpose.(13) There is no Title VII case that permits commercial companies involved in secular, for-profit activity to qualify for religious exemptions to anti-discrimination laws.(14)

The discrimination that for-profit commercial companies would be permitted to engage in while obtaining tax-payer money is excessively broad. “Religion” would include all aspects of religious observance, practice, and belief.(15) As noted above, this belief would not have to be compelled by, or central to, a system of religious belief.(16) The upshot of all these changes is that an employer, whose company makes machinery for a profit, is eligible for consideration as a religious organization. If the religious exemption were granted, the corporation could maintain a government contract to manufacture machinery, while also firing their employees for holding different religious viewpoints than their boss, or even for refusing to attend a sectarian religious sermon.

This scenario is far from hypothetical or outlandish. In Townley, a commercial company that manufactures mining equipment for profit sought a religious exemption from Title VII so that they could require their employees to attend a weekly religious service that had absolutely nothing to do with the manufacture of mining equipment.(17) Had the exemption been granted, the company would not have been required to accommodate any employees who did not want to attend the service. But, primarily because the Townley’s operated a for-profit mining corporation, they did not qualify for the exemption.(18) The court ultimately noted ”[w]e merely hold that the beliefs of the owners and operators of a corporation are simply not enough in themselves to make the corporation “religious” within the meaning of section 702 [of Title VII].”(19)

The Agency is incorrect that the fact that the company was a for-profit corporation was not determinative.(20) The Ninth Circuit noted that the company “encloses Gospel tracts in its outgoing mail, prints Bible verses on its commercial documents (such as invoices and purchase orders), financially supports churches, missionaries, a prison ministry, and Christian radio broadcasts, and, of course, conducts a weekly devotional service. Underlying all these facts, of course, ‘is the discipleship Jake and Helen Townley have for the Lord Jesus Christ.’”(21) Weighing against all this was the fact that “the company is for profit. It produces mining equipment, an admittedly secular product. It is not affiliated with or supported by a church. Its articles of incorporation do not mention any religious purpose.”(22) The Agency seeks to take out from consideration every single factor relied upon by the Ninth Circuit in Townley – non-profit status(23) church affiliation(24) and whether religion is mentioned in the articles of incorporation or other founding documents.(25) The Third Circuit in LeBoon, which the Agency also cited for the proposition that for-profit status has not been dispositive, also expressly noted, “[o]f course the religious organization exemption would not extend to an enterprise involved in a wholly secular and for-profit activity.”(26)

As noted above, religiously affiliated non-profits have been able to fire employees for things such as not believing in the holy trinity,(27) attending a Jews for Jesus concert,(28) dressing too modestly in a nursing home,(29) and getting re-married.(30) These nonprofits did not have to accommodate their employees, despite the fact that the religious differences in question did not place any burden on the employer. Permitting for-profit companies organized for pecuniary interests who wish to contract with the government to fire employees for reasons such as these, or to coerce their employees into sectarian religious practice in order to keep their job, would undermine both Title VII and the Executive Order. In Townley, the Ninth Circuit noted that ”[w]here the practices of employer and employee conflict, as in this case, it is not inappropriate to require the employer, who structures the workplace to a substantial degree, to travel the extra mile in adjusting its free exercise rights, if any, to accommodate the employee’s Title VII rights.”(31) The assertions in Townley and LeBoon, that for-profit corporations who deal in secular products are generally not eligible for religious exemptions to employment antidiscrimination laws, is not even subject to a circuit split. Nevertheless, the proposed rule completely upends this caselaw.

The question of whether an organization is organized for a religious purpose is often easy for courts to ascertain.(32) An example of this cited by the Ninth Circuit is the Church of Jesus Christ of Latter Day Saints.(33) There are times when the question of whether an employer qualifies for a religious exemption is less clear. The opposite end of the spectrum, however, is not a for-profit mining corporation, like in Townley. One example of a court addressing what it believed to be a grey area involves the LeBoon case, where a non-profit Jewish Community Center was alleged to have fired a bookkeeper for being an evangelical Christian.(34) In LeBoon, the Third Circuit was willing to give an extremely broad view of who qualifies for the exemption, and found the community center qualified.(35) Nevertheless, citing Townley, the Court noted that “[o]f course the religious organization exemption would not extend to an enterprise involved in a wholly secular and for-profit activity.”(36)

The Agency draws their test of whether an employer qualifies as a religious association largely from Judge O’Scannlain’s concurrence in World Vision.(37) However, the Agency removes from that test the requirement that the entity in question be a non-profit.(38) Judge O’Scannlain indicated that this inquiry was central to the test itself. He noted, “[t]he initial consideration, whether the entity is a nonprofit, is especially significant” because it “must spend any net earnings to advance its tax-exempt purpose” and “the fact that an entity is structured as a nonprofit provides strong evidence that its purpose is purely nonpecuniary.”(39)

The Agency correctly notes that Judge Kleinfeld, in his concurring opinion in World Vision, would have replaced the nonprofit requirement with a requirement that the entity “not engage primarily or substantially in the exchange of goods or services for money beyond nominal amounts.”(40) The disagreement between Judge O’Scannlain and Judge Kleinfeld was not about whether a for-profit commercial company that produces or sells secular products should qualify for an exemption. Both judges believed they should not. The issue was that Judge Kleinfeld was concerned that for-profit companies can organize as a non-profits for strategic purposes, while behaving no differently than a for-profit that is organized for pecuniary interests.(41) Both Judges wanted to avoid extending religious exemptions to what are essentially for-profit companies with primarily pecuniary interests, the only question was how to best achieve that result.

The Agency also repeatedly cites Hobby Lobby in its notice, for the proposition that it can reject the distinction between a non-profit and a for-profit company when determining whether a company can be recognized as exercising religion.(42) Hobby Lobby is a Religious Freedom Restoration Act (“RFRA”) case, not an employment discrimination case. RFRA protects people from lawmakers who burden religious exercise.(43) It achieves this by going “far beyond what this Court has held is constitutionally required” and subjecting any laws burdening religious exercise to strict scrutiny.(44)

When lawmakers enacted RFRA they did not intend for it to affect Title VII, let alone control Title VII.(45) Under RFRA, the question of whether someone has standing to allege that the government is burdening their religious exercise is the beginning, not the end, of the inquiry. The law in question is then subject to strict scrutiny, and may nevertheless survive.(46) Allowing the question of RFRA standing to dictate whether a company should be granted a religious exemption from the requirements of Title VII, is akin to the Agency asserting that Title VII is not the least restrictive means of achieving a compelling government interest, a conclusion that was not intended by RFRA’s enactment and that no court has come to.

The Agency’s interpretation does not promote religious freedom. Rather, it prioritizes the religious beliefs of employers over those of employees. The interpretation permits employers to obtain an exemption from anti-discrimination laws, which would then permit the employer to fire employees “of a particular religion.”(47) The fact that religion is defined so broadly and subjectively to include any belief, suggests that employers can fire single mothers, women on birth control, people who have remarried, LGBTQ employees, and people who eat shellfish or pork on their lunch break. But even under a strict reading of these terms, what an employer who is eligible for an exemption is allowed to do is to fire an employee for being of a different religion, or to force them to attend sermons as in Townley, or to deny them promotions on the basis of religious differences, even when those differences have no direct connection with the work of the organization. This does not promote religious freedom, it simply prioritizes the religious doctrines and beliefs of the employers over those of the employees.

The Agency’s caselaw interpretation is flawed. As a result, the proposed rule would permit employers seeking government contracts to discriminate beyond what would be permitted under Title VII. It would permit commercial businesses to claim religious exemptions originally intended for churches and other religiously affiliated organizations with expressly religious, rather than pecuniary, missions. It allows corporations contracting with the government to fire protected employees for reasons that have nothing to do with the actual work of the company. This undermines the purposes of the Executive Order, which are 1) to address systemic and long-standing discrimination against employees of certain protected classes such as women and religious minorities; 2) to give the government an active role in ensuring that companies that contract with the government abide by non-discrimination requirements; and 3) to ensure that employers seeking federal contracts make an affirmative effort to abide by their antidiscrimination requirements.

B. The Proposed Rule Promotes Unlawful Discrimination While Pushing the Burden Of Enforcing Anti-Discrimination Laws Against Government Contractors Back Onto Private Parties

Executive Order 11246 reflects the government’s commitment to contracting with employers who abide by antidiscrimination laws. Employers who wish to obtain a government contract must place a non-discrimination notice in conspicuous places, and must expressly state in all employment ads that it will consider employees “without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin.”(48) The contractor must also file Compliance Reports related to the nondiscrimination requirements.(49)

Under the Executive Order, the government can adopt sanctions and penalties against contractors who discriminate. For example, any contractor who does not follow the nondiscrimination requirements may have their contract terminated and be declared ineligible for further contracts.(50) The Secretary of Labor may publish the name of noncomplying contractors.(51) The Secretary may also recommend that the Equal Employment Commission commence Title VII proceedings against the employer.(52)

The Order also provides for government oversight that is not normally present, in the form of compliance reports and evaluations.(53) In addition to their own reporting requirements, the contractors are subject to Standard Compliance Evaluation Reports filled out by Compliance Officers (“COs”).(54) The purpose of this is to “determine if the contractor maintains nondiscriminatory hiring and employment practices and is taking affirmative action to ensure that applicants that are employed and that employees are placed, trained, upgraded, promoted, and otherwise treated during employment without regard to race, color religion, sex, sexual orientation, gender identity, or national origin.”(55) The evaluations include an analysis of trends of minority and female representation in the workforce generally and also by job category.(56) The CO’s evaluation may include the following: whether there are disparities in trends of minority groups, a summary of good faith efforts to promote diversity in hiring, whether there are any other issues with disparities in the workforce that must be resolved, whether employers are following appropriate leave requirements for pregnancy, childbirth, and related medical conditions, whether the employer practices have an adverse impact on the basis of sex, whether the contractor has policies prohibiting discrimination and harassment on the basis of religion and national origin, ensuring accommodation for religious observance and practice, and a number of other pressing employment discrimination issues.(57)

By permitting commercial businesses to claim religious exemptions and still obtain a contract, the government strips the DOL and the OFCCP of all of the above noted tools and incentives to prevent unlawful discrimination among federal contractors. This is contrary to the purpose of the Executive Order, which is to incentivize employers to take affirmative steps to comply with antidiscrimination laws and to ensure the government does not give contracts to noncompliant employers. The onus for ensuring that employers who receive taxpayer money from the federal government do not disregard federal laws should be on the employers seeking taxpayer dollars and the government itself, who has the resources, tools, and incentives at its disposal to root out unlawful discrimination.

C. Conclusion

Gender Justice believes that the Agency’s proposed rule rests on a flawed interpretation of caselaw related to employment discrimination and religious exemptions. Rather than provide clarity to religious organizations, the rule appears to promote unlawful conduct on the part of commercial businesses. The rule undermines the very purpose of the Executive Order, which is to provide the government with tools and incentives to ensure that any employer that chooses to seek out a federal contract abides by the nondiscrimination requirements enacted to protect vulnerable workers. It does all this to the detriment of employees engaged in entirely secular work who are religious minorities, single mothers, women who take birth control, LGBTQ workers, and others who are often the targets of discrimination. We urge the Agency not to adopt the proposed changes to the Executive Order, and to affirm the Agency’s commitment to anti-discrimination protections.



Legal Director, Gender Justice

(1) 84 FR 41677, 41679.

(2) Id.

(3) 29 CFR § 1608.1(b).

(4) Id.

(5) Id.

(6) Id.

(7) Sec. 202, E.O. 11246; 30 F.R. 12319, 12320 (Sept. 28, 1965). See also, 165 Fed. Reg. 219 (Nov. 13, 2000).

(8) Exec. Order 11246 § 202; 41 CF.R. § 60-1.4

(9) Exec. Order 11246 § 204; 41 C.F.R. 60-1.5(5).

(10) 84 F.R. 41677, 41679.

(11) Id.

(12) 84 F.R. 41677, 41690-91.

(13) Id.

(14) Leboon v. Lancaster Jewish Community Ass’n, 503 F.3d 217, 229 (3rd Cir. 2007) (“[o]f course the religious organization exemption would not extend to an enterprise involved in a wholly secular and for-profit activity.”).

(15) 84 F.R. 41677, 41690-91.

(16) Id.

(17) E.E.O.C. v. Townley, 859 F.2d 610 (9th Cir. 1988).

(18) Id. at 619.

(19) Id. At 619.

(20) 84 F.R. 41677, 41683-84.

(21) Townley, 859 F.2d at 619.

(22) Id.

(23) 84 F.R. 41677, 41691 (a religious organization may or may not be nonprofit).

(24) Id. at 41690-91 (a religious organization need not have a place of worship and need not be affiliated with any sect, religion, denomination, or other religious tradition).

(25) Id. at 4168 (noting that a religious purpose can be shown in articles of incorporation or other founding documents, but if none is present, such purpose can also be found elsewhere).

(26) LeBoon v. Lancaster Jewish Center Ass’n, 503 F.3d 217, 229 (3rd Cir. 2007).

(27) Spencer v. World Vision Inc., 633 F.3d 723 (9th Cir. 2011)

(28) LeBoon v. Lancaster Jewish Community Ass’n, 503 F.3d 217 (3rd Cir. 2007)

(29) Kennedy v. St. Joseph’s Ministries, Inc., 657 F.3d 189 (4th Cir. 2011)

(30) Little v. Wuerl, 929 F.2d 944 (3rd Cir. 1991).

(31) Id. At 621.

(32) Spencer v. World Vision, Inc., 633 F.3d 723, 726 (9th Cir. 2011) (O’Scannlain, J., concurring) (“[t]ypically, the question of whether an organization is religious for purposes of section 2000e-1 [of Title VII] warrants little analysis. In most cases, the organization seeking the exemption is ‘clearly’ religious, and the result is straight forward.”).

(33) Id.

(34) LeBoon v. Lancaster Jewish Community Center Ass’n, 503 F.3d 217 (3rd Cir. 2007).

(35) Id. at 229-230 (noting that a religious non-profit organization does not give up a religious exemption by also engaging in secular activities, that the organization in question need not adhere absolutely to the strictest tenets of the faith, and that the organization need not enforce an across-the-board policy of hiring only co-religionists, to qualify for the exemption).

(36) Id. at 229, citing E.E.O.C. v. Townley Engineering & Mfg. Co., 859 F.2d 610 (9th Cir. 1988).

(37) 84 F.R. 41677, 41682.

(38) Id. at 41683-84.

39 World Vision, 633 F.3d at 734-35, (O’Scannlain, J., concurring).

(40) 84 F.R. 41677, 41684 citing World Vision, 633 F.3d at 748 (Kleinfeld, J., concurring).

(41) World Vision, 633 F.3d at 745-46 (Kleinfeld, J., concurring) (citing as an example that hospitals have a history of refusing to hire Jewish Doctors, and a hospital may organize itself as a nonprofit while still charging market rate and paying high salaries, and could then claim an exemption to discriminate against Jewish doctors simply to indulge in the bigotry of a hiring physician).

(42) 84 F.R. 41677, 41684.

(43) 42 U.S.C. § 2000bb.

(44) Burwell v. Hobby Lobby, 573 U.S. 682, 705 (2014).

(45) H.R. Rep. 103-88 (“[n]othing in this bill shall be construed as affecting Title VII of the Civil Rights Act of 1964.”).

(46) 42 U.S.C. § 2000bb-1.

(47) E.O. 11246 § 204.

(48) E.O. 11246 § 202.

(49) Id. at § 203.

(50) Id. at § 209.

(51) Id.

(52) Id.

(53) 41 CFR 60-1.20.

(54) Id.

(55) Id.

(56) Federal Contract Compliance Manual, Oct. 2014

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