On March 1, 2023, the Office of Federal Contract Compliance Programs (OFCCP) published a Final Rule rescinding a prior rule the agency published late in the Trump administration that broadened the scope of Executive Order 11246’s religious exemption. As a result of the new rule, fewer federal contractors or subcontractors will likely qualify for the religious exemption, and the scope of conduct exempted from Executive Order 11246’s anti-discrimination requirement will likely be reduced.

Since the Bush 43 administration, Executive Order 11246 and OFCCP’s implementing regulations have provided that the Equal Employment Opportunity clause required by Executive Order 11246 would not apply to “a Government contractor or subcontractor that is a religious corporation, association, educational institution, or society, with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities.”  

The 2020 rule provided definitions of the terms “religion,” “particular religion,” “religious corporation, association, educational institution, or society,” and “sincere” that arguably broadened the scope of the exemption beyond the corresponding exemption in Title VII of the Civil Rights Act. The 2020 rule also provided that OFCCP’s should be construed in favor of broad protection of religious exercise.

With the 2020 rule’s definitions, and the broad construction provision now eliminated, the interpretation of the religious exemption reverts back to Title VII standards. 

This will likely make it more difficult for some organizations (particularly those that are for-profit) to claim the exemption. In addition, there will likely be less protection for actions taken based on religion-adjacent tenets, as opposed to membership in a particular sect.  

The practical effect of the 2020 rule was limited, and the effect of its rescission will likely also be limited. Religious contractors remain subject to Executive Order 11246’s other requirements, such as its affirmative action obligations. In addition, contractors are also covered by other federal, state, and local laws prohibiting discrimination on the basis of religion.

Federal contractors who wish to consider religious factors in making personnel decisions should work carefully with legal counsel to evaluate their status as a religious entity under the exemption’s new scope and other applicable laws and ensure the religious nature of each position is well documented in order to lessen the risk of discrimination claims in making religion-influenced personnel decisions.