Keeping the Faith: Faith-Based Employers Get a Boost from the U.S. Government

December 21, 2020

On December 14, 2020, several departments of the United States government announced a Joint Final Rule Regarding Equal Treatment of Faith-Based Organizations in Department of Labor-Supported Social Service Programs, which be found at 29 C.F.R. § 2.30, et seq. The enactment of the Rule is the culmination of efforts to implement President Trump’s Executive Order 13831 on the Establishment of a White House Faith and Opportunity Initiative (May 3, 2018). The proposed Rule was published on January 17, 2020 and was held open for public comment until February 18, 2020. During the comment period, the nine involved agencies received over 95,000 public comments. The stated goal of the Rule is to “promote and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions, advance opportunities for profitable employment; and assure work-related benefits and rights.”

While the goals of the Rule seem honorable and consistent with the First Amendment, the Rule leaves several questions unanswered as to the effect it will have on enforcement of Title VII and Title IX with respect religious employers. During the comment period, groups such as the ACLU voiced serious concerns that the proposed Rule will allow faith-based employers to circumvent employee protections where Congress has previously refused to defer to the faith-based interests of the employer over the employee. Similarly, one commenter raised concerns over faith-based housing owners participating in HUD programs discriminating against recipients and imposing upon the recipients’ religious beliefs. The proposed Rule carves out what some say is a unnecessary and redundant specific regulatory requirement to treat religious organizations the same as any other organization seeking DOL support or to participate in federally funded programs.

Unfortunately for employers, the new Rule does not clarify the delicate interplay between employer and employee rights under the First Amendment, Title VII, or Title IX. The Rule does not explain whether an employer can rely upon its own religious beliefs to take adverse employment action against an employee without violating Title VII or the Establishment Clause if it accepts federal funds. The regulation is also unclear as to an organization’s Title VII exemption status when receiving federal funds directly or indirectly. This rule could give more legal support to employers’ previous arguments that their religious freedoms may be violated by being required to comply with Title VII. Even less clear is the federal government’s power to intervene in or deter potential constitutional or criminal violations committed by a religious organization under the veil of religious beliefs when the organization received federal funding.

It is likely that this regulation will be amended or end up being a toothless administrative placebo for religious organizations. It is anticipated that the Biden Administration will make changes to many of the federal departments and regulation to be refocused on employees and recipients of social services and be less inclined to defer to organizational rights over individual rights. While this regulation could provide legal support for actions by religious organizations vying for participation in federal programs, it could also serve as a shield for religious organizations in discriminatory conduct against employees.

One of the first tests under this new rule could come in a case in the Seventh Circuit captioned Starkey v. Roman Catholic Archdiocese of Indianapolis, 20-3265 (7th Cir. 2020). In that case, a guidance counselor sued the Roman Catholic Archdiocese of Indianapolis for firing her after she disclosed that she was married to a woman. The Archdiocese has asked the Seventh Circuit to intervene after the District Court Judge rejected the bulk of its religious liberty defenses and teed the case up for trial. While it is likely the appeal will be dismissed for  as premature, it will present one of the first major test cases under the new Rule and provide insight as to how the courts, and specifically the Seventh Circuit, will rule if the case makes its way back to the appellate level. We will continue to monitor and keep you updated of any changes or case law under the new Rule.

The information contained in this publication should not be construed as legal or medical advice, is not a substitute for legal counsel or medical consultation, and should not be relied on as such.