On August 10, 2018, Craig Leen, Acting Director of the Department of Labor’s Office of Federal Contract Compliance Programs (OFCCP), issued a new directive, 2018-03, instructing staff to take into account in their affirmative action and equal employment opportunity enforcement activities recent Supreme Court opinions and Trump administration executive orders addressing the freedoms and anti-discrimination protections that must be afforded religion-exercising organizations and individuals under the United States Constitution and federal law.

Background

Executive Order 11246 requires federal contractors to take affirmative steps to ensure equal opportunity in employment for all people without regard to race, color, religion, sex, sexual orientation, gender identity, or national origin.  The requirements of the executive order are implemented and enforced by the OFCCP.

As noted in the directive, certain requirements under the executive order do 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 executive order also provides that “[s]uch contractors and subcontractors are not exempted or excused from complying with the other requirements contained in this Order.”¹ 

Executive orders issued in 2017 and 2018 have further expressed the Trump administration’s understanding of entities’ free expression of religion.² In addition, recent Supreme Court decisions have interpreted expansively the rights of U.S. organizations to express religion under the United States Constitution and federal law.  In Masterpiece Cakeshop v. Colorado Civil Rights Commission, the Court held that the government unlawfully restricted a cake shop owner’s right to the free exercise of religion when it did not give “neutral and respectful” consideration of the owner’s religious objections to designing a wedding cake for a same-sex couple.  In Trinity Lutheran Church of Columbia, Inc. v. Comer, the Court determined that the Missouri State government violated a parochial school’s religious rights by denying it a grant for playground resurfacing while providing grants to similarly situated non-religious schools.  In Burwell v. Hobby Lobby Stores, Inc., the Supreme Court held that closely held for-profit corporations are also afforded the constitutional right to religious freedom.

Directive 2018-03’s Instructions to OFCCP Staff

In light of these developments in federal law and policy statements in recent executive orders, OFCCP’s Directive 2018-03 instructs staff to bear in mind the following when undertaking their enforcement activities, including when providing compliance assistance, processing complaints, and enforcing Executive Order 11246. 

• First, pursuant to Masterpiece Cakeshop, agency staff “cannot act in a manner that passes judgment upon or presupposes the illegitimacy of religious beliefs and practices” and “must proceed in a manner neutral toward and tolerant of religious beliefs.” 
• Second, they must not, under Trinity Lutheran, condition opportunities (such as federal contracts) upon an organization’s willingness to surrender its religious focus. 
• Third, consistent with Hobby Lobby, the OFCCP must comply with the Religious Freedom Restoration Act when seeking to restrict the activities of a for-profit closely held corporation, meaning facially neutral laws must not unduly burden the exercise of religion. 
• Fourth, OFCCP staff must permit faith-based organizations equal opportunity to compete for federal contracts.
• Fifth, they must allow for individuals’ and entities’ free expression of religion without fear of discrimination or retaliation by the federal government.

Practical Implications for Contractors

Directive 2018-03 provides some indication of the OFCCP’s interpretation of recent case law addressing the expression of religious freedom under the U.S. Constitution and federal law.  However, it may have limited practical significance for federal contractors.

Most federal contractors are not closely held for-profit corporations whose actions are driven by a strongly held religious belief, as would be required for application of the Hobby Lobby doctrine.  For such contractors and subcontractors, this directive should have little to no meaningful impact.

Likewise, federal contractors seeking to express religious belief or affiliation can expect limited practical effect from the directive, even though it supersedes previous guidance from the agency that was inconsistent with these recent legal developments.

As a result, contractors should act upon Directive 2018-03’s mandates with caution.  Specifically, contractors whose employment practices are guided, in part, by religious belief should:

• Continue to comply with federal, state, and local laws prohibiting discrimination and employment and requiring affirmative action to ensure equal employment opportunity;
• Understand the grave risks that exist from public backlash to policies that may be characterized as running afoul of existing laws against discrimination;
• Carefully consider whether corporate documents and practices actually make the contractor a closely held entity with sincerely held religious beliefs akin to the plaintiffs in Hobby Lobby;
• Understand the state of the law remains ambiguous for religious objections to OFCCP mandates other than those expressly addressed in such cases as Masterpiece Cakeshop and Hobby Lobby;
• Continue to monitor legal developments and OFCCP guidance; and
• Consult counsel regarding any OFCCP investigation into religiously-based practices or policies, as well as any charges of religious discrimination or failure to accommodate that employees may file.