Religious Exemptions for Federal Contractors Returned to Long-Standing Rule


Federal Contractors Subject to OFCCP Rules


March 31, 2023



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Quick Look

  • OFCCP returns to longstanding rules for determining who qualifies for a religious exemption to anti-discrimination obligations.
  • Religious exemption still does not permit discrimination on the basis of race, color, sex, sexual orientation, gender identity, or national origin, even if the discrimination is religiously motivated.


The Office of Federal Contract Compliance Programs (OFCCP) recently rescinded a 2021 Trump Administration rule, implementing Directive 2018-03, that provided a faith-based carve-out exempting federal contractors from compliance with certain anti-discrimination obligations. Previously, there was already an exemption for religious employers, including religious educational institutions, from certain anti-discrimination obligations applicable for employees performing religious activities when addressing their terms and conditions of employment.

Directive 2018-03 had expanded “religion” to include “all aspects of religious observance and practice.” Even for-profit businesses “infused with a religious purpose” could qualify as a religious organization entitled to exemption under the rule. It also expanded protection of religious exercise “to the maximum extent permitted by the U.S. Constitution and law.”

Following opposition to the last rule, and to maintain clarity around the religious exemption, the current Administration rescinded the 2021 rule. This means that the OFCCP’s longstanding practice of using a nine-factor test to determine whether an employer qualifies for the religious exemption has been reinstated. The U.S. Department of Labor highlighted that the rule’s rescission still maintains the religious exemption. Employers should note that the OFCCP’s long-established view “that the exemption does not permit qualifying employers to discriminate on the basis of race, color, sex, sexual orientation, gender identity, or national origin, even if such discrimination is religiously motivated,” has also been reinstated.


Action Items

  1. Review the Department of Labor’s guidance here.
  2. Have appropriate personnel trained on discipline in the workplace.
  3. Review the religious exemption with legal counsel.
  4. Subscribers can call our HR On-Call Hotline at (888) 378-2456 for further assistance.


Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2023 ManagEase