Obama Issues Order Banning LGBT Bias, Declines Call to Expand Religious Exemption

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By Chris Opfer    

July 21 --President Barack Obama July 21 issued an executive order banning sexual orientation and gender identity discrimination by federal contractors, while resisting calls to carve out an exemption for religion-affiliated employers.

“America's federal contracts should not subsidize discrimination against the American people,” Obama said shortly before signing the order.

The move amends two existing executive orders, first by adding sexual orientation and gender identity to the list of classes protected from employment discrimination under Executive Order 11,246, which applies to federal contractors. It also amends Executive Order 11,478 to explicitly prohibit gender identity discrimination by federal government agencies for the first time.

The contractor order is expected to go into effect in early 2015, after the Labor Department's Office of Federal Contract Compliance Programs issues implementing regulations. The ban on gender identity bias by federal agencies is effective immediately.

Despite recent pressure from faith leaders, the contractor provisions don't include an exemption allowing religion-affiliated employers to make hiring and other decisions based on workers' sexual orientation or gender identity. However, these employers will continue to be permitted to take workers' religious beliefs into account in making certain employment decisions.

“Wanted was a way to balance the rights of religious identity with the clear moral obligation to end discrimination based on orientation,” Stephen Schneck, the director of Catholic University's Institute for Policy Research & Catholic Studies, told Bloomberg BNA via e-mail July 21. “The executive order does not offer the nuanced exemption for religious positions that was sought.”

A total of 20 states and the District of Columbia currently prohibit employment discrimination based on sexual orientation, according to the American Civil Liberties Union. Of those, 17 states--and D.C.--also ban gender identity bias in the workplace.

Religious Issue Leaves 'Details to Litigation.'

Schneck was among 14 faith leaders, including many with ties to the White House, who sent a letter to the president in early June urging him to exempt religion-affiliated companies, educational institutions, and other organizations from any ban on LGBT discrimination .

The group said it hoped Obama would include a provision similar to that set forth in the Employment Nondiscrimination Act (S. 815), a bill that would have banned sexual orientation and gender identity bias in the workplace generally, but stalled in the Republican-controlled House after passing in the Senate last year. Earlier this month, the ACLU and Lambda Legal joined three other LGBT rights groups in withdrawing their support for ENDA over opposition to its exemption for religion-affiliated employers.

Schneck and Catholic Charities USA President Rev. Larry Snyder told Bloomberg BNA they were pleased the executive order retains an existing exemption for religion-affiliated employers that allows them to make certain hiring decisions based on a worker's religious beliefs. The exemption was created by President George W. Bush via executive order in 2002.

“Specifically, we are pleased that the religious exemption in this Executive Order ensures that those positions within Catholic Charities USA that are entrusted with maintaining our Catholic identity are to be held exempt,” Snyder said in an e-mail.

Religious groups are also given leeway under the so-called “ministerial exception” to make hiring, firing and other employment decisions related to clergy members. Schneck said the extent of those exemptions as they apply to the new order may very well be tested in court.

OFCCP's jurisdiction to enforce the new order and other contracting requirements with respect to subcontractors remains “very unsettled,” Littler Mendelson shareholder Alissa Horvitz said.

Schneck said the order “leaves details to litigation.”

“I think the courts will ultimately have to decide how Obama's and Bush's respective executive orders will fit together,” he added. “Nevertheless, with the future help of the courts, the administration has left open a path that religious groups can work with and wins real progress against LGBT discrimination.”

The executive order comes less than a month after the U.S. Supreme Court ruled that an Affordable Care Act provision requiring employers to pay for certain forms of contraception for workers violated the Religious Freedom Restoration Act as applied to closely held corporations (Burwell v. Hobby Lobby Stores Inc., 2014 BL 180313, 123 FEP Cases 621 (2014); . That ruling left open the question of whether certain corporations can challenge other legal requirements based on religious opposition.

Civil rights advocates and labor organizations largely praised Obama for taking unilateral action to protect LGBT workers. They also repeated calls for Congress to pass federal legislation to protect all employees from sexual orientation and gender identity discrimination.

“We are deeply grateful to President Obama for continuing his administration's sensible, principled progress toward full equality, inclusion and respect for the contributions made every day by LGBT Americans,” Lambda Legal workplace fairness strategist Greg Nevins said in a statement. “We now will continue working closely with the Administration and congressional leaders to pass legislation that follows President Obama's lead.”

Government Worker Protections Also Expanded

The new order also adds gender identity to the list of classes protected from discrimination in federal workplaces under EO 11,478. Originally issued by President Richard Nixon in 1969, the order was amended by President Bill Clinton nearly 29 years later to protect federal workers from discrimination based on sexual orientation.

The Equal Employment Opportunity Commission has previously asserted that gender bias is already banned by Title VII of the 1964 Civil Rights Act and other federal discrimination laws. For contractors, Obama's order makes the prohibition explicit.

The National Treasury Employees Union issued a statement in support of the move shortly after the president signed the order. “NTEU has long believed that the federal government should be a model employer, and this action by the White House is another step in that direction,” union president Colleen M. Kelley said.

Small Contractors Likely to See Biggest Impact

Alissa Horvitz, a Littler Mendelson shareholder and co-chair of the firm's OFCCP practice group, said the order is likely to have the biggest impact on smaller contractors that operate in states where sexual orientation and gender identity discrimination isn't currently prohibited and that aren't subject to OFCCP affirmative action and reporting requirements.

OFCCP affirmative action obligations concerning the hiring of minority and disabled workers and military veterans apply only to contractors that do at least $50,000 worth of business with the government and employ at least 50 or 100 workers, respectively. It appears that the sexual orientation and gender identity discrimination bans, like the general prohibitions on race, sex, religion and national origin bias under EO 11,246, will apply to all contractors with 10 or more employees.

“This looks like it will affect government contractors at a very, very low threshold and no employee number,” Horvitz told Bloomberg BNA July 21. “A lot of companies that aren't familiar with the nondiscrimination laws will have to revise their policies.”

Horvitz also said the OFCCP's jurisdiction to enforce the new order and other contracting requirements with respect to subcontractors remains “very unsettled.”

“We definitely hear a lot from our client base about how difficult it is to know whether every supplier and contractor is subject to OFCCP requirements,” she said.

Affected employers will get a chance to comment on regulations implementing the new order before they become final. Horvitz said it's unclear whether the OFCCP will hold a “listening session” or similar event to get feedback from contractors.

“I think we should give the Department of Labor the opportunity to write its proposed rule,” Horvitz said. “The more input they seek from contractors, the better.”

To contact the reporter on this story: Chris Opfer in Washington at copfer@bna.com  

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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