Legal Updates

Federal Court Finds Exception To Title VII For "Religious" Businesses

Recently, a U.S. District Court in the 5th Circuit ruled that Title VII of the Civil Rights Act of 1964 (“Title VII”) does not prohibit a for-profit business from discriminating against employees based on their LGBTQ+ status, where such discrimination stems from the business’s sincerely-held religious beliefs.

The District Court’s ruling, in Bear Creek Bible Mgmt. v. EEOC, raises important questions as to Title VII’s reach in the context of sexual orientation and gender identity and expression, particularly in view of a recent U.S. Supreme Court decision extending Title VII to those categories. As such, this issue is almost certain to be the subject of future decisions by other courts.

Background

In recent years, the intersection of, and conflict between, the protections that anti-discrimination laws grant employees and the rights that privately-held businesses have to act based on their owners’ sincerely-held religious beliefs have spawned a great deal of litigation.

Two years ago, in the landmark decision Bostock v. Clayton County, Georgia, the Supreme Court held that under Title VII (the federal law that, in part, prohibits employers from discriminating against an individual “because of” the individual’s sex), it is unlawful for an employer to fire or otherwise discriminate against an individual due to that individual’s sexual orientation or gender identity.

The Bostock decision cited Title VII’s language protecting employees from employment discrimination that occurs “because of” or “on the basis of” an individual’s race, color, religion, sex or national origin. In Bostock, the Court found that if an employee experiences an adverse employment action because of his or her sexual orientation or gender identity, then that action is, by implication, occurring “because of” the employee’s sex.

In support of its holding, the Bostock Court reasoned that if the employee were of the opposite sex, there presumably would have been no such adverse action. For example, if an employer discriminates against a male employee for being sexually attracted to other men, the employer is implicitly discriminating against that employee based on the employee’s sex, because a similarly-situated female employee would not face an adverse employment action for being sexually attracted to men.

The Bostock decision signaled a major shift in civil rights jurisprudence as it relates to LGBTQ+ issues in employment law. However, the Supreme Court’s opinion stressed that the decision should be read narrowly, as applying only to Title VII, and that it did not affect laws concerning other related and hotly debated topics such as sex-segregated bathrooms and locker rooms, or dress codes.

Further limiting the potential reach of Bostock is the fact that Supreme Court jurisprudence has traditionally limited the extent to which certain civil rights protections can be enforced against religiously affiliated organizations, recognizing robust exceptions based on the First Amendment. For example, in decisions such as Our Lady of Guadalupe Sch. v. Morrissey-Berru, which was decided in 2020, the Supreme Court has recognized a “ministerial exception” implicit in the First Amendment’s Establishment Clause and Free Exercise Clause. The ministerial exception exempts religious groups from anti-discrimination laws in their employment of ministers or other employees who carry out religious functions.

Additionally, in its 2012 Burwell v. Hobby Lobby Stores, Inc. decision, the Supreme Court held that such First Amendment protections can extend to for-profit employers. Based on the religious beliefs of the company’s owners, the Court concluded that the federal Religious Freedom Restoration Act of 1993 allowed Hobby Lobby to deny its employees health coverage for contraception – coverage to which the employees would otherwise be entitled under federal law. Hobby Lobby thus reinforced the principle that under certain circumstances, employers may base employment decisions on their religious beliefs, even if those beliefs conflict with other laws designed to protect employees.

The 2021 Bear Creek Decision

The recent Bear Creek decision is the latest key federal case exploring the tension between the civil rights of LGBTQ+ employees and the First Amendment rights of employers.

The case, from the Northern District of Texas, involved a group of for-profit employers (including Braidwood Management Inc. (“Braidwood”)) that operate Christian healthcare businesses, Bear Creek Bible Church, and other religious non-profits. These plaintiffs filed suit against the United States Equal Employment Opportunity Commission (“EEOC”) seeking declarations that the First Amendment and the Religious Freedom Restoration Act allowed them to be shielded from enforcement of Title VII’s anti-discrimination provisions for refusing to hire, or taking adverse action against, an employee whose sexual behavior or gender identity conflicted with the employer’s sincerely-held religious belief. The case did not revolve around an actual firing or adverse employment action, but rather was the result of the plaintiffs’ seeking a declaratory judgment that their policies regarding homosexual, bisexual, or transgender employees were exempted from Title VII’s anti-discrimination provisions.

The District Court held not only that religious non-profits like Bear Creek Bible Church were protected by the ministerial exception, but also that a for-profit business like Braidwood could avoid being bound by Title VII’s LGBQT+ anti-bias prohibitions as long as the employer had a sincerely-held religious belief that the actions of the employees in question were immoral.

The court found that the EEOC’s argument that the federal government had a compelling interest in ending all forms of discrimination was undercut by the fact that Title VII includes specific “secular” exemptions. For example, Title VII does not apply to businesses with fewer than 15 employees. Therefore, the court concluded, the government must allow for “religious” exemptions as well.

Notably, the District Court also made a distinction between discrimination against an employee based purely on his or her status (e.g., identifying as a homosexual) and discrimination based on an individual’s conduct that conflicts with the employer’s sincerely-held religious belief. It is unclear, then, whether the court’s holding would apply to an employer who took an adverse employment action against an employee who identified as homosexual but also as celibate.

Implications For Employers

The Bear Creek decision is currently being appealed and could eventually make it to the Supreme Court. In the meantime, other federal courts presented with similar questions may well reach the opposite conclusion, in light of Bostock and other recent court decisions upholding the rights of LGBTQ+ employees.

The parts of the Bear Creek holding concerning churches and other religiously-affiliated non-profits seem most likely to be upheld, in light of the well-established “ministerial exception.” Conversely, the Texas federal court’s extension of the Hobby Lobby holding to Title VII appears much more tenuous.

We are continuing to monitor developments in this area of the law closely. In the meantime, if you have any questions about the Bear Creek decision, or about any other issue relating to Title VII or other anti-discrimination laws, please contact one of our experienced labor and employment attorneys.