Labor Dept. Moves to Expand Religion Exemption for Hiring and Firing

The Labor Department has proposed a rule that would allow more federal contractors to base employment decisions on religion, a move that rights advocates said could be used to discriminate against workers for all manner of reasons.

The proposal, announced on Wednesday, seeks “to provide the broadest protection of religious exercise recognized by the Constitution and other laws,” the Labor Department said in a statement. It applies to a wide variety of organizations and companies that claim a religious goal as part of their mission.

Naomi Goldberg, policy research director of the Movement Advancement Project, a think tank focused on equal rights for gay, lesbian, bisexual and transgender people, said the “proposed rule would permit taxpayer-funded discrimination.”

“Examples of the type of discrimination this action condones include firing unmarried pregnant workers, workers who may not be coreligionists or who can’t sign a statement of faith, unmarried cohabiting workers and L.G.B.T. workers,” Ms. Goldberg said.

In addition to this rule, the Trump administration is challenging other protections for gay and transgender workers. In three cases the Supreme Court will hear this fall, the administration is arguing that federal civil rights law does not prohibit employers from discriminating against such workers. The Equal Employment Opportunity Commission had previously ruled that such discrimination is illegal.

Religious nonprofit organizations that receive federal contracts are currently exempt from rules covering other contractors that prevent religious discrimination. For example, a social services agency with a Jewish affiliation that receives a federal contract to feed disadvantaged children can insist on hiring a rabbi to oversee preparation of kosher food.

The proposed rule appears to expand the scope of hiring and firing decisions in which contractors can invoke their religious tenets. While it was previously unclear if an agency that receives a federal contract could insist on hiring a Jewish janitor, the proposed rule appears to resolve that question in favor of the employer.

The proposed rule would also extend the ability to discriminate in hiring and firing to all federal contractors, not just nonprofits, that identify their mission as including a religious purpose and practicing religion to advance that purpose.

Under this definition, a privately held, for-profit company like Hobby Lobby, the arts and crafts chain whose owners have said they have sought to organize the company around their Christian beliefs, could refuse to hire a gay manager without risking the loss of a federal contract, which would normally preclude such discrimination.

The public has 30 days to comment on the proposed rule, after which the department can issue a final version. Many advocates said they would expect a variety of legal challenges if it is enacted.

Luke Goodrich, vice president and senior counsel of the Becket Fund for Religious Liberty, which advocates for the rights of people to express their religious faith, said the order was necessary to better align the religious exemption that exists for federal contractors with the broader exemption for religious organizations that exists under federal civil rights law. Under current law, a religious organization that is not a contractor could refuse to hire workers who do not share certain religious beliefs.

Thousands of companies have federal contracts, for food and information technology services, the provision of furniture and military equipment, and much more.

Holly Hollman, general counsel of the Baptist Joint Committee for Religious Freedom, a group that opposes government-funded religion, said the rule would not override state laws intended to protect certain workers, which typically have primacy over federal rules.

In explaining the purpose of the rule, the Labor Department said some religious organizations had indicated they were hesitant to apply for federal contracts because they were unsure if the existing religious exemption applied to them.

“As people of faith with deeply held religious beliefs are making decisions on whether to participate in federal contracting, they deserve clear understanding of their obligations and protections under the law,” Patrick Pizzella, the acting labor secretary, said in a statement.

But Patricia A. Shiu, who ran the federal office that oversees compliance for federal contractors under President Barack Obama, said no contractors or prospective contractors had expressed such concerns during her more than seven years in the job.

In 2014, Mr. Obama signed an executive order prohibiting contractors from discriminating on the basis of sexual orientation or gender identity, which was not forbidden by existing federal civil rights law. Ms. Shiu said she worried that the new rule could help employers evade that rule, but also that it would go much further in eroding civil rights protections.

“My breath is taken away by the scope of this,” she said.

Jennifer C. Pizer, the law and policy director of Lambda Legal, an L.G.B.T. advocacy group, said the law had long held that the government could not deny public benefits to people who may have discriminatory views — such as Christians who assert that their religious beliefs forbid homosexual relationships. But organizations have no similar entitlement to federal contracts.

Historically, Ms. Pizer said, “if you want to work for the public, with public money, you have to be willing to employ the public.”

“This proposed rule erases that distinction,” she added.