May nonprofits and business employers make faith-based employment decisions involving individuals’ sexual orientation and gender identity (“SOGI”)? Or do these decisions, such as hiring and firing workers, run afoul of Title VII and its analogous state and local employment discrimination laws? A recently issued appellate ruling in Braidwood Management, Inc., et al. v. EEOC expands on the U.S. Supreme Court’s 2020 Bostock v. Clayton City decision, clarifying the tension that can exist between employment discrimination laws and religious freedom protections for private employers under the Religious Freedom Restoration Act (“RFRA”). RFRA requires the government to prove that any burden on employers’ religious interests – such as arising from SOGI anti-discrimination laws – is outweighed by a “compelling governmental interest” and with such burden constituting “the least restrictive means of furthering” the government’s compelling interest. The resulting implications for both nonprofit and for-profit religious employers are significant because the ruling limits the government’s ability to enforce SOGI-related prohibitions on faith-based employment decisions. The Braidwood court ruling briefly addresses churches and similar religious organizations’ legal rights, but only under a categorical statutory exemption under Title VII.
Legal Background – Bostock and “Sex” Defined
Bostock involved a consolidated trio of SOGI-employment discrimination claims from various lower federal courts. In that ruling, the U.S. Supreme Court expanded the term “sex” for purposes of employment discrimination to include SOGI, ruling that employers unlawfully discriminate under Title VII when they take adverse employment action based on employees’ SOGI.[1] The Court expressed “deep[] concern[],” however, “with preserving the promise of the free exercise of religion enshrined in our Constitution.” The Court thus indicated that the result might have been different if the employers had asserted infringement on their religious convictions. Indeed, the Court left open the possibility that RFRA might “supersede Title VII’s commands in appropriate cases.” This statement left significant uncertainty for many employers, attorneys, and legal scholars as to the proper legal framework for balancing religious liberty and employment discrimination interests involving faith-based employers.
Fifth Circuit’s Braidwood Management Ruling
Following Bostock, various employers filed declaratory judgment lawsuits against the Equal Employment Opportunity Commission (“EEOC”), the federal government agency charged with upholding federal employment discrimination laws. (The EEOC may initiate litigation directly against employers, in addition to receiving and processing claims filed by individual employees.) The legal argument in these cases was essentially that such employers should be allowed to conduct their activities pursuant to their sincerely held religious beliefs including sexuality and SOGI-related considerations. The declaratory judgment framework was to seek preemptive rulings for employers’ decisions and to eliminate resulting liability such as through an EEOC enforcement action.
One of those cases made its way to the Fifth Circuit Court of Appeals, which provides appellate review of cases brought in the United States District Courts of Louisiana, Mississippi, and Texas. On June 20, 2023, that court issued its decision in Braidwood Management, Inc., et al. v. EEOC, et al.[2] The court ruling addresses Braidwood’s religious liberty argument – namely, that SOGI-related enforcement of Title VII would violate Braidwood’s religious freedom rights in contravention of RFRA.
Braidwood Management, Inc. is a management company that employs workers of several wellness-related companies. The companies are Christian businesses and do not hire individuals whose actions directly oppose Christian orthodoxy, such as engaging in what they view as sexually immoral or gender non-conforming conduct. More specifically, as the appellate court noted, Braidwood does not “employ individuals who engage in behavior considered sexually immoral or gender non-conforming,” nor is “Braidwood [allowed] to recognize homosexual marriage. Braidwood also “enforces a sex-specific dress code that disallows gender non-conforming behavior.”[3] Notably, all such requirements are pursuant to the direction of one person who owns or controls Braidwood and its related businesses.
On appeal to the Fifth Circuit, the court analyzed Braidwood’s claims under RFRA’s balancing framework that “the federal government ‘shall not substantially burden a person’s exercise of religion’ unless the burden furthers a ‘compelling governmental interest’ and is ‘the least restrictive means of furthering’ that interest.”[4] The EEOC did not challenge the sincerity of the religious beliefs underlying Braidwood’s employment practices. Braidwood was consequently only required to initially demonstrate that post-Bostock Title VII’s “sex” prohibition – as now covering SOGI too – would substantially burden its religion liberty interests. As the court recognized, such a burden exists when a law “operates so as to make the practice of…religious beliefs more expensive in the context of business activities . . . .”[5] The Braidwood trial court had found this burden to exist when an employer is “required to choose between two untenable alternatives: either (1) violate Title VII and obey their convictions; or (2) obey Title VII and violate their convictions.” The Fifth Circuit agreed, concluding that “[b]eing forced to employ someone to represent the company who behaves in a manner directly violative of the company’s convictions is a substantial burden and inhibits the practice of Braidwood’s beliefs.”
Proceeding further through its RFRA analysis, the Fifth Circuit found the EEOC’s “compelling interest” and “restrictive means” rebuttals unpersuasive. The EEOC argued that the government has a compelling interest in preventing workplace discrimination based on sexual orientation and gender identity just as much as it has in preventing workplace discrimination based on race. But the Fifth Circuit did not accept this extension of the law, since the U.S. Supreme Court has not made the determination that preventing businesses from SOGI-related employment decisions, alone, presents a government interest that is compelling enough to override religious liberty interests. That is especially so, given the Supreme Court’s explicit reference to RFRA in Bostock. The Fifth Circuit also rejected the EEOC’s argument that “forcing [Braidwood] to hire and endorse the views of employees with opposing religious and moral views is not the least restrictive means of promoting” the government’s interest as posed by the EEOC. Under RFRA’s balancing test, the employer thus prevailed.
Bear Creek Religious Freedom Claim Too
Bear Creek Bible Church also sought a declaratory judgment and pursued an appeal to the Fifth Circuit, like Braidwood. But the trial court concluded that Bear Creek was statutorily exempt from Title VII,[6] based on its status as a church and therefore dismissed its claim. Bear Creek appealed, but neither it nor the EEOC appealed the court’s statutory exemption ruling. Accordingly, the Fifth Circuit declined to rule or comment on the lower court’s application of Title VII’s statutory exemption to Bear Creek as a church.
Additional implications may be involved with respect to a church or other house of worship’s employment decisions, such as the applicability of the “ministerial exception” and church autonomy doctrine, which essentially prevent courts from intervening in employment-related disputes involving religious workers.[7] Here, however, we will continue focusing on employers other than churches, synagogues, mosques, temples, and the like, through the Braidwood decision and its impact.
Employer Takeaways
Although Braidwood is controlling law only in the Fifth Circuit, it is the first post-Bostock federal appellate decision providing guidance on RFRA’s available protections to employers with sincerely held religious beliefs related to SOGI. Employers – both nonprofit and business – should thus consider such RFRA-related protections in connection with any SOGI-related potential liability areas involving applicants and employees.
In particular, employers desiring such religious liberty protection should clearly articulate that such religious beliefs are “sincerely held.” For nonprofit employers, such beliefs may be reflected as follows:
(1) bylaws, such as a statement of faith contained therein and a related director qualification standard;
(2) governance policies, such as a religiously oriented dispute resolution policy;
(3) employee handbook provisions supported by scriptural references that convey beliefs regarding employee conduct, which may specifically address sexual activity, marriage, and gender;
(4) requirements that employees affirm and agree to religious standards (including sexuality), such as in any employee contracts and via written handbook acknowledgments;
(5) external representations including the nonprofit’s website, program materials, and signage;
(6) internal protocols such as corporate prayer and other religious activities; and
(7) operational compliance with such requirements and standards, including employment-related activities.
On this last point, certain employers may wish to further develop their sexuality-related employee standards directly in connection with their nonprofit missions. For example, a religious pregnancy resource center or health clinic may wish to develop written standards explaining how abstinence, one-partner only sexual activity, and other sexually related health aspects are critically important to carrying out their mission to clients, patients, and others. Such religious standards in turn may be memorialized in binding agreements with their employees, such as a written affirmation to follow such religiously grounded standards. Standards may contain scriptural references and quotes to demonstrate how they are supported by a religious belief. This level of description provides clear communication to a judge or jury that the employer truly holds sincere religious beliefs that should be honored and respected.
Through some or all of these measures, religious employers should also be able to assert that application of SOGI anti-discrimination laws would substantially burden their religious freedom rights to exercise those beliefs.
Correspondingly for a nonprofit employer, the board should approve all governance-related requirements and be prepared to protect and defend such religious beliefs, mindful that a job applicant or employee may indeed file a discrimination claim. Notably, whether an employer has violated RFRA involves an individualized inquiry. Remember too that RFRA is only a framework for evaluating claims. A court thus could rule differently for certain employee claims than in Braidwood (especially in other jurisdictions), concluding that the government’s interest regarding SOGI-related discrimination laws is sufficiently compelling to outweigh the employer’s religious liberty interests. Such result could be especially true if the employer’s religious beliefs are not strongly articulated or otherwise reflected in its actual practices. Keep in mind as well that litigation itself is inherently uncertain. The employer thus may wish to consider whether its insurance would protect against such claim and to otherwise evaluate the related costs.
Broadly speaking, an employer should consider how best to care for its workers, further its mission, and operate effectively, such as through its employee handbook, any employee agreements, and clear communications. RFRA is not a failsafe, and the law certainly continues to evolve. But for many employers who seek post-Bostock religious liberty protections, Braidwood brings substantial support of religious freedom protection, allowing them to operate consistent with their SOGI-related and well expressed sincerely held religious beliefs.
[1] For more information about Bostock and its expansion of Title VII’s definition of “sex” to include sexual orientation and gender identity, see our blog article explaining that ruling.
[2] 2023 U.S. App. LEXIS 15378; Braidwood Management, Inc., et al. v. EEOC, et al.
[3] Braidwood, slip op. at p. 3. As the court further regarding the owner/controller Steven Hotze: To Hotze, that would “lend approval to homosexual behavior and make him complicit in sin.” Hotze also gives a nonreligious reason for refusing to recognize same-sex marriage: He will not allow Braidwood to recognize same-sex marriage because Texas continues to define marriage in heterosexual terms.
[4] For more information about RFRA within the pre-Bostock employment context, see our firm’s blog article addressing a Catholic school’s liability for declining employment to an applicant in a same-sex marriage. This article further explains the RFRA burden-shifting and balancing approach in light of the U.S. Supreme Court’s landmark Hobby Lobby decision as follows: State RFRA laws generally provide religious liberty protections through a balancing test, which seeks to honor both religious liberty and government interests, without any predetermined outcomes. Notably, the Hobby Lobby case was decided under the federal RFRA, with a very favorable employer victory honoring its religious values regarding abortifacients. To assert a RFRA claim, an employer must establish that it holds a sincere religious belief that has been substantially burdened. Upon such a showing, the burden shifts to the government to demonstrate the existence of a compelling government interest that is unachievable by a less restrictive alternative. The resulting question is thus whether the government’s asserted interests are compelling enough to outweigh the employer’s religious interests.
[5] Braidwood at 35 (citing Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682, 710 (2014)).
[6] See 42 U.S.C. § 2000e-1(a), which is often referred to as the “co-religionist” exemption and protects the right of churches and other religious organizations to hire fellow believers.
[7] For more information about the ministerial exception, see our firm’s blog article addressing the Supreme Court’s 2020 Guadalupe decision and resulting implications for clergy and other employees engaged in religious activities. For more information about the church autonomy doctrine, see our firm’s recent blog article.
