University of Southern California

Religion-Based Employment Discrimination in Charitable Choice: A Guide for the Perplexed

Within America's faith communities, there is very little agreement concerning whether or not religious criteria should be allowed in selecting staff members within contracts that are funded under Charitable Choice.

Many religious leaders support the right to discriminate on religious grounds when they employ individuals within so-called Charitable Choice contracts. Charitable Choice, they argue, should permit faith-based organizations to "be themselves" so long as these organizations do not try to proselytize or otherwise to advance religious beliefs within federally-funded programs. This is a position that has been consistently argued by Carl Esbeck, a constitutional law professor who is associated with the Christian Legal Society and with the Center for Public Justice.

Others strongly disagree. The federal government, they argue, should not fund religion-based discrimination.

Following the lead of religious leaders, Congress also has focused on Charitable Choice's rule that allows the use of religious criteria in employing staff members. In considering President Bush's Faith-Based and Community Initiatives, the "discrimination rule" has moved to front and center in Congressional debate. A substantial number of Democrats in the Senate, for example, apparently view the rule as a major stumbling block in their consideration of the Initiatives.

The following is intended as a guide to this heated debate. It does not attempt to elaborate either a legal or a political position. Its intention is to clarify the Charitable Choice employment rule, to identify issues, then to cite laws and court decisions that bear on the constitutionality of this rule.

I. Does the federal government allow faith-based organizations to use religious criteria when they are selecting employees for contracts that have been awarded by programs that are under Charitable Choice?

Yes. Charitable Choice -- a provision of Congress's 1996 welfare reform legislation--allows faith-based organizations to use religious criteria when they employ people to work in contracts that are federally-funded through Temporary Assistance for Needy Families (TANF).

TANF funds are distributed to the states in the form of block grants. Although each state is allowed to formulate its own version of TANF, all states are required to include Charitable Choice in their plans. Thus, all states currently allow faith-based organizations to use religion-based employment criteria in TANF-funded contracts--contracts that offer human services to assist welfare-to-work clients in making their ways into the workforce.

In subsequent "expansion laws," Congress applied Charitable Choice's employment rule to the Department of Labor's Welfare-to-Work programs and to Community Services Block Grants. Although Charitable Choice was later applied to programs under the Substance Abuse and Mental Health Services Administration, these programs do not allow faith-based organizations to use religious criteria in their employment practices.

Charitable Choice's religion-based employment rule states that "a religious organization's exemption provided under section 2000e-1 of this title regarding employment practices shall not be affected by its participation in, or receipt of funds from, programs described in subsection (a)(2) of this section."

In other words, Charitable Choice's religion-based discrimination rule is defined by Title VII of the Civil Rights Act of 1964, as amended in 1972 (section 2000e-l). Title VII exempts religious organizations from its general prohibition against religious discrimination by private sector organizations (e.g., employers, labor organizations, employment agencies). Charitable Choice simply declares that the exemption created in Title VII applies to TANF-funded contracts (and, subsequently, to contracts in other programs that are affected by Charitable Choice) that are held by faith-based organizations.

The fact that Congress defined Charitable Choice's employment rule by using terms drawn from the Civil Rights Act of 1964 has important consequences. For example:

(1) Congress signaled that it wanted to apply the Charitable Choice's employment rule to a wide variety of faith-based organizations. Title VII of the Civil Rights Act of 1964 (as amended in 1972) provides that the Act's general prohibition against religion-based discrimination in hiring practices "shall not apply to...a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation, association, educational institution, or society of its activities."

Federal and state courts have generally been expansive in their interpretations of what kinds of faith-based organizations qualify for the Title VII exemption. As court after court has observed, there is no "bright line" or obvious boundary between organizations that qualify for the Title VII exemption and those that do not qualify. The courts have chosen to proceed on a case-by-case basis. They have chosen to examinine each organization in terms of its balance of secular and sacred elements.

In 1987, however, the Supreme Court showed how far it was willing to go. In Corporation of the Presiding Bishop v. Amos (1987), it affirmed the Title VII exemption for a religiously-affiliated nonprofit that was conducting an essentially sectarian program.

(2) Congress signaled that it wanted to apply its exemption to employees that would be engaged in a wide variety of activities--not just "ministerial" activities. Title VII of the Civil Rights Act of 1964 currently defines the term "religion" to include "all aspects of religious observance and practice." When the Act was amended in 1972, the word "religious" was removed as a qualifier of the activities covered by the religion-based employment discrimination exemption, suggesting that exempt organizations could use religious criteria in employing individuals for all of their activities.

This more expansive style of reasoning has been adopted by the Supreme Court and by other federal courts. In Corporation for the Presiding Bishop v. Amos (1987), for example, the Supreme Court allowed for the use of religious criteria in the firing of an individual who was performing secular tasks in a religiously-affiliated health club. The Supreme Court argued that it did not want to get courts into the role of deciding, case by case, whether a particular employment role was religious or secular. It wanted to guard the freedom of religious corporations, associations, societies and educational institutions to define which employment roles they themselves considered to be engaged in religious functions.

II. Does Charitable Choice's permission to use religious criteria in employment break new ground in American church-state relations?

The answer to this question depends on your perspective.

Opponents of the Charitable Choice employment rule argue that the Title VII exemption, which permits the use of religious criteria in the employment practices of religious corporations, associations, educational institutions, and societies, does not apply to federal grants and contracts. From their perspective, Charitable Choice moved the Title VII exemption into new territory. Congress allowed a form of employment discrimination that had been created in Title VII for privately-funded religious organizations to be applied in federally-funded contracts.

There is a strong counter-argument: Title VII's permission for faith-based organizations to use religious criteria in employment is--and always has been-- intended to apply to public contracts, also.

Here is the argument: Title VI of the Civil Rights Act of 1964 pointedly omits religion from its list of prohibited forms of discrimination in federal contracts. If Congress had intended to prohibit religion-based employment discrimination by faith-based organizations in federal contracts, it undoubtedly would have done so in Title VI. The fact that particular federal programs do not allow faith-based organizations to discriminate religiously in their human service contracts does not change the overall situation. When Congress is silent about the matter, the Title VII exemption applies.

At least since the mid-1980s, federal and state courts have consistently treated Title VII's permission for religious organizations to use religion-based employment critia as a right, even when these organizations receive various forms of public financial assistance.

For example, in Young v. Shawnee Mission Medical Center (1988, U.S. District Court for the District of Kansas) the court held that Shawnee Mission Medical Center should not lose its exemption from Title VII's prohibition of religion-based employment discrimination because it received federal Medicare payments.

In Little v. Wuerl (1991, United States Court of Appeals, Third Circuit), the Court observed that Title VII exemptions for religious organizations should not be viewed as a privilege or interest granted to these organizations. "Instead, those exemptions reflect a decision by Congress that the government interest in eliminating religious discrimination by religious organizations is outweighed by the rights of these organizations to be free from government intervention." A similar conclusion was drawn in Siegel v. McConnell College (1994, United States District Court for the Northern District of Georgia, Gainesville Division). The religious character of McConnell College was not altered by the receipt of federal funds, the Court concluded. Thus, there were no grounds for withdrawing Title VII exemptions. Federal funds were not being used to advance religion. "Public aid to higher education is unconstitutional only if the government is directly funding explicit religious activities," the district court concluded.

In Hall v. Baptist Memorial Health Care Corporation,( 2000, United States Court of Appeals, Sixth Circuit), the plaintiff argued that Baptist Memorial Health Care Corporation had waived its Title VII exemption for such institutions because it received federal funds. The Court did not agree. "[Statutory] exemptions from religious discrimination claims under Title VII cannot be waived....The receipt of funds from government sources did not alter the fundamentally religious character" of the institution, and therefore, did not providing grounds for withdrawing the Title VII exemption.

The conclusions drawn in Hall v. Baptist Memorial Health Care Corporation were parallel to those drawn in Arriaga v. Loma Linda University (1992, California Court of Appeals, 4th)--a California case which involved religious discrimination exemptions under California's Fair Employment and Housing Act (FEHA, California Government Code Sections 12900 et. seq.). The plaintiff, Bethsaida Arriaga, was appealing the decision of the Superior Court of San Bernardino, which held in favor of Loma Linda University on her complaint concerning discrimination based on sex, marital status, and pregnancy. The University had previously informed all of its employees that their failure to act in a manner consistent with the Seventh Day Adventist disapproval of sexual intercourse outside of marriage would lead to discipline or dismissal. Arriaga, who was single, had become pregnant. She was dismissed from her position in the University's library.

FEHA exempts religious organizations from its antidiscrimination requirements by excluding from the definition of employer "a religious association or corporation not organized for private profit" (Goverment Code section 12926, subdivision (d)(1). Arriaga argued, however, that the University had lost its exemption from discrimination rules as a nonprofit religious corporation under the California Fair Employment and Housing Act because the University had accepted funding from the state. She cited Section 1135 of the California Fair Employment and Housing Act: "No person in the State of California shall, on the basis of ethnic group identification, religion, age, sex, color, or physical or mental disability, be unlawfully denied the benefits of, or be unlawfully subjected to discrimination under, any program or activity that is funded directly by the state or receives any financial assistance from the state." The Court disagreed. It argued that Section 11135 does not affect the University's exemption as a nonprofit religious corporation. This status does not hinge on whether or not the corporation received state funds. FEHA explictly excludes nonprofit religious corporations from its prohibition against religion-based employment discrimination practices, whether or not they receive state funds.

In summary, since 1990 federal and state courts have been addressing conflicts related to religion-based discrimination in religiously-affiliated programs receiving federal assistance. Fairly consistently, courts have resolved these conflicts by allowing the use of religion-based employment criteria when the theological grounds for their use are clearly documented in the organizations' creeds, charters, or by-laws and when federally-funded positions are not used to advance religion.

Whether or not, at a later time, these kinds of arguments will be persuasive to Supreme Court justices remains to be seen.

III. Under Charitable Choice, can faith-based organizations discriminate on the basis of sex, gender orientation, race, color, and/or national origin?

Charitable Choice does not allow forms of employment discrimination other than that based on religious identity. Most courts have ruled that religious institutions must comply with Title VII's prohibition against employment discrimination with respect to race, color, sex, or national origin.

Problems are created, however, when religion-based employment discrimination is expanded to include other forms of discrimination. In these cases, when religious organizations justify discriminatory practices by referring to religious creeds or organizational charters, they have usually succeeded in being allowed by the courts to proceed with these discriminatory practices.

A case in point is the opinion issued by the Seventh Circuit Court in Maguire v. Marquette University (1986). In this case, Dr. Marjorie Maguire did not succeed in being appointed as an associate professor of theology at Marquette University, a university that is affiliated with the Society of Jesus--a Roman Catholic men's religious order. She claimed that the university had rejected her appointment because of her gender and because of her controversial views concerning abortion. Ultimately, the Seventh Circuit Court did not agree. It concluded that the central issue was that Maguire's theological views did not align with Marquette University's goals and mission, confirmed in innumerable Roman Catholic and university documents.

IV. Is Charitable Choice's permission to use religious criteria in the employment of staff for contracts affected by Charitable Choice Constitutional?

Who knows?

As Professor Erwin Chemerinsky, a Constitutional law scholar at the University of Southern California Law School, argues, no one can predict what the Supreme Court will do in decisions related to church-state issues. New church-state paradigms seem to be emerging. It is not as yet clear where the Supreme Court is moving.

In the event that the Court chooses to accept a case involving Charitable Choice's religion-based employment discrimination rule, the justices may agree with the strict separationist opinion issued in Dodge v. Salvation Army (1989, United States District Court for the Southern District of Mississippi, Southern Division). According to Professor Carl Esbeck, Dodge is the "only case to the contrary" in a long history of cases that protect the Title VII exemption enjoyed by faith-based organizations that receive various forms of federal funding.

In this case, the plaintiff, Jamie Kellam Dodge, reported that her employment as a Victims' Assistance Coordinator in a Salvation Army Domestic Violence Center had been terminated because she had used a copy machine to copy manuals and information on Satanic/Wiccan rituals. "I was misled by Satan," she complained. "I only hope that it is not too late for me to change." She alleged, nevertheless, that her termination was unconstitutional, because her employer, the Domestic Violence Center, received substantial federal and state funds. She also argued that her job did not involve "religious" activities, so Title VII of the Civil Rights Act of 1964 did not apply to her position.

The court ultimately agreed with Dodge's argument. They were especially impressed by Dodge's claim that her own position as Victims' Assistance Counselor was funded directly and substantially, if not entirely, by federal, state and local governments. This situation, the court concluded, raised important constitutional considerations.

Using the so-called "Lemon Test," delineated in Lemon v. Kurzman (1971, U.S. Supreme Court), the justices concluded that direct federal funding of a position that had been filled using religion-based discrimination had the effect of directly advancing religion. Therefore, Dodge's dismissal on religious grounds was also unconstitutional.

The Supreme Court, however, might disagree with the opinion in Dodge v. Salvation Army. Constitutional scholars such as Ira Lupu (PDF) and Stephen Monsma believe that the Supreme Court is, in fact, moving away from strict separationist doctrines. It currently seems to be using "neutrality" doctrines in decisions related to church-state relations. Douglas Laycock argues that Court reasoning about the Establishment Clause uses both separationist and neuturalist themes, applied differently to various kinds of cases.

So, what is "neutrality?"

There are different forms. All, however, emphasize the importance of choice. All argue that government should treat all private sector organizations with impartiality, not preferring one religious tradition over another, and not preferring secularism over religion.

One form of neutrality, which might be applied by the Court to a case involving Charitable Choice's religion-based employment discrimination rule, permits the direct distribution of aid to religious groups, when aid is made available on a nonpreferential basis to both religious and nonreligious groups. For example, Bowen v. Kendrick (1988, United States Supreme Court) allowed a wide variety of institutions, including faith-based groups, to compete for funding under the Adolescent Family Life Act. Widmar v.Vincent (1981, United States Supreme Court) required a state university to allow student religious groups to use campus buildings for their meetings, when these buildings were not otherwise being used, if nonreligious student groups were allowed to use these same facilities. Similarly, Rosenberger v. University of Virginia (1995) required the university to fund a religious student publication out of funds that were intended to support the expression of a wide variety of "student news, information, opinion, entertainment, or academic communications media groups."

Consistent with this particular form of "neutrality," the Court might come to the following conclusion:

Under the First Amendment, the federal government can fund employment positions in contracts that are filled using the Charitable Choice rule (1) if the contract award process does not involve a preference for religious organizations over secular organizations, (2) if the contracted program has a secular purpose, e.g. reducing poverty; (3) if neither the program nor the federally-funded employment position directly and substantially advances religion; and (4) if the contracted program does not create an excessive entanglement of the federal government with religion. Because a federally-funded position is filled using the Charitable Choice employment rule does not necessarily mean that federal funds are being used to advance religion.

The Supreme Court has already used this kind of argument. We would not be surprised if it used it again in deciding some future case involving Charitable Choice's religion-based employment discrimination rule.

-John Orr, Center for Religion and Civic Culture, University of Southern California jorr@usc.edu Research assisted by Nori Henk and Peter Spoto.