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DOL Plans to Rescind Religious Contractor Exemption Rule (1)

Feb. 10, 2021, 3:31 PM; Updated: Feb. 10, 2021, 9:20 PM

The Labor Department’s contractor compliance agency will propose to roll back a controversial Trump-era rule that broadened the defenses religious federal contractors can use when accused of workplace discrimination.

The DOL’s Office of Federal Contract Compliance Programs told a Southern District of New York judge Tuesday and a District of Oregon judge Wednesday that it “intends to propose rescission” of the rule “in the near future,” requesting stays in separate cases brought in January by a group of states and labor unions challenging the regulation.

The OFCCP wants the judge to pause the litigation for 90 days in light of the agency’s rescission plan, which could take several months “as it will entail notice-and-comment rulemaking,” it said.

The Labor Department declined to comment on the filing.

The rule, which took effect in January before President Joe Biden’s inauguration, codified some already-existing liability exemptions for “religion-exercising organizations” that make religiously-motivated employment decisions, like hiring or firing.

“Closely held” corporations could also take advantage of the exemptions under the rule, if an owner was making religiously-motivated employment decisions.

The states argued that the OFCCP rule weakened anti-bias protections for workers, echoing previous concerns from civil rights groups like the American Civil Liberties Union.

The cases are New York v. DOL, S.D.N.Y., No. 1:21-cv-00536, Motion to Stay filed 2/9/21 and Oregon Tradeswomen, Inc. v. DOL, D. Or., No. 3:21-cv-00089, Motion to Stay 2/10/21.

(Updated to include the Labor Department's response.)

To contact the reporter on this story: Paige Smith in Washington at psmith@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Andrew Harris at aharris@bloomberglaw.com

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