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Observers uncertain about the impact of Obama's employment orders on faith-based agencies

Published: Wednesday, July 23 2014 6:20 a.m. MDT

Updated: Friday, July 25 2014 1:32 p.m. MDT

President Barack Obama speaks at the Democratic National Committee's (DNC) annual Lesbian, Gay, Bisexual and Transgender (LGBT) fundraiser gala in Gotham Hall, Tuesday, June 17, 2014, in New York. The fundraiser comes a day after the White House announced plans for Obama to sign an executive order that would prohibit federal contractors from discriminating on the basis of sexual orientation or gender identity. (AP Photo/Pablo Martinez Monsivais)

Pablo Martinez Monsivais, ASSOCIATED PRESS

WASHINGTON — A pair of executive orders signed by President Barack Obama barring federal contractors from discriminating against gay or transgender employees may create dilemmas for faith-based nonprofits that could only be settled in court, observers said Tuesday.

The orders do not contain a specific exemption for religious organizations that contract with the government, something many faith leaders requested before Monday's signing ceremony. Social service and disaster relief groups operated by church organizations as well as religiously affiliated colleges and universities could, under the orders, lose such contracts if they refuse to hire gay or transgender job candidates.

"This kind of thing is chilling for religious organizations," said Stanley Carlson-Theis, founder and president of the Institutional Religious Freedom Alliance, a Washington-area group that advises nonprofits. He asked, "Will the government lose some quite good partners for services" because those groups have faith standards that preclude homosexuality or transgender behavior?

Obama issued the orders after the Employment Non-Discrimination Act, or ENDA, stalled in the House after passing the Senate in 2013. The bill included protections for faith-based groups in hiring, something several gay rights groups protested by dropping their support for the bill.

With legislation blocked, Obama said he decided to act. "America’s federal contracts should not subsidize discrimination against the American people," the president said at a White House signing ceremony.

The White House noted an exemption for faith-based groups still exists under an executive order issued by President George W. Bush in December 2002, allowing these groups to restrict hiring to members of their faith. Bush granted the exemptions to let federal agencies contract with faith-based providers that were previously deemed ineligible for such deals, worth billions of dollars.

The executive orders, to be implemented under yet-to-be-announced rules from the Labor Department, cover federal contracts, but not grants, which many nonprofits also receive.

Court challenges

The latest orders create an ambiguous situation for so-called "parachurch" organizations such as Samaritan's Purse, headed by evangelist Franklin Graham, which contracts with the U.S. Agency for International Development, which is faith-based, but which is not sponsored by a specific denomination.

The Bush order ostensibly covers such groups, said Galen Carey, a vice president at the National Association of Evangelicals, but it's unknown "whether the government and the courts will accept a religious organization's decisions when it touches on some of the other protected categories," he said.

Without a law barring employment discrimination against homosexuals or transgendered people, a candidate could be turned down without explanation. Now, under the presidential order, a religious group contracting with the federal government has to walk a fine line, while fearing legal action from an unsuccessful job-seeker.

"The big question is: How far does religious hiring go?" asked Carlson-Theis. "Is it narrowly about selecting the religion of the employee or does it have to do with faithfully being that kind of believer, which has to extend just beyond saying you believe it?"

To best way to find answers those questions, says Stephen Schneck, director of the Institute for Policy Research & Catholic Studies in Washington, is for religious organizations to "stick with your guns and see where the chips fall."

The observers agree, the answers will likely come from a judge.

"The administration has forgotten that the Religious Freedom Restoration Act exists, and it's there to protect the religious freedom of groups, even when they contract with the federal government," said Erik Stanley, senior legal counsel for the Alliance Defending Freedom in Scottsdale, Arizona. He said his group would represent organizations challenged under the new rules.

A possible scenario that could lead to a lawsuit, Carlson-Theis said, is when a religious group interviews job candidates who say they are a "faithful" church members but also identify as transgender. If the employer doesn't hire such an applicant, the person could sue.

Schneck and other religious leaders signed a July 1 open letter to Obama asking for "a robust religious exemption" to the order, without which, the letter said, "this expansion of hiring rights will come at an unreasonable cost to the common good, national unity and religious freedom."

Michael Wear, a 2012 Obama campaign faith adviser who organized the open letter, lauded the continuation of the Bush-era executive order. But, he said, it would be up to the Labor Department and the Equal Employment Opportunity Commission to translate the executive order into rules and regulations that serve everyone's needs.

Absent such "clarity" from the two agencies, Wear said, "we risk opening up the doors for litigation that leaves both LGBT Americans and religious organizations uncertain and unprotected."

Religious schools, charities uncertain

Because of its application to contracts, including research contracts, many Christian colleges and universities are concerned about the order's effects, a statement from the Council for Christian Colleges and Universities in Washington said.

"There is no reason that the principles of a 2007 exemption memo from the federal attorney general's office, which says RFRA 'is reasonably construed' to exempt federal grantees from religious nondiscrimination requirements, should not also apply to federal contractors, but ultimately it will depend on the administration’s interpretation," the CCCU statement said.

Brigham Young University is awaiting that interpretation, spokesman Joe Hadfield said.

"We do have federal research contracts at BYU," Hadfield said. "It would be premature to say for sure how this executive order will affect future federal contracts with universities like BYU. We’ll know more when the Department of Labor issues regulations that guide the interpretation of this executive order."

Spokesmen for three of the largest Christian social service agencies that deal with federal contracts via USAID were silent Tuesday about the Obama order. A Samaritan's Purse spokeswoman said Franklin Graham was traveling and would need to consult with legal counsel before commenting.

"We have not yet received the order and as such have not had an opportunity to review the context," Jennifer Byrd, communications director for The Salvation Army's national headquarters in Alexandria, Virginia, said.

The church and social-services agency's overseas relief group, The Salvation Army World Service Office, is also a major contractor with USAID. So, too, is the Adventist Development and Relief Agency, which from 2001 to 2005 received more than $85 million in USAID contracts. Its management was weighing the Obama order's implications at a Tuesday meeting, a spokeswoman said.

Some groups will apparently avoid any problems by applying for federal grants, not contracts. Jenny Yang, vice president for advocacy and policy at Word Relief, a humanitarian group sponsored by the National Association of Evangelicals, said the organization is no longer a federal contractor, receiving USAID and State Department grants instead.

"We are not currently a federal contractor," Yang said. "Our general concern is that it's about religious freedom in general."

Email: mkellner@deseretnews.com

Twitter: @Mark_Kellner

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