[co-author: Julia Tape]

Seyfarth Synopsis: In Braidwood Management, Inc. v. Equal Employment Opportunity Commission, the Fifth Circuit endorsed for-profit employers integrating their religious beliefs into their employment policies to apply the Religious Freedom Restoration Act of 1993 (RFRA) as a shield from complying with the prohibitions against sex discrimination under Title VII of the Civil Rights Act of 1964. This endorsement was possible because the Supreme Court left the door open for RFRA to function as a “super statute” in Bostock v. Clayton County. However,
for-profit employers should proceed with caution when relying on RFRA’s protections when forming employment policies that incorporate their religious beliefs.

Tension lies between Title VII of the Civil Rights Act of 1964 (Title VII) and the Religious Freedom Restoration Act of 1993 (RFRA). The tension is between providing protected individuals the right to be free from sex discrimination and preserving the right for individuals to freely exercise their religious beliefs. Decided on June 20, 2023, the Fifth Circuit in Braidwood Management, Inc. v. Equal Employment Opportunity Commission, directly addressed this tension.

In Braidwood, the Fifth Circuit held that under RFRA, Braidwood Management, Inc., a “religious-business-type” employer, was exempted from complying with Title VII’s prohibitions against sex discrimination. Braidwood is a for-profit business, not a religious organization, that employs nearly seventy employees and its owner is a self-proclaimed Christian. According to the Fifth Circuit, the owner’s religious beliefs about gender and sex correlate with an individual’s biological sex. Braidwood’s employment policies further employee conduct in accordance with the owner’s beliefs about sex and gender identity. As the Fifth Circuit noted, in creating Braidwood’s employment policies, “religion plays an important role but is not the sole mission of the organization.”

On one hand, Title VII prohibits employers from discriminating against employees “on the basis of sex.” In 2020, the Supreme Court interpreted the phrase “on the basis of sex” to include both same-sex sexual orientation and transgender identity in Bostock v. Clayton County. However, the Supreme Court was “nebulous” when it did not limit the scope of how its interpretation could apply to employers forming policies influenced by their religious beliefs.

On the other hand, RFRA prohibits the Federal Government from substantially burdening an individual’s exercise of religion unless the Government uses the least restrictive means to further a compelling interest. Some individuals guided by their religious beliefs maintain that sex and gender correlate with one’s biological sex, and these individuals will not endorse conduct that opposes this belief. The Fifth Circuit addressed this conflict between the definition of sex according to some religious beliefs and Bostock’s prohibitions of discrimination “on the basis of sex.”

Braidwood’s policies prohibited employees from engaging in conduct that does not align with its Christian beliefs about sex and gender. More specifically, Braidwood had two policies that were challenged in court. The first, a sex-specific dress code that prohibited individuals from dressing in clothing that did not correspond with their biological sex. The second, a policy that prohibited employees from using restrooms opposite to their biological sex, regardless of an individual’s gender identity.

Is RFRA a “super statute” defense?

Braidwood proposed applying RFRA as a defense for its noncompliance with Title VII’s prohibitions on sex discrimination. RFRA acting as a defense for noncompliance with federal laws due to an employer’s religious beliefs is not new. For example, in Burwell v. Hobby Lobby Stores, Inc., the Supreme Court held in favor of a for-profit corporation that refused to comply with the Patient Protection and Affordable Care Act’s contraceptive mandate because it defied the company’s religious beliefs.

Although this particular clash between Title VII and RFRA is a case of first impression for the Fifth Circuit, in 2018, the Sixth Circuit addressed the issue in Equal Employment Opportunity Commission v. R.G. Harris Funeral Homes, Inc. The Sixth Circuit held in favor of the EEOC, requiring the employer, a funeral home, to comply with Title VII. Thus, the Fifth and Sixth Circuits are now at odds with one another.

In Braidwood, the Fifth Circuit framed the issue as forcing Braidwood “to comply wholeheartedly with guidance it sees as sinful.” According to Braidwood, employing an individual who engages in same-sex relationships or expresses their transgender identity, even in private, is a tacit endorsement of the individual’s conduct that violates Braidwood’s religious practice. The Fifth Circuit did not question the sincerity of Braidwood’s religious beliefs. However, the Sixth Circuit in Harris rejected this argument, and held that “bare compliance” without providing financial assistance for the benefit of the employee to directly engage in conduct that the employer believes violates their religious beliefs is insufficient to establish a “sincere” religious belief.

The Fifth Circuit held that Braidwood’s choice between complying with Title VII’s prohibitions on sex discrimination or violating its religious beliefs substantially burdens Braidwood’s ability to practice its religious beliefs. The Court emphasized that this choice is “precisely what RFRA is designed to prevent.” The Sixth Circuit in Harris held the opposite–simply being at odds with another’s conception of sex and gender identity is not a substantial burden under RFRA. The Fifth Circuit addressed the Sixth Circuit’s holding by rejecting the reasoning and noting that the decision was not binding on the Fifth Circuit. Instead, the Fifth Circuit accepted Braidwood’s argument that by employing individuals who engaged in transgressive conduct, their customers would understand that by proxy, Braidwood was endorsing this conduct.

Both the Fifth and Sixth Circuits applied the Supreme Court’s strict scrutiny test under RFRA from Gonzales v. O Centro Espírita Beneficente União do Vegetal. The first step in the strict scrutiny test is to focus on the “Government’s categorical approach.” In both Braidwood and Harris, the EEOC argued the Government’s categorical interest of eradicating workplace discrimination regardless of sex. The second step is applying the “to the person” test. Under the “to the person” test, a court should look beyond the Government’s categorical interest and scrutinize the asserted harm of granting specific exemptions to the particular claimants.

In Braidwood, the Fifth Circuit held the EEOC could not carry its burden of showing it had a compelling interest because it relied on a generalized interest. The weakness in the EEOC’s case may be due to the specific facts and timing of the case. Unlike in Harris, there was no employee who was directly harmed by Braidwood’s policies, and the suit was brought before the EEOC had taken any enforcement action against Braidwood. Thus, the EEOC could not demonstrate a specific harm.

Additionally, the Fifth Circuit rejected the EEOC’s pre-enforcement arguments challenging the justiciability of the case. Citing to the Supreme Court’s decision in Steffel v. Thompson, the Fifth Circuit held that Braidwood had a “credible fear” of enforcement because of the EEOC’s previous enforcement action in Harris. Without Harris, Braidwood may have had a greater challenge to establish Article III standing.

As for the least restrictive means standard under RFRA, the Fifth Circuit held that the EEOC did not use the least restrictive means for refusing to exempt Braidwood from complying with Title VII. The Fifth Circuit noted that the EEOC did not have a method or guidance for organizations seeking an exemption from complying with Title VII’s prohibitions on sex discrimination because of the employer’s religious beliefs. The Sixth Circuit in Harris took a different approach by focusing on the statute acting as a vehicle for the least restrictive means, and explained that Title VII was designed by Congress as a regulatory scheme that intentionally does not provide any exemptions for discrimination “on the basis of sex.” Because Congress created a regulatory scheme, the Sixth Circuit held that Title VII is the least restrictive means to further the Government’s compelling interest.

Lessons learned from this case:

THERE IS NO BRIGHT-LINE FOR “RELIGIOUS-BUSINESS-TYPE” EMPLOYERS

The Fifth Circuit left the door open for employers to broaden the scope of using RFRA as a defense for noncompliance with certain federal laws, particularly Title VII’s prohibitions on sex discrimination. But the Fifth Circuit declined to answer what other policies employers could implement. For-profit employers should be aware that there is no bright-line for whether a policy based on their religious beliefs will be overcome by a compelling governmental interest.

As some circuit courts have noted, using RFRA as a defense for noncompliance with Title VII’s prohibition of discrimination “on the basis of sex” is a balancing test. It is not a bar to litigation and EEOC enforcement. The Government can overcome that defense by demonstrating that there is a compelling governmental interest, and by showing the specific harm that would occur if an exemption were granted to the particular religious employer.

PRE–ENFORCEMENT MAY PLAY A ROLE

The different outcomes from Braidwood and Harris might be due to the underlying facts of each case. In Braidwood, the case was brought by the employer before the EEOC pursued enforcement, and before any employee had suffered any actual harm from the employment policies. Whereas in Harris, the EEOC brought an enforcement action against the employer because the protected employee suffered an adverse employment action. Following Braidwood, employers may have more success using RFRA as a defense for noncompliance with Title VII’s prohibition on sex discrimination pre-enforcement by the EEOC, rather than waiting for their practice or policy to impact a particular employee.