In what appears to be the first case directly addressing the issue, a U.S. District Court judge recently ruled that Title VII’s exemption for religious employers does not bar claims of employment discrimination based on sexual orientation. In Starkey v. Roman Catholic Archdiocese of Indianapolis, No. 1:19-cv-03153 (S.D. Ind. October 21, 2020), a guidance counselor sued her employer, a Roman Catholic high school, alleging the school declined to renew her contract after learning she was in a civil union with another woman. The school asked the court to dismiss the counselor’s lawsuit, arguing Title VII does not apply to employment decisions by a religious employer when those decisions are based on religion. The school required its employees to support the Church’s beliefs on human sexuality by refraining from conduct at odds with the Church’s teachings.

Among other things, the school relied on Title VII’s exemption for religious employers, which states that Title VII “shall not apply” to a religious organization “with respect to the employment of individuals of a particular religion . . . .”

The court rejected the school’s position, stating instead that the exemption should be read narrowly to apply only to claims of religious discrimination, not discrimination based on other protected categories. The court then held that the plaintiff’s claims could proceed because her allegations supported an inference that the school would not have made its decision but for her sexual orientation.

This case will likely be the first of many to wrestle with the meaning of Title VII’s religious employer exemption in the wake of the Supreme Court’s holding in Bostock v. Clayton County, 140 S. Ct. 1731 (2020), that Title VII prohibits discrimination on the basis of sexual orientation. Accordingly, religious organizations should consult with legal counsel to assess potential exposure related to religious conduct codes.