The Department of Labor issued guidance explaining how a faith-based organization receiving DOL financial assistance can seek exemption under the Religious Freedom Restoration Act (RFRA) from the prohibition that religion not be used as a hiring criteria.

Enacted in response to the Supreme Court decision Employment Division, Department of Human Resources of Oregon v. Smith, 494 U.S. 872 (1990), the RFRA re-imposed the requirement that government justify substantial burdens on religious exercise. The DOL guidance implements the opinion by the U.S. Department of Justice that determined how the RFRA applies to laws restricting recipients of federal financial assistance from making employment decisions based on religion, and established procedures for implementing the requirements of RFRA within the DOL. The guidance outlines the process by which faith-based organizations that receive DOL financial assistance can seek exemption from laws enforced by the DOL that prohibit religious discrimination in employment. Currently, the only law enforced by the DOL that prohibits religious discrimination in employment by recipients of DOL financial assistance is the Workforce Investment Act (Pub. L. No. 105-220).

In essence, the mandate that religion not be a hiring factor would not apply to the faith-based organization if: (a) the organization can demonstrate that its religious exercise would be substantially burdened by application of the religious non-discrimination requirement to its employment practices in the program or activity at issue; and (b) the DOL is unable to demonstrate that applying the non-discrimination provision to this recipient both would further a compelling government interest and would be the least restrictive means of furthering that interest. Such a determination would be made on a case-by-case basis.