In July, 2014, President Obama issued Executive Order 13672 prohibiting sexual orientation and gender identity job discrimination in federal contracting. In April, 2015, regulations implementing this change came into effect for new or modified contracts, subcontracts, and vendor agreements. But the federal contracting rules contain an exemption that permits religious organizations to consider religion when hiring and firing. How do the new prohibitions intersect with this existing exemption? The information offered by the Office of Federal Contract Compliance Programs does little to clarify.

A systematic assessment and interpretation has now been offered by Carl Esbeck, noted church-state expert at the University of Missouri law school. In an article published in September, 2015, in the Oxford Journal of Law and Religion, Professor Esbeck argues that the religious staffing exemption is robust and protects a religious employer that, for religious reasons, considers matters of sexual conduct when making employment decisions. Because the exemption in the contracting rules mirrors the exemption in Title VII of the 1964 Civil Rights Act, this interpretation, if upheld by courts and the federal government, is important for religious employers in general, whether or not they receive federal contract funds.