The U.S. Department of Labor’s Office of Federal Contract Compliance Programs has issued a final rule that expands the ability of federal contractors to claim exemptions from federal nondiscrimination laws that would effectively allow them to discriminate against LGBTQ employees in the name of religion.

OFCCP has tried to justify the rule, saying it will bring “clarity” to employers, particularly religiously-based or religiously-affiliated organizations or businesses that wish to contract with the federal government.

“Recent Supreme Court decisions have addressed the freedoms and antidiscrimination protections that must be afforded religion-exercising organizations and individuals under the U.S. Constitution and federal law,” the rule reads, citing several “religious liberty” cases.

Some of those cases include the infamous Masterpiece Cakeshop case where a baker refused to provide a cake for a same-sex wedding; the Hobby Lobby decision, in which the Supreme Court found that for-profit closely-held corporations were entitled to religious exemptions; and the Our Lady of Guadalupe School case, where the high court found that schools have a right to designate any employee as a “minister” and may dismiss them if their behavior or lifestyle is in conflict with religious teachings.

“In this final rule, OFCCP has sought to follow the principles articulated by these recent decisions and orders, and has interpreted older federal appellate-level case law in light of them as applicable,” the rule states. “OFCCP has chosen a path consistent with the Supreme Court’s religion and Title VII jurisprudence as well as what OFCCP views to be the more persuasive reasoning of the federal courts of appeals in these areas of the law.”

Specifically, the rule expands the types of contractors who qualify for a religious exemption, allowing even some for-profit corporations to qualify for it, and directs the agency to interpret the religious exemption broadly, rather than narrowly, meaning a contractor could fire employees that do not conform with its own religious beliefs or practices.

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Under the rule, a religious “corporation, association, educational institution or society” is defined as one that has a religious purpose, holds itself out to the public as carrying out a religious purpose, or engages in activity consistent with, or in furtherance of a religious purpose, and either operates on a not-for-profit basis or provides other evidence that its purpose is “substantially religious.”

Under this definition, it means that employers or businesses contracting with the federal government that meet this much broader criteria could qualify for exemptions to employment nondiscrimination law, and thus, will be allowed to discriminate on the basis of the organization’s stated religious beliefs. So, if a contractor has a religiously-based opposition to homosexuality, it may refuse to hire or retain LGBTQ individuals.

The rule offers several examples to illustrate the principle. For example, a closely held for-profit manufacturer of candlesticks that does business with religious communities as well as the federal government, or a for-profit collector business curating various cultural or religious artifacts would not be granted an exemption.

However, a nonprofit that provides chaplaincy services to military and federal agencies, or a catering company that provides kosher meals to synagogues and for Jewish-specific events or occasions whose mission statement is to “strengthen the Jewish community” and “honor G-d” through its preparation of the meals, would be considered religious corporations, and would thus be exempt from federal nondiscrimination laws.

Related: Trump wants to let federal contractors discriminate against LGBTQ people

LGBTQ advocates cried foul over the expanded definition of a religious entity, with Lambda Legal calling it “grotesquely overbroad.”

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“It is hard to overstate the harm that the Office of Federal Contract Compliance Programs is visiting on LGBTQ people, women, religious minorities, and others with the sledgehammer it is taking to federal nondiscrimination protections,” Jennifer Pizer, the director of law and policy at Lambda Legal, said in a statement. 

“For nearly 80 years, it has been a core American principle that seeking and receiving federal tax dollars to do work for the American people means promising not to discriminate against one’s own workers with those funds,” Pizer added. “This new rule uses religion to create an essentially limitless exemption allowing taxpayer-funded contractors to impose their religious beliefs on their employees without regard to the resulting harms, such as unfair job terms, invasive proselytizing and other harassment that make job settings unbearable for workers targeted on religious grounds.”

“There are almost 4 million employees who work for federal contractors, including another 1.6 million who work for federal grantees impacted by this rule,” added Sasha Buchert, a senior attorney at Lambda Legal. “This rule effectively allows almost any federal contractor to claim a right to fire a person, deny health benefits or take other forms of discriminatory action for marrying a same-sex partner or coming out as transgender, or who the employer or would-be employer discovers is transgender, for living in accordance with their gender identity.”

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Americans United for Separation of Church and State President and CEO Rachel Laser called the rule “unconscionable,” accusing the Trump administration of trying to jam through the rule in the lame-duck session, and called on incoming President Joe Biden’s administration to revoke the rule.

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“The constitutional right to religious freedom promises everyone the right to live their lives secure that the government will treat them equally, no matter what their belief system,” Laser said. “The new Department of Labor rule, however, turns this core American value on its head and puts countless peoples’ jobs at risk because they do not share the religious views or meet the religious code of conduct of a government contractor…. This rule is a last-gasp effort by the outgoing administration to ignore the will of the people and cement a legacy of using religious freedom as a sword to harm people, rather than a shield to protect all of us.”

Erin Uritus, the CEO of Out & Equal Workplace Advocates, also condemned the new rule.

“The Supreme Court ruled this summer that LGBTQ individuals in America cannot be discriminated against in workplaces,” Uritus said, citing a recent decision finding that LGBTQ people are protected from discrimination in employment by the Civil Rights Act of 1964. “But now President Trump is carving out exceptions to that rule for federal contractors.

“I’m angry. LGBTQ Americans deserve equal rights — at work, in schools, in health care access, and in our communities,” Uritus added. “We will fight this license to discriminate. We need the Equality Act. And we will continue working with major employers to make sure that no claims of ‘legitimate discrimination’ will stand. LGBTQ employees are part of every workplace and organizations thrive when they can bring their full selves to work.”

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