Labor & Employment Law Daily Wrap Up, COVERAGE, LIABILITY—D. Ore.: Oregon reproductive health law’s exemption for religious employers found unconstitutional in as-applied challenge by religious pro-life organization, (Jul 15, 2026)

By K. C. Salcedo

A federal court held that Oregon’s reproductive health coverage law unconstitutionally favored certain religious employers over others by limiting an exemption to organizations that inculcate religious values and serve members of their faith, and granted declaratory relief to a religious pro-life organization challenging the law.

The state law requiring all health plans to provide reproductive health coverage provided an exemption for religious employers if they served persons sharing their religious tenets and their purpose was to “inculcate religious values.” This exemption was found unconstitutional as applied to a religious pro-life organization because the state failed to show how the exemption, which had a denominational preference for certain religious organizations over others, either: (1) served its compelling government interest of ensuring reproductive care for all state residents, or (2) was narrowly tailored to that interest (Oregon Right to Life v. O’Day, 6:23-cv-01282-MTK (D. Ore. July 1, 2026)).

A religious pro-life organization (Organization) filed suit against the Oregon Department of Consumer and Business Services Director and the Oregon Insurance Commissioner (State Defendants) alleging that the Reproductive Health Equity Act’s (RHEA) exemption for religious employers was unconstitutional. The federal court, in granting declaratory relief to Organization, found that: (1) the religious employer exemption’s requirement to “inculcate religious values” and serve only persons sharing its religious tenets amounted to a preference for certain religious denominations over others based on its religious activities, (2) the Organization, who did not fulfill those requirements, was nonetheless motivated by religious beliefs and, as a religious organization, was effectively less favored by RHEA than other religious organizations, (3) the State Defendants were unable to show that a compelling governmental interest justified RHEA’s religious employer exemption or that the exemption was narrowly tailored to that interest, and (4) the employer exemption was unconstitutional only as it applied to Organization, not to all similarly situated organizations or insurers.

Organization’s objection to RHEA’s applicability on religious grounds. To comply with RHEA, the Organization was required to purchase health insurance for its employees that covered abortions and abortifacients, which ran counter the Organization’s fundamental mission to advocate for pro-life positions based on its Judeo-Christian values. Prior to this case, the Organization was found ineligible for the religious employer exemption under RHEA on the grounds that the Organization did not inculcate religious values nor served members of its specific religion.

Statute’s religious employer exemption resulted in denominational preference for certain religious organizations. RHEA’s exemption for religious employers differentiated on the basis of the employers’ religious practices. Specifically, RHEA exempted religious organizations that inculcated religious values and served members of its specific religion, as opposed to employers who did not engage in such activities, such as Organization. Granting the exemption to employers due to qualifying religious activities amounted to a “denominational preference” for certain organizations over others, invoking strict scrutiny review. Furthermore, even in the absence of such “preferred” activities, the Organization was held to be a religious organization, as its pro-life mission was expressly based on its Judeo-Christian beliefs.

State Defendants failed to justify exemption under strict scrutiny. Given that RHEA’s religious employer exemption amounted to a denominational preference, the First Amendment subjected the exemption to strict scrutiny review and thus required State Defendants to demonstrate that the statute was: (1) justified by a compelling government interest, and (2) narrowly tailored to advance that interest. State Defendants however failed to justify either element, asserting only that RHEA aimed to ensure “comprehensive reproductive health care for all Oregonians” and to limit the number of religious exceptions. In light of State Defendants’ failure to offer any further reason, the court found that the religious employer exemption under RHEA was unconstitutional as applied to Organization’s religious views.

Declaratory relief limited to Organization, no injunctive relief necessary. The court granted declaratory relief to Organization and elected not to extend such relief to other employers with similar objections to RHEA and would-be insurers because the claims applied to Organization’s particular circumstances. The court further declined to grant injunctive relief against State Defendants to prevent them from denying Organization the religious exemption under RHEA. Declaratory relief was deemed sufficient to protect Organization’s interests, and State Defendants represented that it would abide by the court’s judgment.

The case is No. 6:23-cv-01282-MTK.

Judge: Kasubhai, M.

Attorneys: Shawn M. Lindsay (JurisLaw LLP) for Oregon Right To Life. Brian Simmonds Marshall, Oregon Department of Justice, for Sean O'Day.

Companies: Oregon Right To Life

Cases: CoverageLiability IndividualRights StateLawClaims OregonNews