Labor & Employment Law Daily Wrap Up, DISCRIMINATION—SEX—4th Cir.: CSR not shielded by religious-employer exemption from gay employee’s Title VII sex discrimination claim, (Oct 19, 2026)

By Kathleen Kapusta, J.D.

“Title VII, considering its remedial purpose, does not shield religious employers from liability for discrimination based on race, sex, or national origin even if the employment decision is also motivated by religious belief.”

Affirming a district court’s judgments in favor of a gay IT analyst who sued Catholic Relief Services (CRS) under Title VII and the Maryland Fair Employment Practices Act (MFEPA) after it informed him that his husband’s enrollment in its dependent benefits program had been a mistake because providing dependent benefits to his husband was contrary to its religious values, the Fourth Circuit held that Section 702 of Title VII provides no safe harbor here because the employment decision was based on sex as well as religion and thus the district court did not err in its application of Title VII. Nor did the court err in its application of the MFEPA’s exemption for religiously affiliated employers. As to CRS’s constitutional challenges, the appeals court held that for lay employees like the plaintiff—those not performing a spiritual function, not involved in carrying out the mission of the organization, and not even a member of the church implicitly consenting to its authority—the church autonomy doctrine does not require that courts extend some lesser protection compared to employees of secular organizations. Judge Quattlebaum dissented (Doe v. Catholic Relief Services, No. 25-1569 (4th Cir. Oct. 16, 2026)).

When the employee applied for an IT analyst job with CRS, a nonprofit social services agency affiliated with the Catholic Church, he informed the recruiter that he was gay and was married and was told his husband would be covered by CRS’s dependent health benefits. Five months after he enrolled his husband in CRS’s dependent benefits program, CRS told him that providing dependent benefits to his husband was contrary to its religious values and it eventually terminated his husband’s benefits.

Lawsuit. The employee brought 10 causes of action under state and federal law and relevant to this appeal, the district court granted summary judgment to the employee for liability only on his discrimination claims under Title VII and the Equal Pay Act and certified to the Maryland Supreme Court several questions related to his MFEPA claim. The state high court issued a decision on the certified questions, after which the parties resolved two outstanding claims and proceeded to trial on the MFEPA sexual-orientation discrimination claim.

After the bench trial, the district court entered judgment on the MFEPA claim in favor of the employee and the parties stipulated to $60,000 compensatory damages in the event CRS was found liable for any claims. CRS appealed the district court’s judgments on the employee’s Title VII, EPA, and MFEPA claims.

Title VII. As to the employee’s Title VII claim, CRS argued on appeal that the exemption for religious employers in section 702 shields it from liability for the employment decision at issue. According to CRS, section 702 applies “when a religious employer takes an adverse employment action because an employee’s conduct is incompatible with some aspect of the employer’s religion” such that “the employer is exempt from liability that might otherwise attach under Title VII.”

The court pointed out that while it has previously found that the reach of section 702 is limited “to one particular reason for employment decisions—that based upon religious preference,” and that it “does not confer upon religious organizations a license to make those same decisions on the basis of race, sex, or national origin,” it had not previously addressed whether the exemption applies to a decision based on race and religion, sex and religion, or national origin and religion.

Statutory text. Because the Fourth Circuit had not yet definitively answered how Title VII applies to an employment decision based on race, sex, or national origin and motivated by religion, the court turned to the text of the statute, which provides in relevant part that “[t]his subchapter,” meaning Title VII, “shall not apply” to religious employers “with respect to the employment of individuals of a particular religion.”

The court found this was susceptible to at least two different interpretations: for religious employers, (1) Title VII liability cannot be premised on religious discrimination, or (2) any employment decision based on a religious motivation is exempt from Title VII liability. Considering the structure and purpose of the statutory scheme, the court found the first was the most plausible interpretation of the statute as a whole.

Noting that the primary purpose of Title is remedial and it aim is to eliminate employment discrimination, the court held that “even when an employment decision is motivated by religious belief, section 702 does not apply to claims of discrimination based on sex, race, or national origin.” To hold that section 702 permits religious organizations to discriminate on any basis so long as a religious reason attended, said the court, “would allow the exemption to swallow the rule, which would undermine rather than respect the remedial goals of Title VII.”

In sum, said the court, section 702 provides no safe harbor in this case because the employment decision was based on sex as well as religion and thus the district court did not err in its application of Title VII.

MFEPA claim. Turning to the employee’s MFEPA claim, the court noted that it provides that an employer may not “fail or refuse to hire, discharge, or otherwise discriminate against any individual with respect to the individual’s compensation, terms, conditions, or privileges of employment” based on an employee’s sexual orientation. The prohibition, however, does not apply to “a religious corporation, association, educational institution, or society with respect to the employment of individuals of a particular... sexual orientation[]... to perform work connected with the activities of the religious entity.”

The Maryland Supreme Court, in response to the district court’s certified question, held that for the exemption to apply, the employee’s duties must directly further the core mission(s)—religious or secular, or both—of the religious entity.” After assessing the employee’s various duties here, the district court found that none “directly furthered a CRS mission” as “each of his positions was one or more steps removed from taking the actions that effect CRS goals.” Thus, the district court held that his positions at CRS did not qualify for the exemption.

While CRS challenged the lower court’s focus on the tasks the employee did not perform—his duties did not include serving the poor and vulnerable overseas; soliciting, selecting, or securing funding; or making decisions about CRS’s programmatic goals and its efforts to fulfill its mission—the Maryland high court, observed the court here, “specifically rejected the notion that the legislature’s intent was ‘to allow religious entities to discriminate on the basis of sexual orientation or gender identity against employees whose duties are materially indistinguishable from those performed by individuals at secular organizations.’”

A position that serves a religious organization’s mission is distinguishable because its duties are unlike those at an organization not oriented towards that same mission. And here, the court observed, the employee’s duties were materially indistinguishable from those performed by individuals at secular organizations without the same mission as CRS, “which supports our conclusion that Doe’s roles did not directly further CRS’s mission.”

RFRA. As to CRS’s contention that the federal antidiscrimination statutes at issue here substantially burden its religious exercise and therefore the Religious Freedom Restoration Act requires that the application of these statutes further a compelling interest, the Fourth Circuit found that the RFRA does not apply in cases between private parties and thus it was not an available defense in this case. A plain reading of the statute, said the court, limits its applications to governmental action, and in the context of litigation, governmental action can only be challenged under the RFRA when the government is a party to the suit.

Free Exercise Clause. CRS next argued that enforcement of any of the statutes at issue here violates its First Amendment rights under the Free Exercise Clause because they are not generally applicable. Rejecting CRS’s assertion that the MFEPA is not generally applicable because of the fact-based inquiry courts must undertake to determine whether the exemption applies, the Fourth Circuit explained that this was not the kind of discretion the Supreme Court was concerned about.

The mere existence of an exemption cannot alone undermine general applicability. “Indeed,” said the court, “it strains credulity that any reference to facts to determine whether an employee falls under an exemption intended to benefit religious organizations could render a law not generally applicable vis-à-vis religion. We will not make such a counterintuitive conclusion here.”

Secular exception rule. While a law also lacks general applicability if it prohibits religious conduct while permitting secular conduct that undermines the government’s asserted interests in a similar way, and CRS pointed to Title VII and MFEPA’s exemptions for small businesses with fewer than 15 employees, Title VII and MFEPA apply the same exemption threshold to both secular and religious conduct, the court observed.

EPA’s categorical exemptions. CSR also argued that the EPA includes exemptions that benefit secular employers. Here, the court noted these exemptions created a closer and more difficult question than those for small businesses. “Because of the novelty and difficulty of this question, we ultimately find that the most prudent resolution here is to avoid the issue.” The parties stipulated as to damages such that the employee was entitled to $60,000 in compensatory damages corresponding to any and all claims for which CRS was found liable.

Accordingly, the court explained, a decision as to whether the EPA violates CRS’s “right to freely exercise its religion has no practical effect—both parties will be in the same place either way because we affirm the district court’s judgment on Doe’s Title VII and MFEPA claims.” Thus, out of respect for the complexity of this issue, in the absence of clear authority, and in recognition of the lack of practical effect this decision would have, the court deemed this question moot on appeal.

Church autonomy doctrine. Next, CRS argued that the existence of ecclesiastical themes raised by the parties, including that the employment decision here was based on religious belief, created an affirmative defense. It failed, however, to establish either that the district court resolved or that this court necessarily must resolve an ecclesiastical question beyond its authority and it cited no authority “for the idea that ephemeral ecclesiastical questions require judgment in CRS’s favor.”

It also argued that the court would squarely face a religious question it lacked constitutional authority to resolve if it reversed the district court’s decision on either CRS’s defense under the RFRA or the Free Exercise Clause. The court emphasized that its precedent reveals that the ministerial exception is the form of the church autonomy doctrine that most often applies to questions of employment because those roles are related to “spiritual function.”

Here, the court held that “for lay employees like Doe—those not performing a spiritual function, not involved in carrying out the mission of the organization, and not even a member of the church implicitly consenting to its authority—the church autonomy doctrine does not require that courts extend some lesser protection compared to employees of secular organizations.”

“Following today’s decision,” the court emphasized, “religious organizations maintain complete autonomy in the employment of those who communicate the organization’s religious teachings. And religious organizations may require employees to adhere to religious doctrine so long as such requirements do not discriminate on the basis of race, sex, or national origin. But for those employees who do not perform spiritual functions, the state may act to ensure equal opportunities to work free from discrimination.”

Dissent. In a lengthy dissent, Judge Quattlebaum argued that “Rooted in the text, history and tradition of the First Amendment, the church autonomy doctrine prevents courts from reviewing a religious organization’s conduct based on its faith, doctrine or governance. John Doe’s lawsuit against Catholic Relief Services (CRS) asks the federal courts to do just that.”

“Perhaps it doesn’t feel so bad to trample on the First Amendment rights at stake here because the governmental action that does the trampling seeks to prevent discrimination. But the Constitution—counter-majoritarian at its core—permits no such ends-justifies-the-means selectivity. We must protect the rights the Constitution guarantees whether we agree with their application in a particular case or not. Because the majority fails to do this, with respect, but with deep sadness, I dissent.”

The case is No. 25-1569.

Judge: Floyd, H.

Attorneys: Lauren A. DiMartino (Brown Goldstein & Levy) for John Doe. Joseph Christian Dugan (Gallagher) for Catholic Relief Services.

Companies: Catholic Relief Services; State of Maryland

MainStory: TopStory SexDiscrimination ReligiousDiscrimination Procedure MarylandNews NorthCarolinaNews SouthCarolinaNews VirginiaNews WestVirginiaNews GCNNews