Do Charitable Choice Provisions Preempt State Nondiscrimination Employment Laws?

Faith and Federalism: Do Charitable Choice Provisions Preempt State Nondiscrimination Employment Laws?

McClellan, Melissa

I. Introduction

“We don’t hire people of your faith.”1 Alan Yorker, the top candidate for a psychologist position at the United Methodist Children’s Home in Decatur, Georgia, was not only disappointed that his job interview ended with this abrupt pronouncement about his Jewish faith-he was angry enough to file a lawsuit.2 ‘”It’s painful to have someone tell you they won’t even interview you for a job because of your religion, ‘ ” Yorker explained, ” ‘ [b]ut the pain becomes greater when you realize your own taxes are supporting that discrimination.'”3

If the children’s home were strictly a private religious charity financed by the United Methodist Church, there would be little question whether Yorker’s religious beliefs could disqualify him as an employee.4 Under Title VII of the Civil Rights Act of 1964,5 religious organizations enjoy an exemption from the Act’s general prohibition of religious discrimination in employment.6 But the United Methodist Children’s Home in Decatur, Georgia, like many religiously affiliated children’s homes, receives a substantial amount of its funding from state social service contracts.7 Should government funding affect the organization’s exemption status?

“Tax-funded religious discrimination”8 has become a rallying cry for opponents of “charitable choice,” the informal title for laws and regulations that allow religious organizations to compete for government social service contracts on an equal basis with other private service providers without altering their religious character.9 In this Note, “charitable choice” will refer to the original charitable choice provisions Congress enacted as part of the sweeping welfare reform legislation of 1996.10 The 1996 charitable choice provisions applied primarily to welfare programs funded under block grants to states for Temporary Assistance for Needy Families (TANF).11 The charitable choice provisions direct states distributing these funds to recognize certain safeguards protecting the religious freedom of faith-based service providers.12 The provision addressing religious hiring freedom is the most controversial of these protections.13 section 604a(f) of the charitable choice statute expressly states that government funding does not affect a religious organization’s Title VII exemption.14

President Bush entered the White House in 2001 aiming to expand the role of faith-based organizations in the delivery of social services.15 In his first month in office, Bush created the Office of Faith-Based and Community Initiatives in the White House to facilitate faith-based participation in government-funded welfare programs.16 Two months later, Representative J.C. Watts introduced the Bush Administration’s most ambitious piece of legislation designed to expand charitable choice.17 The “Charitable Choice Act of 2001,” Title II of the Community Solutions Act of 2001, would have extended charitable choice protections for faith-based contractors to eight federal program areas.18 The House passed the Charitable Choice Act in July 2001,19 but the bill had a rougher time in the Senate.20 The Senate’s version of the Community Solutions Act, called the “Charitable Aid, Recovery and Empowerment Act” (CARE),21 did not address faith-based hiring rights or extend charitable choice provisions to specific federal programs.22 The 107th Congress ended without a Senate vote on the CARE Act, and the scaled-back 2003 version of the bill is now in committee.23

Although the Senate has effectively stonewalled legislative attempts to extend charitable choice provisions, President Bush has continued to advance his Faith-Based Initiative via executive orders and administrative policy.24 In December 2002, President Bush issued an executive order to “expand opportunities” for faith-based participation in a broad range of federally-funded social service programs.25 In response, federal agencies have revised their regulations to reflect that faith-based organizations with government contracts retain their Title VII exemption.26

Critics of charitable choice, representing a broad range of political and religious viewpoints,27 believe the government has opened a Pandora’s Box of constitutional evils by encouraging partnerships between religious organizations and the government.28 Critics have voiced special concern about the charitable choice provision that allows religious organizations receiving government funds to retain their hiring exemption under Section 702 of Title VII.29

One of these vocal critics of government-funded employment discrimination is Alan Yorker, whose lawsuit alleged that the partnership between the Georgia Department of Human Resources and the United Methodist Children’s Home constituted government indoctrination of religion and religious discrimination in violation of Title VII of the Civil Rights Act, the Georgia Constitution’s Separation of Church and State Clause, and the Establishment Clause of the First Amendment to the United States Constitution.30 Yorker and his fellow plaintiffs eventually reached a settlement with the United Methodist Children’s Home.31 The complicated legal question of government funding and religious employment discrimination remains unanswered, however, and it is only a matter of time before another lawsuit challenges the statute.32

Although plaintiffs challenging charitable choice laws will likely frame their employment discrimination claims as First Amendment and Title VII violations,33 they may be overlooking civil rights protections provided by state nondiscrimination laws. Most states have their own laws prohibiting religious discrimination, and many of these laws do not fully exempt religious organizations.34 Even if the Supreme Court upholds the constitutionality of the charitable choice provisions, including the Title VII exemption,35 faith-based organizations receiving government funds may still have to comply with state civil rights laws prohibiting religious discrimination.36 Should religious organizations that receive charitable choice funds remain subject to state nondiscrimination laws? Or do the provisions of charitable choice preempt state law and allow faith-based organizations to retain their hiring freedom, regardless of their relationship with the state government?

No court has ruled on the preemption issue, and commentators disagree about the preemptive effect of charitable choice laws on state employment laws.37 The Center for Public Justice and the Christian Legal Society, both strong advocates for charitable choice and the Faith-Based Initiative, assert that state nondiscrimination laws do not apply to religious employers receiving charitable choice funds.38 Professors Ira Lupu and Robert Turtle of the Roundtable on Religion and Social Welfare Policy disagree and direct faith-based organizations that receive charitable choice funds to comply with state and local employment guidelines.39 The Working Group on Human Needs and Faith-Based and Community Initiatives, an organization representing bipartisan civil liberties and religious groups, aptly characterizes the preemption question as an issue in dispute.”40

The preemption question is crucial to faith-based employers participating in charitable choice programs, but as the split in opinions indicates, the answer is not immediately apparent from the face of the 1996 statute. In addition to highlighting important practical considerations facing faith-based organizations, the preemption question implicates larger issues of federalism and the interplay of federal and state laws. This Note applies traditional doctrines of federal-state preemption law to the original charitable choice provisions in 42 U.S.C. section 604a to determine whether faith-based organizations receiving charitable choice funds remain subject to state nondiscrimination laws. Part II of this Note provides a brief overview of charitable choice and the Faith-Based Initiative, examines the Title VII exemption for religious employers, and surveys the state nondiscrimination laws that may affect faith-based organizations contracting with the government. Part III examines federal preemption doctrines and anticipates how the doctrines will apply in the charitable choice context. Part IV outlines the policy questions Congress should consider before choosing to override state nondiscrimination laws. Part IV also addresses the possible implications of the Supreme Court’s recent decision in Locke v. Davey on different federal and state standards regulating government funding of religious organizations. Part V concludes that the charitable choice provisions do not preempt state laws, with a caveat for religious organizations that receive indirect funding for inherently religious services. Finally, this Note calls for states to provide faith-based specific contracts that outline how state and federal employment laws apply to religious organizations participating in charitable choice programs.

II. Background of the Issue

A. Charitable Choice and the Faith-Based Initiative

Congress introduced charitable choice in the Personal Responsibility and Work Opportunity Act of 199641 (Welfare Reform Act) to ensure that faithbased organizations42 could compete for and receive government social service funding without diluting their religious character.43 The concept of private service organizations formally contracting with the government has roots in Lyndon Johnson’s Great Society programs-programs that encouraged partnerships between nonprofit community organizations and the government.44 In the past, religious organizations receiving government funding for their social programs carefully separated secular services from their pervasively sectarian institutions.45 Groups such as Catholic Charities and Lutheran Social Services took advantage of government funding by establishing separate nonprofit organizations and removing religious symbols from service areas.46

The charitable choice provisions in the 1996 Welfare Reform Act ensure that faith-based organizations can receive social service contracts without taking down religious artwork, altering their internal governance, or creating separate non-profit organizations.47 The charitable choice statute also expressly stipulates that religious organizations maintain their Title VII exemption to use religious criteria in hiring when they receive specified government funds.48 Charitable choice curtails the religious activities of the organizations, however, by prohibiting direct expenditure of government funds on proselytization or worship.49 The statute further protects the rights of beneficiaries by requiring states to provide alternative assistance for any beneficiary who objects to the religious character of the service provider.50 The statute also states that religious organizations receiving charitable choice funds cannot discriminate against beneficiaries on the basis of religious belief or “refusal to participate in a religious practice.”51

Congress extended charitable choice to the Welfare-to-Work program in 1997,52 the Community Service Block Grants in 1998,53 and the Substance Abuse Prevention and Treatment Block Grants in 2000.54 Upon taking office in January 2001, President Bush began to push for more participation by religious organizations in government-funded social programs,55 giving the “Faith-Based and Community Initiative” an exalted position in his domestic policy.56 Although Bush’s legislative attempts to expand charitable choice have not survived the Senate,57 he has issued four executive orders to “remove barriers” and “level the playing field” for faith-based organizations to seek federal grants for their social service programs.58

Buried within the larger Welfare Reform Act of 1996, the original charitable choice provisions received little attention when they were passed.59 These newer initiatives to expand charitable choice, however, have sparked a debate over the constitutionality of government-funded religious service providers.60 Of all the contentious issues in the debate, the right of faith-based organizations to make employment decisions based on religion has generated the most heated discussions.61 Alan Yorker’s experience with the United Methodist Children’s Home in Georgia illustrates that “removing barriers” to religious hiring freedom necessarily results in new barriers to employment.62

B. Title VII Hiring Exemption for Religious Organizations

Title VII of the 1964 Civil Rights Act, the major federal antidiscrimination employment law that applies to private and public employers with fifteen or more employees, contains an express, limited exemption for religious organizations.63 The exemption, section 702 of Title VII, allows religious organizations to make hiring decisions based on religion, but not on the other characteristics prohibited by the act (race, color, national origin, or sex).64 The Title VII religious discrimination exemption is not limited to employees in ministerial positions; it applies to all employees of a nonprofit religious organization.65

The original Title VH exemption for religious employers in the 1964 Civil Rights Act had a narrower scope, limiting the exemption to employment related to “religious activities.”66 In 1972 Congress deleted the qualifier “religious” in front of “activities”; the amended exemption now applies to “its activities.”67 In a 1987 case interpreting the amended language, the Supreme Court applied the amended Title VII exemption for religious employers to a nonministerial position in the secular nonprofit arm of a religious organization.68 In Corp, of the Presiding Bishop of the Church of Jesus Christ of Latter Day Saints v. Amos,69 the appellee, Arthur Mayson, worked as a building engineer at a gymnasium owned and operated by the Latter Day Saints (LDS) Church.70 Although Mayson’s duties were not even tangentially related to the religious beliefs or activities of the church, Mayson lost his job when he failed to qualify for a “temple recommend,” a certificate representing standing as a participating member of the Church.71 Mayson brought a lawsuit charging that the LDS Church discriminated on the basis of religion in violation of section 702 of the Civil Rights Act of 1964.72 When the LDS Church moved to dismiss on the ground that section 702 exempted the Church from religious discrimination claims, Mayson argued that if the exemption were construed to allow religious employers to discriminate on the basis of religion in nonreligious jobs, section 702 would violate the Establishment Clause of the Constitution.73 The Supreme Court disagreed.74 After examining the legislative history of the amendment, the Court determined that Congress intended to minimize governmental interference in the decision-making process of religious organizations.75 Deeming noninterference to be a legitimate legislative purpose,76 the Court found “ample room under the Establishment Clause for ‘benevolent neutrality which will permit religious exercise to exist without sponsorship and without interference.'”77 Thus, section 702 of Title VII allows religious organizations to make hiring decisions based on religious grounds, even when the employment is not related to the religious activities of the organization.

Section 604a(f) of the charitable choice statute states that religious organizations receiving government funds under specified programs retain their Title VII hiring exemption.78 Although the Title VII exemption has not been particularly controversial when applied to private religious organizations, some argue that when those organizations choose to receive government funds for their programs they effectively waive their exemption.79 Opponents of charitable choice rail against what they perceive to be government-funded religious discrimination.80

The rhetoric sounds persuasive, but the position is probably not legally defensible under Title VII. The exemption for religious organizations appears to apply regardless of whether the organization receives government funding. The statute does not speak to the relationship between the religious organization and the government, and lower courts have ruled that government funding simply does not affect a religious organization’s status under Title VII.81 In Hall v. Baptist Memorial Health Care Corp.82 the United States Court of Appeals for the Sixth Circuit held that the Baptist Memorial College of Health Sciences did not waive its Title VII exemption from religious discrimination claims when it accepted federal funds.83 The Sixth Circuit reasoned that religious organizations could never waive Title VII exemptions because they “reflect a decision by Congress that religious organizations have a constitutional right to be free from governmental intervention.”84 Contrary to the Sixth Circuit’s intimation, the Supreme Court has never held that a religious organization has a constitutional right to discriminate in any job position.85 Even without a constitutional mandate, however, the language of Title VII suggests that the exemption is absolute for employers who fall within the statute’s broad category of “religious entities.”86 Following the line of reasoning in Amos and Hall, faith-based organizations that receive government funding under the charitable choice statute most likely can discriminate on religious grounds for any position without violating Title VII or jeopardizing their eligibility for federal funds.

C. State Nondiscrimination Laws

Although Title VII does not address government funding of religious groups, many states and municipalities have their own laws prohibiting jovernment-funded religious discrimination.87 According to a report from the Roundtable on Religion and Social Welfare Policy, forty-six states have laws prohibiting employment discrimination on the basis of religion.88 All but three of those states provide an exemption for religious employers,89 but the exemptions vary and may not apply to faith-based organizations that receive state funds. For example, eighteen states currently have laws stating that religious organizations contracting with the government waive their exemption from state nondiscrimination law.90 Another set of state laws limits the exemption to “the purpose of carrying on … religious activities”91 or “to promote . . . religious principles.”92 Because the charitable choice statute prohibits the expenditure of government funds on “sectarian worship, instruction, orproselytization,”93 faith-based organizations may surrender their hiring freedom in states with limited, ministerial-type exemptions.94 Additionally, most major cities also have their own laws forbidding all organizations contracting with the city from exercising religious hiring preferences.95

With so much variation in federal, state, and local employment law, not to mention the confusion inherent in church-state relationships, it is not surprising that states and faith-based organizations are implementing charitable choice inconsistently. A 2002 report from the United States General Accounting Office (GAO) noted that some state, local, and faith-based organization officials were unaware of the religious employer exception to federal discrimination law, and that a number of the state and local officials who were aware of the exception nevertheless believed it “to be in conflict with local antidiscrimination laws.”96 Despite efforts in many states to create agencies or to appoint liaisons to facilitate the implementation of charitable choice,97 the GAO study found that “few local and [faith-based organization officials] we interviewed recalled receiving any guidance on the safeguards, informal or otherwise, from state or local officials, respectively.”98

The lack of clear guidelines in state social service contracts exacerbates this confusion. Currently, many state contracts for funding have employment discrimination provisions that require compliance with “federal and state law,” and some contracts explicitly forbid religious discrimination and do not exempt religious organizations.99 Because the language was not drafted with charitable choice and faith-based service providers in mind, the contracts confuse religious organizations.100 Faith-based organizations have access to information about charitable choice and federal laws.101 When it comes to state law, however, faith-based organizations are encouraged to consult an attorney to navigate the complicated questions about state laws and religious hiring freedom.102

The White House offers a solution to the confusion: simply permit faithbased organizations to retain religious hiring freedom.103 Because the different patterns of exemptions in federal and state law have created a “patchwork quilt of conflicting approaches,” the White House advocates changing conflicting federal standards to create a uniform federal exemption for religious organizations.104 At the state level, however, “the President will urge the courts to provide guidance on whether faith-based organizations are required to comply with state and local ordinances that restrict their ability to participate in Federally funded formula and block grant programs.”105 President Bush has turned to the courts for guidance on the relationship between state and federal law, but the courts will look to Congress to determine whether charitable choice displaces state nondiscrimination statutes. Preemption is largely a question of congressional intent,106 and as the Supreme Court has noted, “the courts should not assume the role which our system assigns to Congress.”107

III. Federal-State Preemption Law

A. An Overview of the Preemption Paradigm

The question of whether state nondiscrimination laws apply in light of charitable choice implicates important issues of state sovereignty, federalism, and the doctrine of preemption, perhaps the “most frequently used doctrine of constitutional law in practice.”108 When evaluating preemption cases, the Supreme Court uses a standard framework for preemption that is easy to summarize but difficult to apply.109 In brief, the Constitution’s Supremacy Clause grants Congress the power to displace state laws in any area where Congress has the power to regulate.”110 However, the Court recognizes a presumption against preemption when states are regulating in their traditional areas of authority.111 Congress may expressly exercise its powers to preempt by including a preemption clause in the statute.112 If Congress does not specifically address preemption in the statute, it may implicitly achieve the same effect by occupying a field of regulation so completely that it leaves no room for the states to supplement it113 or by passing legislation that conflicts with state law.114 When deciding whether state and federal laws conflict, the Court will first consider the respective legislative purposes reflected by the statutes and then determine whether compliance with both federal and state law would be actually or legally impossible.115 Finally, the Court will ask the broader question of whether the state law acts as an impermissible obstacle to achieving the full purpose of the federal statute.116

Courts will likely apply this paradigm to a charitable choice preemption challenge. Predicting where the paradigm will lead jurists is more difficult to predict; the Supreme Court’s preemption cases have created an enigmatic set of precedents.117 As Professor Caleb Nelson observed, “Most commentators who write about preemption agree on at least one thing: Modern preemption jurisprudence is a muddle.”118 Working through the muddle, however, yields an indication of how courts should evaluate the charitable choice preemption question.

B. Presumption Against Preemption

The Supreme Court has routinely recognized a presumption against preemption, especially when the states are regulating in an area traditionally under their authority.119 The presumption requires that courts “start with the assumption that the historic police powers of the States were not to be superseded by the Federal Act unless that was the clear and manifest purpose of Congress.”120 Furthermore, the presumption “provides assurance that ‘the federal-state balance’ . . . will not be disturbed unintentionally … by the courts.”121 Following this line of reasoning, courts should apply the presumption when determining whether the charitable choice statute overrides state nondiscrimination laws because the nondiscrimination laws flow from the states’ police powers.122 The states have traditionally enjoyed broad authority under their police powers to regulate all aspects of the employment relationship-including discrimination-to protect workers within the state.123

In his dissenting opinion in Gade v. National Solid Wastes Management Association,124 a 1992 case dealing with the Occupational Safety and Health Act, Justice Souter argued that the preemption analysis should begin with the presumption against displacing state law.125 He asserted, “If the statute’s terms can be read sensibly not to have a preemptive effect, the presumption controls and no pre-emption may be inferred.”126 If Souter’s characterization of the presumption were accurate, a state nondiscrimination law would easily escape a preemption challenge in a charitable choice lawsuit. One could sensibly construe the provisions of 42 U.S.C. Section 604a to preserve the status quo regarding federal and state employment law. The statute could serve to protect the religious character of faith-based organizations and to prevent states from discriminating against faith-based service providers without requiring the preemption of state employment laws.127 Of course, this reading is not the only possible construction of the statute,128 but it is sensible and avoids preemption.

The presumption will probably not settle the question, however-at least not at the outset of the preemption analysis. Justice Souter’s characterization of the presumption against preemption does not comport with the Court’s recent preemption decisions.129 In practice, the presumption does not consistently temper the Court’s interpretation of statutes.130 Indeed, several scholars have commented that the Court’s usual recitation of the presumption against preemption is all but meaningless.131

Consider, for example, Egelhoff v. Egelhoff.132 In this 2001 preemption case, the Supreme Court concluded that the Employment Retirement Income Security Act of 1974 (ERISA) displaced a Washington statute providing that a divorce automatically revokes the designation of a spouse as a beneficiary in a life insurance plan.133 Because the Washington statute regulated family property law, an area of law traditionally governed by the states, the presumption against preemption should have shaped the Court’s interpretation of the state and federal statutes.134 In his dissent, Justice Breyer argued that the Court could have read the state law to supplement ERISA, thereby honoring the presumption against preemption.135 Justice Thomas’s majority opinion took note of the presumption against preemption, but he quickly dismissed the presumption in light of Congress’s “clear” intent to preempt state law.136 The majority’s casual treatment of the presumption in Egelhoff prompted Professor Calvin Massey to lament, “If the national motto ‘In God We Trust’ is a ‘ceremonial deism,’ the presumption against preemption is a ceremonial federalism.”137

Massey’s characterization may overstate the declining value of the presumption. As long as the Court continues to acknowledge the presumption against preemption in its opinions, the presumption may yet prove conclusive in close cases. ’38 Because the charitable choice statute presents a difficult preemption challenge, the presumption could be the deciding factor in determining whether the federal provisions override state laws. The Supreme Court’s recent applications of the presumption, however, indicate that the Court will not allow the presumption to solve the question at the outset of the preemption analysis. The Court will first evaluate the charitable choice statute and state nondiscrimination laws under the other preemption doctrines.

C. Congressional Intent and Implied Preemption

Congressional intent is the touchstone of the preemption inquiry.139 When determining congressional intent, courts first turn to the language, structure, and purpose of the statute.140 Even when Congress includes a clause expressly addressing preemption, as it did in ERISA,141 questions remain about the extent to which Congress intended to displace state law.142 In the charitable choice statute, however, Congress included no clause expressly preempting state law.143 Thus, courts will look to the implied preemption doctrines to discern Congress’s intent. The Supreme Court has recognized two general ways Congress may implicitly override state lawfield preemption and conflict preemption.144

1. Field Preemption and the Title VII Exemption

Congress may choose to regulate a field of law so completely that state authority is necessarily preempted.145 Congress may occupy the field by passing legislation in an area where the federal interest is so superior to the state interest that the federal law overrides any state laws touching on the same subject. For example, in a 1941 preemption case146 the Supreme Court found that the federal government’s supremacy in the general field of foreign affairs superseded a state’s interest in regulating aliens within its borders, and therefore Congress’s comprehensive plan for alien registration preempted more restrictive state registration laws.147 Similarly, Congress may occupy a field of law by passing legislation that regulates a field so pervasively that it “leaves no room for the states to supplement it.”148 The Nuclear Energy Act, for example, illustrates Congress’s intent to regulate the field of nuclear safety concerns except for limited powers expressly retained by the states.149 The Supreme Court determined in a 1983 preemption case that Congress intended for the federal government to maintain “complete control of the safety and ‘nuclear’ aspects of energy generation,” while allowing states to retain their traditional authority over the general regulation of energy production.150

Neither type of field preemption applies to the charitable choice dilemma. Congress has not expressed the intention to occupy the field of law addressing social service contracts or governing the relationship between religious service providers and the state. In fact, welfare programs are largely a matter of state concern.151 As welfare policy researchers noted, the 1996 reforms to TANF “expressed a theory of federalism, in which states were given flexibility in designing policies and dealing with clients in exchange for state accountability to financial penalties and bonuses attached to program goals.”152 Far from occupying the field of welfare law, Congress created a broad framework within which states are expected to legislate.

With respect to the field of antidiscrimination employment law, although the federal government has passed important pieces of antidiscrimination law that apply to employers, the states retain authority to regulate employment within their borders.153 Specifically, the charitable choice statute preserves a religious organization’s exemption under Title VII of the Civil Rights Act of 1964.154 However, Congress did not intend for Title VII to occupy the field of antidiscrimination employment law.155 In fact, the language of section 1104 of Title XI of the Civil Rights Act of 1964 supports the idea of state supplementation. That section provides that no part of the Act should be construed to indicate “an intent on the part of Congress to occupy the field in which any such title operates to the exclusion of State laws on the same subject matter.”156 Although Section 1104 goes on to provide that the Act may override state laws “inconsistent with any of the purposes of this Act, or any provision thereof,” Congress provided an even narrower preemption inquiry for Title VII.157 According to section 708, Title VII preempts only state laws that would result in a violation of Title VII.158

In other words, Congress has preserved the states’ authority to enact nondiscrimination laws that provide more protection for employees.159 For example, the Supreme Court upheld state employment laws that provide greater protection for pregnant workers than Title VII requires.160 Additionally, some states have chosen to prohibit discrimination on the basis of sexual orientation, which is not protected by Title VII. 161 Applying this reasoning to the charitable choice context, it appears that Section 702 of Title VII does not mandate religious hiring freedom for religious organizations-it simply states that the federal prohibitions on religious discrimination do not apply to religious employers.162 A state law prohibiting government-funded religious employers from discriminating on the basis of religion provides additional protection for employees. In this sense, the state law does not violate Title VII, it supplements Title VII. Thus, Title VII does not preempt state laws providing greater protection against religious employment discrimination.

2. Actual Conflict Preemption

Although Congress has not preempted state antidiscrimination law by its pervasive regulation of the field of employment law, courts will also examine whether state laws conflict with the charitable choice statute. In Perez v. Campbell,163 the Supreme Court stated that “[d]eciding whether a state statute is in conflict with a federal statute and hence invalid under the Supremacy Clause is essentially a two-step process of first ascertaining the construction of the two statutes and then determining the constitutional question whether they are in conflict.”164 If compliance with both the state and federal law would be physically impossible, the federal law preempts the state law.165 In Perez, the court applied conflict preemption to a situation where compliance with both statues was logically impossible.166 In that case, the state statute required an uninsured negligent driver to pay tort damages and withheld driving privileges until the driver satisfied the judgment.167 The state law specifically noted that the obligation to pay damages could not be discharged in bankruptcy,168 contrary to the federal Bankruptcy Act, which granted debtors a broad discharge from tort damages.169 The Supreme Court found that the state law conflicted with the federal statute’s broad discharge for debtors and thus concluded that the Bankruptcy Act preempted the state law.170

Applying the Perez reasoning to 42 U.S.C. Section 604a, if the charitable choice provisions imply that religious organizations do not have to comply with laws restricting their hiring freedom, contrary state nondiscrimination laws would be preempted due to actual conflict with the federal statute. The relevant provisions of the charitable choice statute are the subsections outlining charitable choice’s purpose171 and the safeguards for religious character and freedom.172 The stated purpose of the federal charitable choice statute “is to allow States to contract with religious organizations . . . without impairing the religious character of such organizations, and without diminishing the religious freedom of beneficiaries of assistance funded under [charitable choice programs].”173 The statute safeguards the religious character of the organizations by providing that a religious organization with a charitable choice contract “shall retain its independence from Federal, State and local governments, including such organization’s control over the definition, development, practice, and expression of its religious beliefs.”174 The statute further provides that a religious organization shall not be required by either a state or the federal government to “alter its form of internal governance” to receive funding.175

Proponents of preemption believe these charitable choice sections demonstrate Congress’s intent to preempt state employment or procurement laws that would inhibit religious hiring freedom.176 According to the Christian Legal Society’s (CLS) construction of the statute, the provision that religious organizations retain independence from state and local governments over the definition and development of their religious beliefs includes the implied right to discriminate in hiring if the organization “has a sincere religious belief concerning religious staffing.”177 Additionally, CLS argues that the provision stating that religious organizations need not alter their “internal governance” must refer to the organization’s employment practices regarding “officers and other key personnel.”178 The CLS reading of the statue thus construes an actual conflict between the 42 U.S.C. Section 604a and state laws that would restrict religious hiring freedom for organizations receiving funds under charitable choice.179

Although the CLS reading of the statute is plausible, the language of the statute is more ambiguous than the CLS analysis suggests. First, the charitable choice statute provides that religious organizations are not required to alter their “internal governance,”180 but the statute does not define this phrase. Congress may have been referring to the religious organization’s governing board rather than its employees-the statute is not clear on this point. Additionally, though charitable choice preserves a religious organization’s independence from state and local government, including control over “the definition, development, practice, and expression of its religious beliefs,”181 the term “religious beliefs” appears to limit this grant of independence. Arguably, religious organizations do not define or express their religious beliefs when they offer secular social services funded by charitable choice.

For insight on this point, return to the Supreme Court’s opinion in Amos.182 Amos is not controlling in the preemption context, but the decision sheds some light on how a court might interpret a religious organization’s right to define its religious beliefs. In his concurring opinion, Justice Brennan agreed with the majority’s decision to apply the Title VII religious employer exemption to the seemingly secular nonprofit activities of the Latter Day Saints Church, but his justification for the exemption rested on the fact that it would be too difficult for courts to distinguish between the religious and nonreligious activities of a religious organization.183 Ideally, religious organizations should be permitted “to discriminate on the basis of religion only with respect to religious activities, so that a determination should be made in each case whether an activity is religious or secular.”184 In Brennan’s opinion, “the infringement on religious liberty that results from conditioning performance of secular activity upon religious belief cannot be defended as necessary for the community’s self-definition.”185

Although Brennan believed that religious discrimination in employment should be limited to religious activities, he recognized that the autonomy of religious organizations required courts to refrain from evaluating the religious character of their activities on a case-by-case basis.186 The problem of characterizing the nature of the activity as religious or secular served as the primary justification for a categorical exemption for religious nonprofit organizations. The categorical exemption allows courts to avoid excessive entanglement and relieves religious organizations from trying to anticipate whether a court would consider its activities religious or secular.187

a. Direct Funding

The charitable choice statute, however, addresses Brennan’s concern in Amos by delineating how religious organizations receiving direct government funding may use the money. Section 604a (j) expressly prohibits organizations that receive direct government funds from spending the funds on “sectarian worship, instruction, or proselytization.”188 These prohibitions should reduce ambiguities about the religious nature of an organization’s activity. To receive direct government funds, the religious organization must provide “inherently secular” social services.189

The charitable choice prohibitions against direct expenditures of government funds on religious instruction require religious organizations to assess the religious nature of their social service programs. The organizations, rather than the courts, bear the responsibility of characterizing their nonprofit activities as religious or secular. This separation should ameliorate concerns about excessive entanglement. The distinction between religious and secular activities also weakens the Christian Legal Society’s broad construction of a religious organization’s right to define, practice, and develop its religious beliefs through its employment decisions.190 For example, a faith-based organization operating a government-funded soup kitchen is providing a secular service. Even if some of the organization’s employees view their work as fulfilling a religious duty or advancing the organization’s religious mission, the service it provides is not inherently religious-assuming the employees are not providing spiritual instruction along with the soup. In most direct funding cases, it will be clear that the religious service provider does not need to discriminate on the basis of religion to effectively carry out its secular program. Therefore, state nondiscrimination laws would not actually conflict with the charitable choice statutory grant of religious autonomy to faith-based service providers.

b. Indirect Funding

Charitable choice’s prohibition on proselytization and religious instruction applies only to organizations that receive direct government funds.191 Some religious service providers receive charitable choice funds only through indirect channels such as vouchers.192 For these service providers, the primary restraint on the religious content of their programs, at the federal level,193 is the Establishment Clause of the Constitution,194 The Supreme Court has interpreted the Establishment Clause to allow broad freedom for religious expression, regardless of government funding.195 Thus, faith-based organizations receiving only indirect funding have more flexibility in designing the spiritual content of their programs.

In a recent charitable choice case, Freedom from Religion Foundation v. McCallum,196 the United States Court of Appeals for the Seventh Circuit followed the Supreme Court’s lead and concluded that Wisconsin did not violate the Establishment Clause when it provided indirect funding to an inherently religious addiction recovery program.197 Under Wisconsin’s program, a convicted criminal who violated his parole or probation could, as an alternative to returning to prison, choose to enroll in one of the several halfway houses authorized by the state.198 The state’s list of halfway houses included Faith Works, a Christian rehabilitation program.199 Parole officers who recommended Faith Works to parolees were required to explain that the program had a significant religious component.200 Parole officers also informed parolees that they were free to choose a secular alternative.201 For every parolee who enrolled in Faith Works, the state reimbursed the program for an amount specified in its contract.202 The plaintiff taxpayers argued that the state’s funding arrangement with Faith Works constituted a violation of the Establishment Clause of the Constitution.203

At trial, Faith Works emphasized the secular nature of Faith Work’s program and argued that it could separate the religious aspects of its program from the secular components.204 The district court rejected the argument and noted that Faith Works won the state contract because of its “unique long-term, faith-based approach.”205 The district court would not permit Faith Works to disavow its inherently religious character, but it concluded that the religious components of Faith Works did not affect the program’s eligibility for state funding.206 The district court reasoned “simply because a state-funded program engages in indoctrination does not mean that the program’s funding is unconstitutional.”207

Instead of focusing on the religious nature of the program, both the district court and the Seventh Circuit scrutinized the state’s contractual relationship with Faith Works.208 The courts agreed that the state’s practice of reimbursing Faith Works for each parolee who voluntarily enrolled in the program was effectively the same as providing vouchers to the parolees-the state simply skipped the intermediate step of putting the voucher in the hands of the parolee.209 Judge Posner analogized Wisconsin’s indirect funding of Faith Works with state voucher programs that fund parochial schools, a practice that the Supreme Court has upheld under the Establishment Clause.210

If McCallum reflects a sound application of Establishment Clause principles,211 it may stand for a narrow situation in which charitable choice provisions preempt state nondiscrimination employment laws. The Christian Legal Society argument for actual conflict preemption becomes more persuasive in the indirect funding context because the Section 604a(j) constraints on proselytization and religious teaching no longer apply.212 Without statutory restrictions on religious expression, the provisions in charitable choice protecting the religious organization’s right to define, develop, and practice its religious beliefs could conflict with state laws that deny religious organizations the right to make religiously motivated hiring decisions.

The preemption question did not arise in McCallum because Wisconsin law expressly states that government social service funding does not affect a religious organization’s freedom to make employment decisions based on religion.213 Imagine that Wisconsin had a law forbidding any organization receiving state funds from discriminating on the basis of religion in employment decisions. If the state law applied to Faith Works, the results would be illogical. The federal charitable choice provisions protect Faith Works’s independence from state laws affecting its “control over the definition, development, practice and expression of its religious beliefs.”214 The entire Faith Works program is infused with the organization’s Christian beliefs, and the organization expects its employees to proselytize and offer spiritual guidance to program participants on an as-needed basis.215 Faith Works could not carry out these aspects of its program if the state nondiscrimination law prohibited it from assembling a Christian staff.216 In other words, Faith Works has a legitimate need to make hiring decisions based on religious criteria to “define, develop, and practice” the organization’s religious beliefs.217 According to the doctrine of conflict preemption, the federal charitable choice laws would displace the conflicting state law. This preemption is narrow, however, and would only apply to an organization such as Faith Works that receives indirect funding and demonstrates a concrete need to define, develop, practice, and express its religious beliefs through its employment decisions.

3. Obstacle Conflict Preemption

If no actual conflict exists between the charitable choice statute and the state nondiscrimination law, courts will ask whether the state law “stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.”218 Because the obstacle conflict doctrine requires courts to “consider the relationship between state and federal laws as they are interpreted and applied, not merely as they are written,”219 courts evaluating a preemption challenge will look at the express purposes of the statutes and at how the laws operate in practice.

According to Section 604a(b), the purpose of the charitable choice statute is to allow religious organizations to compete for government contracts without “impairing their religious character.”220 The statute does not formally define “religious character,” but the Supreme Court’s decision in Geier v. American Honda Motor Co., Inc.221 indicates that the Court is willing to rely on information extrinsic to the statute to better understand the federal objective.222 In Geier, the plaintiff sued American Honda under District of Columbia tort law claiming that Honda had negligently manufactured the plaintiff’s car because it did not include a driver’s side airbag.223 The federal regulation in question was a Federal Motor Vehicle Safety Standard (FMVSS) promulgated by the Department of Transportation under the authority of the National Traffic and Motor Vehicle Safety Act of 1966.224 The FMVSS required auto manufacturers to equip some, but not all, of their 1987 vehicles with passive restraints.225 The plaintiff characterized the federal safety standard as a minimum requirement meant to encourage the auto industry to install more airbags.226 The Supreme Court, however, looked to the history of the safety standard and determined that the Department of Transportation had considered the effect a passive restraint requirement would have on the auto industry and public before the agency decided to impose gradual implementation.227 The Department of Transportation experimented with different requirements for the auto industry to implement passive restraint technology.228 Devices such as ignition locks were unpopular with the public, however, and airbags were especially expensive and posed safety risks to small women and children. Based on these findings, the Department of Transportation concluded that a step-wise requirement would give manufacturers more time to improve passive restraint technology while allowing the public to warm up to the idea of passive restraints, thus reducing the backlash that an expensive mandatory requirement would likely produce.229 After considering the Department of Transportation’s explanation, the Court decided that FMVSS 208 reflected the agency’s intent to gradually develop passive restraint devices for “safety-related” reasons, and, thus, FMVSS 208 preempted the state tort law cause of action because it stood as an “‘obstacle’ to the accomplishment of that objective.”230 Geier indicates that the Court will consider extrinsic information both to discern a more complete picture of Congress’s intent and to anticipate the state law’s effect on the overall federal objective.

The reasoning in Geier could have implications for charitable choice if courts choose to take a comprehensive view of faith-based participation in social welfare programs. Empirically, religious hiring freedom appears to be an important element of increasing the role of religious organizations in the delivery of government-funded social services.231 In a survey of four hundred faith-based organizations participating in government contracts, sixty-seven percent of participants reported that being able to exercise religious hiring preferences was “very” or “somewhat” important to them.232 Significantly, eighty-nine percent of “fully expressive” faith-based organizations said that the religious hiring preference was somewhat/very important, as did seventy-three percent of congregations and seventy-one percent of new participants.233 Thus, the survey results indicate that the hiring exemption is most important to the contractors who began contracting with the government after Congress enacted charitable choice. These organizations are also the most religiously expressive and, interestingly, appear to be the most aware of charitable choice law and the most active in trying to comply with the statute.234 Additionally, seventy-five percent of the faith-based contractors polled indicated that they had plans to seek other sources of funding if government or local requirements began threatening the “religious character” of their organizations.235 These survey results suggest that many faith-based organizations-especially organizations that began participating in government contracts after Congress enacted charitable choice-value the freedom to base their hiring decision on religious grounds.

Inspired by the fact that religious organizations value hiring freedom, some advocates of preemption suggest that state laws that curtail hiring freedom are an impermissible obstacle to Congress’s purpose in enacting charitable choice.236 For example, in his article Charitable Choice and the Critics, Professor Carl Esbeck argues that state and local nondiscrimination laws should not apply to faith-based organizations receiving charitable choice funds because “the federal statutory guarantees in charitable choice that promise to protect the ‘religious character’ and ‘internal governance’ of FBOs preempt contrary provisions in state and local laws.”237 Although Esbeck does not directly address the preemption doctrines in his argument for why charitable choice trumps state laws, he makes, in effect, an obstacle-conflict argument for preemption. Esbeck asserts that if religious organizations are not permitted to make hiring decisions based on their “sense of mission, then they will not be able to sustain the impressive record they now have of successfully helping the poor and needy.”238 If Esbeck’s assessment is correct-religious organizations cannot both comply with nondiscrimination laws and operate effectively as service providers-then state laws would indeed act as impermissible stumbling blocks to charitable choice objectives. Surely, Congress did not intend to protect the “religious character” of faith-based organizations receiving government funds only to permit state laws to render the organizations completely ineffective.

There are two flaws, however, in these arguments for obstacle conflict preemption. First, arguments such as Esbeck’s tend to focus solely on how religious organizations view the right to exercise religious hiring preferences and thereby lose sight of the fact that congressional intent is the touchstone of the preemption analysis.239 It is the federal objective that ultimately determines whether state laws stand preempted, not the consensus of charitable choice advocates.

In Geier, the Supreme Court’s most expansive application of the obstacle-conflict doctrine to date,240 the Court considered the empirical findings about public reaction to the passive restraint devices because the evidence influenced the agency’s decision to enact a gradual implementation requirement.241 In contrast, there is no indication that Congress considered the value of religious hiring freedom to faith-based service providers when it enacted the 1996 charitable choice provisions.242 Though relevant to a policy discussion, empirical evidence indicating that faith-based organizations value hiring freedom does not carry legal significance in the preemption analysis, unless the state laws restricting hiring freedom would actually interfere with the fulfillment of Congress’s purpose in enacting charitable choice.

This point leads to the second flaw with the obstacle preemption argument: the arguments advanced by proponents of preemption assume that the purpose of charitable choice is to remove all legal barriers that might deter faith-based participation in government services.243 For example, the Christian Legal Society asserts that if state nondiscrimination laws applied to faith-based service providers, “[t]he consequence would be that the all-out attempt to draw [faith-based organizations] into the nation’s effort to make welfare delivery more effective and efficient would fail.”244 Although it is clear that President Bush’s Faith-Based Initiative seeks to expand faith-based participation in social service contracts, his strong push for more participation began five years after Congress passed the charitable choice provisions in the Welfare Reform Act.245 The more salient questions for the preemption inquiry address Congress’s intent when it initially passed the legislation.246 Did Congress intend to boost overall participation by religious groups at all costs? Or did Congress intend merely to prevent states from discriminating against faith-based applicants for government service contracts?247

Because the language of the statute allows room for debate,248 courts will likely turn to legislative history to discern Congress’s purpose.249 Unfortunately, legislative history for the 1996 charitable choice statute does not provide any additional information about Congress’s intent when it enacted charitable choice.250 No congressional committee meeting addressed the charitable choice provisions, much less the state law preemption implications.251 In light of the current buzz over charitable choice and the employment question, the lack of attention to its initial enactment appears strange. Congress’s silence appears less mystifying, however, when one considers that the 1996 charitable choice provisions constituted a comparatively miniscule subchapter in the massive legislative overhaul of the welfare system.252

Congress passed legislation extending charitable choice provisions to other federal programs during Clinton’s presidency, but none of these measures generated useful legislative history.253 President Bush’s Faith-Based Initiative brought the latent divisions over government funding of religious organizations to light, both in the media and on the floor of Congress. The legislative history of the House Charitable Choice Act of 2001 and the Senate CARE Act reveal that it is impossible to articulate a congressional objective regarding the role of faith-based organizations in the delivery of government social services.254

Recent legislative activity indicates that the House is willing to pass strong charitable choice laws aimed at expanding the role of faith-based organizations as service providers.255 Those provisions, however, will not survive in the Senate. The Senate’s scaled-back version of the CARE Act does not seek to expand charitable choice and instead focuses on tax incentives for charitable giving.256 Three years after passing the Charitable Choice Act of 2001, House supporters of charitable choice gave up on advancing the Faith-Based Initiative through legislation and have agreed not to reintroduce the controversial provisions when the bill returns from the Senate.257 Thus, the Senate’s stonewalling of efforts to expand charitable choice suggests that Congress does not have the same no-holds-barred enthusiasm for charitable choice that the Bush administration has championed. Absent a congressional objective to remove legal barriers in order to increase faith-based social services, state laws do not pose an impermissible obstacle to the stated purpose of the charitable choice statute: to allow religious organizations to compete for government funds while retaining their religious character.

4. Summary of Preemption Analysis

In light of Congress’s current division over charitable choice objectives, it seems artificial to read the ambiguous language of the statute as the “clear and manifest” intent of Congress to displace state nondiscrimination law. Under the doctrine of field preemption, it is clear that Congress did not intend for the charitable choice statute to occupy a field of law to the exclusion of the states.258 For directly funded faith-based organizations, the actual conflict doctrine results in the preservation of state employment laws-the provisions in charitable choice do not conflict with state employment laws because faith-based organizations are restricted to providing inherently secular services.259 However, the prohibitions on religious activity do not apply to indirectly funded service providers.260 The recent Seventh Circuit decision in Freedom of Religion Foundation v. McCallum indicates that the actual conflict doctrine may lead to the preemption of state nondiscrimination laws as applied to faith-based organizations that receive indirect funding for pervasively religious social service programs.261 Otherwise, the lack of a clear congressional objective to increase the participation of religious organizations in government-funded social programs requires that state nondiscrimination laws remain in effect.262

IV. Policy Considerations

Congress has the power to preempt state and local laws to further its charitable choice objectives, but it has not yet done so. This Note offers several related arguments for why Congress should continue to allow states the freedom to develop their own laws regulating government funding and religious hiring rights. First, leaving the question to the states complements the current structure of the welfare system. The 1996 Welfare Reform Act overhauled the system to give states flexibility in designing programs and administering funds.263 The devolution of welfare allows states to serve as laboratories for testing different methods of providing social services.264 Wisconsin’s relationship with Faith Works is one example of a state experimenting with alternative programs to meet the needs of its disadvantaged citizens.265 The general concept of encouraging contracts between the government and religious service providers produces many questions that academic discussions can answer only partially: Do religious organizations have the capacity to deliver professional-quality social services? Will congregations participating in government programs unintentionally encroach on the religious freedom of beneficiaries? Do faith-based organizations that make hiring decisions based on religious grounds have more effective programs? Less effective programs? The best answers to these questions will emerge not from abstract debates over charitable choice, but rather from studies of real programs as states implement them.266 Keeping the welfare decision-making process largely at the state level allows the nation to yield results from fifty models of welfare policy, instead of trial and error on a national scale.

The arguments supporting the devolution of welfare control to states also support state control over employment discrimination laws for government service providers. Some states may follow Wisconsin’s example and encourage faith-based organizations to participate in government-funded service programs by expressly allowing them to retain their right to hiring preferences.267 The state of Georgia, however, has taken steps in the opposite direction. Alan Yorker’s lawsuit against Georgia’s Department of Human Resources and United Methodist Children’s Home led the DHR to change its policies. The agency now prohibits child welfare service providers with state contracts from practicing religious employment discrimination for nonministerial positions.268 The contrasting state approaches to religious hiring freedom reflect the states’ different experiences with government funding of faith-based service providers. The flexibility of state control over discrimination laws will provide more information about the role religious hiring freedom plays in charitable choice programs.

Second, state and local governments are in a better position to address their citizens’ particular concerns about government partnerships with religion. For example, some states and cities have greater concerns about the nexus between religious hiring preferences and the rights of gay and lesbian employees.269 Several lawsuits have challenged the right of religious organizations to make religiously motivated employment decisions based on sexual orientation, an unprotected classification under Title VII.270 A preemptive congressional mandate permitting religious organizations to hire only people subscribing to particular religious beliefs would effectively displace state and local laws prohibiting discrimination on the basis of sexual orientation. Given the lack of consensus on gay rights at the national level, it seems prudent to allow states the option to provide more protection to their citizens. Before choosing to preempt state laws in the name of charitable choice, Congress should carefully consider the inadvertent effect religious hiring freedom could have on other forms of discrimination.

Finally, allowing states the freedom to maintain their own nondiscrimination laws will allow a grassroots response to the more controversial aspects of charitable choice. A public opinion survey indicates that a majority of Americans are receptive to the concept of religious organizations participating in government-funded social services.271 The survey also indicates, however, that Americans are concerned about specific aspects of the relationship between the government and religious organizations.272 Significantly, an overwhelming segment of the surveyed population-seventy-eight percent-objected to the idea of allowing religious organizations that receive government funds to hire only those who share their religious beliefs.273 Unfortunately, the survey did not test for differences in opinion based on geography.274 The results do demonstrate, however, that in the year 2001 there was no national consensus supporting hiring freedom for government-funded religious organizations. The legislative deadlock over the hiring issue in Congress over the intervening years suggests that Americans are no closer to reaching an agreement on the issue.275 States, therefore, should have the freedom under the charitable choice laws to ameliorate their constituents’ concerns about government-funded religious discrimination.

Furthermore, the Supreme Court’s recent decision in Locke v. Davey216 affirms that there is room for different federal and state standards governing church-state relations. In this 2004 case, the Supreme Court upheld the State of Washington’s policy of denying state-funded Promise Scholarships to students pursuing devotional theology degrees.277 The state policy complied with the Washington State Constitution, which states that “[n]o public money or property shall be appropriated for or applied to any religious worship, exercise or instruction, or the support of any religious establishment.”278

The plaintiff, Joshua Davey, was awarded a Promise Scholarship and enrolled in a private religious college, an eligible school under the state program, where he intended to pursue a major in theology that would train him for pastoral ministry.279 When Davey shared his major with the college’s financial aid officer, he learned that he could not use his state scholarship money while pursuing a devotional theology degree.280 In his subsequent legal action, Davey argued that the state of Washington’s denial of his scholarship on the basis on his decision to pursue a theology degree violated “the Free Exercise, Establishment, and Free Speech Clauses of the First Amendment, as incorporated by the Fourteenth Amendment, and the Equal Protection Clause of the Fourteenth Amendment.”281

A seven-justice majority of the United States Supreme Court rejected Davey’s constitutional claims.282 Writing for the Court, Chief Justice Rehnquist observed that the Establishment Clause of the United States would have allowed the State of Washington to fund Davey’s ministerial education.283 In accord with the Supreme Court’s Establishment Clause precedent, Rehnquist explained, “the link between government funds and religious training is broken by the independent and private choice of recipients.”284 Rehnquist went on to find, however, that the Washington Constitution’s firmer stance on government funding of religion was permissible under the United States Constitution.285 He reasoned that “[e]ven though the differently worded Washington Constitution draws a more stringent line than that drawn by the United States Constitution, the interest it seeks to further is scarcely novel. In fact, we can think of few areas in which a State’s antiestablishment interests come more into play.”286 The majority concluded that the Washington policy advanced a substantial state interest in not funding the pursuit of “devotional degrees.”287

The Court’s decision in Locke v. Davey may have a considerable effect on charitable choice and President Bush’s Faith-Based Initiative.288 Thirty-seven states have constitutional provisions prohibiting the flow of state funds to religious institutions.289 Further, the 1996 charitable choice statute expressly states that “[n]othing in this section shall be construed to preempt any provision of a State constitution or State statute that prohibits or restricts the expenditure of State funds in or by religious organizations.”290 By upholding the validity of Washington’s constitutional prohibition on government funding of religion, the Supreme Court signaled that states may be able to choose not to abide by charitable choice provisions in their administration of government social service funds.

Regardless of the decision’s larger implications for the Faith-Based Initiative, Locke v. Davey affirms that there is room for states to navigate between the Establishment and Free Exercise Clauses of the United States Constitution.291 Indeed, the Court noted that Washington had a substantial state interest in asserting a stronger separation between government funding and religion than required by the United States Constitution.292 It seems that the Court may also be receptive to an argument that states have a substantial interest in separating government funding from employment practices that discriminate on the basis of religion.

V. Conclusion

The right of faith-based organizations to make employment decisions based on religion is currently at the center of controversy over charitable choice and the Faith-Based Initiative.293 The debate has largely focused on federal laws, but the Supreme Court’s recent decision in Locke v. Davey may draw attention to state law protections against religious employment discrimination.294 This Note has demonstrated that, apart from a caveat for organizations that receive indirect funding, federal charitable choice provisions do not preempt state employment laws that prohibit religious discrimination.295 States should, therefore, consider how their current nondiscrimination laws affect the implementation of charitable choice. Some states may decide that fully exempting religious organizations from restrictions on hiring freedom is the best way to implement charitable choice. States retain the authority, however, to decide that Alan Yorker’s experience at the United Methodist Children’s Home should not be a necessary outcome of allowing faith-based organizations to participate in the provision of social services.

Regardless of the stance they adopt, states should communicate with faith-based service providers to ensure that the organizations understand their rights and duties as partners with the state.296 One important step states should take is to redraft their social service contracts to address the legal issues affecting religious organizations.297 These contracts should clearly outline the effect that government funding has on the organization’s right to exercise religious hiring preferences for nonministerial employees. The current confusion over hiring rights at both the federal and the state levels serves as an unnecessary stumbling block to faith-based organizations seeking to participate in the delivery of government-funded social services.298 Communication, not preemption, is the key to improving valuable partnerships between the government and religious service providers.

Melissa McClellan*

* Candidate for Juris Doctor, Washington and Lee University School of Law, May 2005. I would like to thank Professor Ann Massie for her enthusiasm and advice during the writing of this Note. I would also like to express my appreciation to Heather Skeeles for her patient and skillful editing of my early drafts, and to the Law Review Board Members who reviewed this Note.

Copyright Washington & Lee University, School of Law Summer 2004

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