Key point: A federal appeals court ruled that a Catholic nonprofit could not rely on its religious beliefs to avoid liability under federal and state employment discrimination laws after denying spousal health benefits to an employee in a same-sex marriage.
The Fourth Circuit for the US Court of Appeals has affirmed a lower court’s ruling that concluded a religious ministry violated federal and state employment laws when it denied benefits coverage to an employee’s same-sex spouse.
In its split decision, the majority determined the religious exemption under Title VII of the Civil Rights Act did not apply, and it declined to apply any religious protections found under the church autonomy doctrine.
The decision is a departure from how other federal circuit courts have interpreted the doctrine, which prohibits—on First Amendment grounds—the government and courts from interfering in matters of discipline, faith, and governance within a religious organization.
Churches and religious organizations in Maryland, North Carolina, South Carolina, Virginia, and West Virginia are directly affected by the Fourth Circuit’s decision. Churches elsewhere should note this development when evaluating employment decisions involving nonministerial staff, although other federal circuit courts have provided more protections to religious organizations under the doctrine.
Benefits denied
Catholic Relief Services (CRS), a humanitarian organization affiliated with the Catholic Church, hired John Doe as an information technology analyst in 2016. Doe informed the organization that he was married to a man and was initially told his spouse would qualify for dependent health insurance benefits.
Several months later, CRS discovered that Doe’s husband had been enrolled contrary to its benefits policy, which reflected Catholic teaching that marriage is between one man and one woman.
CRS terminated spousal coverage but offered alternatives, including additional compensation to offset insurance expenses. Doe declined the proposed arrangement and subsequently sued, alleging discrimination based on sex.
A federal district court ruled in Doe’s favor under Title VII of the Civil Rights Act, the Equal Pay Act, and the Maryland Fair Employment Practices Act (MFEPA). The parties stipulated $60,000 in compensatory damages.
CRS appealed.
Court rejects religious exemptions as a defense
In a divided decision, the Fourth Circuit affirmed the judgment under Title VII and Maryland law, and denied relief under the church autonomy doctrine.
The court addressed several arguments raised by CRS:
- Title VII’s religious exemption: The court concluded that Section 702 of Title VII permits qualifying religious employers to make employment decisions based on religion, but does not authorize discrimination based on sex merely because the decision also reflects sincerely held religious beliefs.
- Maryland’s religious employer exemption: Applying an earlier Maryland Supreme Court interpretation, the appeals court agreed that Doe’s technology-related responsibilities did not directly further CRS’s core mission sufficiently to qualify for the religious exemption.
- Church autonomy doctrine: The majority rejected CRS’s argument that the Free Exercise Clause and church autonomy doctrine broadly shielded its employment benefits decision from judicial review.
The Fourth Circuit’s analysis
Title VII’s religious exemption
Courts across the country have adopted various interpretations of Title VII’s exemption for religious organizations. Since 1985, the Fourth Circuit has adopted the “belief and conduct” interpretation of the exemption. This interpretation holds that religious employers may discriminate based on religious beliefs if those beliefs do not conflict with other protected classes, such as race, color, sex, or national origin. Rayburn v. Gen. Conf. of Seventh-day Adventists, 772 F.2d 1164, 1166 (4th Cir. 1985). It has also held that it was impossible for an employer to discriminate against a gay or transgender individual without discriminating based on sex. Grimm v. Gloucester County School Board, 972 F.3d 586, 616 (4th Cir. 2020).
This case presented the “novel” issue of whether a religious organization may discriminate based on both sex and religion and still have the Title VII religious exemption apply to it. The Fourth Circuit held that the exemption does not apply to discrimination based on both sex and religion, even when the employment decision was based on sincerely held religious beliefs.
The US Supreme Court has not decided whether religious organizations may continue to follow historically sincerely held religious beliefs when those beliefs may discriminate based on another protected class, such as sex. As a result, the Fourth Circuit’s decision lacks support from the Supreme Court. Further, this decision conflicts with other federal circuit courts of appeal on this issue.
Maryland’s religious employer exemption
Maryland’s nondiscrimination statute includes a limited exemption for some employees of religious organizations. The statute exempts employees hired to perform work connected to the religious entity’s activities. The Maryland Supreme Court interpreted the phrase to mean that “the employee’s duties must directly further the core mission(s)—religious or secular, or both—of the religious entity” and the employees’ duties must not be one or more steps removed from taking the actions that effect the goals of the entity.
Because the plaintiff’s positions supported the software that allowed other CRS employees to carry out CRS’s religious mission, the Fourth Circuit held that he was too far removed from the religious mission.
Church autonomy doctrine
The Fourth Circuit held that the church autonomy doctrine only applies if the decision involves (1) the employment of ministers; (2) church membership and hierarchy; and, (3) church discipline. This narrowing of the doctrine’s application conflicts with other federal courts of appeals.
The majority stated:
[w]e hold 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. (Emphasis added.)
The dissenting opinion
The 85-page dissent recounted the history of the church autonomy doctrine. The Supreme Court, and some other circuit courts, use the historical context to interpret the US Constitution. Based on that historical authority, the dissenting judge said he would find that the church autonomy doctrine prevents the court from deciding this case.
What this means for churches
Churches in the Fourth Circuit (Maryland, North Carolina, South Carolina, Virginia, and West Virginia) should comply with this decision when addressing employment actions falling outside the ministerial exception.
Outside of the Fourth Circuit, the opinion is nonbinding, meaning courts located elsewhere may agree or disagree with its reasoning.
All churches should monitor this case for future developments. Because it created a new precedent, CRS may ask all Fourth Circuit judges to re-decide the case. CRS may also ask the Supreme Court to review this decision because it creates a split among the federal circuit courts.
This opinion also shows that churches should engage local employment counsel when making employment decisions that might violate federal employment law.
See also: Doe v. Catholic Relief Services, No. 25-1569 (4th Cir. Oct. 16, 2026)
