Fourth Circuit Limits Religious Employer Exemptions in LGBTQ+ Benefits Case

Fourth Circuit Limits Religious Employer Exemptions in LGBTQ+ Benefits Case

In a significant ruling issued October 16, 2026, the United States Court of Appeals for the Fourth Circuit held that Catholic Relief Services (CRS) violated federal and Maryland employment discrimination law when it revoked spousal health insurance benefits from a gay employee after learning he was married to a man. The 2-1 decision in *John Doe v. Catholic Relief Services* (Case No. 25-1569) affirmed a lower court judgment awarding the plaintiff $60,000 in compensatory damages and carries binding force across the Fourth Circuit's five-state jurisdiction — including North Carolina.

Background

John Doe was hired by Catholic Relief Services, a Baltimore-based Catholic humanitarian nonprofit, in 2016. At the time of hiring, he was assured that his husband would qualify for dependent health insurance coverage under the organization's benefits plan. Approximately five months into his employment, CRS revoked those benefits, citing the organization's religious beliefs about the nature of marriage. Doe continued working for CRS until 2024, when he resigned after years of litigation challenging the revocation.

Doe filed suit alleging violations of Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on sex, and the Maryland Fair Employment Practices Act (MFEPA), which extends protections to sexual orientation. The district court ruled in Doe's favor, and CRS appealed.

The Court's Reasoning

Writing for the majority, Senior Circuit Judge Henry F. Floyd rejected each of the four defenses CRS advanced.

Title VII Religious Exemption: CRS argued that Section 702 of Title VII, which permits religious organizations to favor members of a particular religion in employment decisions, shielded it from liability. The court disagreed, holding that the exemption does not grant religious employers "blanket immunity" from discrimination claims based on other protected characteristics such as sex. Allowing the exemption to cover any employment decision with a religious rationale, the majority wrote, would cause the exception to "swallow the rule."

Ministerial Exception: CRS contended that the constitutional ministerial exception — which protects religious organizations' employment decisions regarding ministers and clergy — applied to Doe's position. The court found otherwise. Doe performed administrative and technical duties indistinguishable from those in secular organizations and held no spiritual or ministerial role within CRS. Because he was a lay employee, the ministerial exception did not apply.

Church Autonomy Doctrine: The majority determined that the broader church autonomy doctrine, which shields internal religious governance decisions from judicial review, was similarly inapplicable. The doctrine protects decisions about religious doctrine, discipline, and internal governance — not routine employment benefits decisions affecting nonministerial staff.

Religious Freedom Restoration Act (RFRA): Finally, CRS argued that RFRA barred Doe's claims by protecting the organization's exercise of religion. The Fourth Circuit rejected this defense, aligning itself with the majority of federal circuits that have held RFRA cannot be invoked as a defense in lawsuits between private parties.

Circuit Judge A. Marvin Quattlebaum Jr. dissented, arguing the majority interpreted constitutional protections for religious institutions too narrowly and that the church autonomy doctrine should extend to employment policies connected to an organization's faith, even for nonministerial employees. Circuit Judge James Andrew Wynn joined the majority but wrote separately to respond to the dissent's reading of constitutional history.

Implications for North Carolina

The ruling is binding on federal courts in Maryland, Virginia, West Virginia, North Carolina, and South Carolina. For North Carolina employers — including the many faith-affiliated nonprofits, hospitals, and universities operating in the state — the decision clarifies that religious exemptions under Title VII do not provide a general shield against sex and sexual orientation discrimination claims brought by nonministerial employees.

Legal advocates note the ruling is particularly significant for LGBTQ+ workers at religiously affiliated organizations, who have faced uncertainty about the scope of their protections since the Supreme Court's 2020 decision in *Bostock v. Clayton County* extended Title VII's sex discrimination prohibition to sexual orientation and gender identity. The Fourth Circuit's decision reinforces that those protections apply even when an employer asserts a religious justification for the challenged conduct.

Legal experts suggest the issue may ultimately reach the Supreme Court, as the ruling highlights ongoing tensions between federal anti-discrimination law and the First Amendment rights of religious organizations. For now, however, the decision stands as a clear statement that nonministerial employees across the Fourth Circuit are entitled to equal benefits regardless of their employer's religious affiliation.