A Department of Labor directive issued Friday instructs the government not to deny federal contracts to faith-based entities that discriminate in the name of their beliefs.

In a memo sent to staff in the Office of Federal Contract Compliance Programs (OFCCP), Acting Director Craig E. Leen claims the department must “proceed in a manner neutral toward and tolerant of… religious beliefs” when enforcing nondiscrimination laws.

Although federal laws like the Rehabilitation Act of 1973 and Veterans’ Readjustment Assistance Act of 1974 prohibit contractors from discriminating on the basis of characteristics like “sexual orientation” and “gender identity,” the directive alleges that these regulations do not apply to faith-based entities acting in accordance with their sincerely held religious beliefs.

“In line with the longstanding constitutional requirement that government must permit individuals and organizations, in all but the most narrow circumstances, to participate in a government program ‘without having to disavow [their] religious character,’” Leen writes.

The government agencies, he adds, allow “faith-based and community organizations, to the fullest opportunity permitted by law, to compete on a level playing field” in all federal contracts.

As precedent for the directive, the OFCCP cites the Supreme Court’s ruling in Masterpiece Cakeshop v. Colorado Civil Rights Commission, which it claims “addressed the broad freedoms and anti-discrimination protections that must be afforded religion-exercising organizations and individuals under the United States Constitution and federal law.”

While the Supreme Court did, in fact, side in favor of baker Jack Phillips in its June verdict, the 7-2 decision was a “narrow” procedural ruling on whether Colorado’s civil rights body had been fair in its decision to sanction Phillips for turning away a same-sex couple because of his Christian beliefs.

Judges ruled the commission illustrated unconstitutional bias against people of faith in its deliberation but declined to weigh in on broader “religious liberty” claims.

In a statement to INTO, Harper Jean Tobin of the National Center for Transgender Equality claims the memo is a misunderstanding of both the key tenets of the Masterpiece Cakeshop ruling and federal civil rights regulations.

“Religious organizations have ample protections under federal law, but they are not allowed to use federal money to discriminate against people,” says Tobin, who serves as the advocacy group’s director of policy. “The language of this directive is so broad and so vague because it is part of a long line of attempts by this administration to sow confusion and encourage any employer to act on their worst prejudices.”

Shannon Minter, legal director for the National Center for Lesbian Rights, adds that the memo is actually “contrary to established law.”

“This directive seems designed to undermine the current requirement that federal contractors may not discriminate based on race, color, religion, sex, sexual orientation, gender identity, national origin, disability, or status as a protected veteran,” Minter claims in comments emailed to INTO. “In the past, the Department of Labor has made clear that religious contractors may prefer members of their religion, but may not discriminate on any of those bases.”

“By eliminating that important qualification, the new directive is confusing at best and at worst sends a dangerous and false message that such discrimination is now permitted,” he continues.

The memo is one of a number of decisions by the White House undermining LGBTQ protections in the name of “religious freedom.”

In July, Attorney General Jeff Sessions announced the formation of a “religious liberty task force” to “help the department fully implement” a federal guidance released by the Department of Justice last year. The order advises that people of faith “should be reasonably accommodated in all government action, including employment, contracting and programming.”

“Except in the narrowest of circumstances, no one should be forced to choose between living out his or her faith and complying with the law,” Sessions wrote at the time.

The language is extremely similar to this week’s directive.

Four years ago former President Barack Obama signed an executive order extending nondiscrimination protections to federal employees for the first time. After taking office in January 2017, President Trump claimed he would not rescind that order — although the Justice Department ruled sexual orientation and gender identity are not covered under federal civil rights laws.

Note: This story has been updated from a previous version which reported that the memo could impact faith-based adoption and foster care centers. It would not.