Employers with federal contracts may be allowed to effectively discriminate against workers based on the employer’s religious beliefs, thanks to a rule proposed by the U.S. Department of Labor. The policy, unveiled Wednesday, means people could be fired for being gay, transgender, or pregnant and unmarried.

The rule would apply even if the employee doesn't work in the part of the business that has a government contract, so it could affect the nearly 25 percent of workers in the U.S. who are employed by a federally contracted company, said Ian Thompson, senior legislative counsel for the American Civil Liberties Union.

"The universe of workers that really stood out to us as being particularly vulnerable to the kind of discrimination that this proposal is clearly intended to encourage are LGBTQ workers and those who are pregnant and unmarried," he said. The proposed rule is open for public comment until September 16.

Thompson said while the ACLU is still doing a full analysis, an initial review of the rule reveals several things the group is concerned about. First, some backstory: Title VII of the Civil Rights Act is a section that bans discrimination in the workplace based on race, religion, sex, or national origin. (This provision is enforced by the Equal Employment Opportunity Commission, or EEOC, and you've maybe seen a reference to nondiscrimination on job listings.) In 2014, President Barack Obama used an executive order to add gender identity to the list of categories protected from discriminatory hiring practices.

Private, religiously affiliated employers currently have an exemption under Title VII that allows them to have a preference for hiring "coreligionists"—so a Jewish organization could have a hiring preference for Jewish people or a Catholic organization could have a preference for Catholic people.

The ACLU's first issue is that the Trump rule would take that religious exemption and apply it to companies with federal contracts. "It is our position that the exemption cannot constitutionally apply to government-funded employers because doing so would have the effect of resulting in taxpayer-funded discrimination," Thompson said.

Beyond that, the rule would dramatically expand the scope of the religious exemption to include not just the hiring of coreligionists, but also to other "religiously motivated" hiring decisions, he said. And it is this aspect that could result in significant discrimination, particularly of people in same-sex relationships, undergoing gender transition, or those having sex outside of a heterosexual marital context, he said.

What this means practically, experts say, is that if an employer with a federal contract is accused of bias after, say, firing someone who's gay, the employer could claim they were acting in accordance with their religious beliefs. The employer doesn't even have to be a religious organization like a Catholic university, for instance; it could be a "closely held" for-profit company like a retail chain whose owners have "sincerely held" religious beliefs, according to the rule.

A national company which fits that bill is Hobby Lobby, the craft chain that won a 2014 Supreme Court case over its objections to covering birth control on its health plans because of the owners' Christian faith. The proposed Department of Labor rule cites the Hobby Lobby case 12 times, with one instance saying "Hobby Lobby forcefully rejected the argument that only nonprofit corporations can exercise religion." Thompson said that's no accident.

"I think clearly the intention of doing that is to signal that there is at least some universe of for-profit federal contractors who will similarly be able to cite these religious-based objections to, for example, LGBTQ people, pregnant and non-married people," he said.

Leila Abolfazli, the director of federal reproductive rights at the National Women's Law Center (NWLC), said this proposed rule is one of the many actions that the Trump administration has taken against women, families, and healthcare. "You look and see what they're doing to immigrant families, you see what they're doing to the Title X program, which supports low-income women needing reproductive healthcare," she said, adding, "They are supporting a lawsuit that wants to get rid of the ACA and have tried again and again [to repeal it] and have no plan."

Trump has said that he is "strongly pro-life" while Vice President Pence called Trump "the most pro-life president in American history." Health and Human Services Secretary Alex Azar said in June that "President Trump, Vice President Pence and I are part of a pro-life administration. We stand for protecting the sanctity of human life from conception until natural death.” And yet firing pregnant people could result in the loss of their health insurance coverage and affect their ability to pay rent and buy staples like food and clothing.

Tamika Turner, associate director of constituency communications at the Planned Parenthood Federation of America said in a statement, “There’s no difference between the government allowing federal contractors to discriminate and the government itself discriminating against people in this country. The Trump administration could allow employers to fire pregnant employees because they’re unmarried at the same time it’s trying to dismantle the nation’s program for affordable birth control. There’s no rhyme or reason to this, just a desire to co-opt religious freedom to inflict harm. This is unconscionable.”

When reached for comment, a Department of Labor spokesperson disputed criticism that the rule could lead to discrimination against unmarried pregnant people and LGBTQ people. The spokesperson noted that the proposed rule states “an employer may not...invoke religion to discriminate on other bases protected by law,” like race, sex, or national origin. The spokesperson added that "the proposed regulation merely clarifies the regulation’s definition of 'religion' and related terms to confirm that 'religion' includes not merely belief, but also 'all aspects of religious observance and practice.' That core definition is drawn directly from Title VII."

Abolfazli, however, said the administration is trying to have it both ways. "At some point [in the text] they say 'Don't worry, your protected bases are still protected,'" she said, adding, "They also basically say, 'if the discriminatory [hiring] behavior could be seen as discriminatory on one of the protected bases, we're going to accept the claim for a religious exemption.' It will be a high bar to get somebody who's going to agree that it wasn't a religious exemption."

Firing someone for being pregnant is still sex discrimination, Abolfazi said, "but the administration is signalling that they're going to enforce a large religious exemption. We don't think that that's lawful, but we do think [the proposed rule] is going to embolden discrimination."

Thompson said the administration is going back against its promises to the LGBTQ community. "The Trump administration said they were not going to repeal [Obama's 2014] executive order, but what they are doing with this proposal is functionally gutting [it]." Almost any employer covered under the executive order that says they have a religious-based objection to, for example, the LGBTQ nondiscrimination requirements, will get out of those nondiscrimination requirements, he said.

Yet the White House disputes this characterization, saying in a statement to The Hill: "In no way does [the] announcement by the Department of Labor undermine the President’s promise and commitment to the LGBTQ community. The proposed rule will continue to responsibly protect religious freedom and members of the LGBTQ community from discrimination."

Thompson says this statement is misleading and to understand its true stance one only need to look at the administration's policies toward the trans community—which include the transgender military ban and the proposal to remove every explicit healthcare protection for transgender people under the Affordable Care Act. Additionally, the Housing Department is expected to issue a rule that would allow federally funded homeless shelters to turn away transgender people, and the administration is likely to soon file a brief with the Supreme Court saying that transgender people have no federal civil rights protections.

“It's very important, I think, to understand this [proposed rule] as part and parcel of the Trump administration's ongoing, all-out assault on the rights and dignity of the trans community," Thompson said.