Lansing — Companies seeking contracts, grants or loans from the state must agree not to discriminate against gay or transgender employees under an executive directive signed this week by term-limited Republican Gov. Rick Snyder.

Snyder signed the directive Thursday and announced it Friday with just four days left in his tenure, describing it as an effort to lead by example in government.

The directive requires state departments and agencies to include language in new contracts prohibiting contractors from hiring or firing on the basis of sexual orientation, gender identity or expression. It includes an exemption for nonprofit religious organizations, including churches.

“Michigan’s continued reinvention and economic growth depend on talented individuals choosing to live and work here,” Snyder wrote. “It is essential for state government to be a leader in welcoming all people to our state and ensuring that everyone is treated fairly and with respect.”

In signing the new contracting rules, the outgoing governor noted that Michigan Civil Service Commission rules already prohibit departments from discriminating against state employees on the basis of sexual orientation.

Michigan law does not explicitly protect gay and transgender residents from discrimination in the private sector, but the Michigan Department of Civil Rights began investigating complaints last summer after state commissioners interpreted existing statute to include some protections.

Jay Kaplan, staff attorney for the ACLU of Michigan’s LGBT Project, said he is glad to see Snyder address workplace bias but thinks the exemption for religious organizations in the governor's directive is "problematic" and could allow for continued discrimination of employees who have no ministerial role.

"We look forward to working with the new administration to maybe fix the problems in this executive order that (Snyder) created by having this exemption in it," Kaplan said, referencing Gov.-elect Gretchen Whitmer, a Democrat.

Snyder is poised to leave office Tuesday after an eight-year tenure marked by state and national debates over gay right and religious freedoms.

He signed a controversial law in 2015 allowing faith-based adoption agencies to decline working with gay parents, and he was a sometimes reluctant defendant in a legal battle over the state’s same-sex marriage ban that was overturned by the U.S. Supreme Court that same year.

But Snyder also encouraged the Legislature to expand the Elliott-Larsen Civil Rights Act of 1976 by including new anti-discrimination protections for gay and transgender residents, a fight Democratic Gov.-elect Gretchen Whitmer has vowed to continue.

Several legislative Republicans blasted the Civil Rights Commission in May when it interpreted existing law to include similar protections, and GOP Attorney General Bill Schuette issued a legal opinion in July calling the interpretation “invalid.”

Despite Schuette's opinion, the state civil rights department has continued investigating private sector workplace discrimination complaints, but it has not yet made any final determinations.

Snyder’s new directive is not binding on the Department of Attorney General or Secretary of State, but he encouraged those departments to voluntarily comply. Attorney General-elect Dana Nessel, a Democrat, will be the first openly gay statewide official in Michigan history.

Erin Knott, interim executive director of Equality Michigan, said the state’s largest gay rights advocacy group is happy to see Snyder build on 2003 and 2007 executive actions by former Gov. Jennifer Granholm, a Democrat.

The new directive “represents an important step forward in making Michigan a safe, fair and equal place for all of us, and we thank Gov. Snyder for taking it today," Knott said in a statement.

But Snyder's move “does not substitute the need for legislative action,” she added. “We look forward to working with the new legislature in 2019, leveraging today's executive order, to pass an amendment to the Elliott-Larsen Civil Rights Act.”

joosting@detroitnews.com