Generally, an employer cannot discriminate against someone based on their religion. However, for religious-based organizations, the rules are slightly different. Churches, religious schools, and other faith-based entities can require a person to be of a certain faith to enjoy their benefits.
What the First Amendment Says
"Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof..."
Religious Discrimination In Employment
United States Library of Congress, The Constitution of the United States of America: Analysis and Interpretation
The Civil Rights Act's prohibition against religious discrimination in employment1 makes it unlawful for any employer to discriminate in employment practices on the basis of an employee’s religion.
However, federal law exempts religious corporations “with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation of its activities.”
In Corporation of the Presiding Bishop v. Amos,2 the Court held that a church-run gymnasium operated as a nonprofit facility open to the public could require that its employees be church members. Declaring that there is ample room for accommodation of religion under the Establishment Clause,3 the Court identified a legitimate purpose in freeing a religious organization from the burden of predicting which of its activities a court will consider secular and which religious.
The rule applying across-the-board to nonprofit activities and thereby avoiding intrusive inquiry into religious belief also serves to lessen entanglement of church and state.4 The exemption itself does not have a principal effect of advancing religion, the Court concluded, but merely allows churches to advance religion.5
More On Religious Freedom:
1. Section 703 of the Civil Rights Act of 1964, 42 U.S.C. § 2000e–2, makes it unlawful for any employer to discriminate in employment practices on the basis of an employee’s religion. Section 702, 42 U.S.C. § 2000e–1, exempts from the prohibition a religious corporation . . . with respect to the employment of individuals of a particular religion to perform work connected with the carrying on by such corporation . . . of its activities.
2. 483 U.S. 327 (1987).
3. 483 U.S. at 338.
4. 483 U.S. at 339.
5. For a law to have forbidden ‘effects,’ it must be fair to say that the government itself has advanced religion through its own activities and influence. 483 U.S. at 337. Justice O’Connor’s concurring opinion suggests that practically any benefit to religion can be recharacterized as simply ‘allowing’ a religion to better advance itself and that a necessary second step is to separate those benefits to religion that constitutionally accommodate the free exercise of religion from those that provide unjustifiable awards of assistance to religious organizations. Id. at 347, 348.