The order Obama is to sign Monday seeks a middle ground. It maintains the narrow exemption already in federal law, which states that religious groups that contract with the government can make religion a condition of hiring. Some gay-rights and civil-liberties advocates had called on Obama to eliminate that provision. But the new order will not include a broader religious exemption that would allow nonprofit contractors to refuse employment to gays if they viewed it as inconsistent with their faith. Some progressive faith leaders had asked Obama to include such an exemption. "The president, and the American people, firmly believe that all Americans deserve to be treated with dignity and respect in the workforce," the White House official said Friday.

The debate over a religious exemptions for sexual-orientation nondiscrimination first came to the fore as ENDA, which would prohibit discrimination on the basis of sexual orientation in private workplaces, was being drafted. Conservative religious groups like the Conference of Catholic Bishops pledged not to oppose the legislation if it included a broad exemption covering all employees of religious nonprofits. (ENDA’s exemption doesn’t apply to for-profit companies like Hobby Lobby, but it would allow a Catholic school, for example, to fire a gay teacher or janitor.) Such an exemption made many gay-rights campaigners nervous, but most accepted it as a necessary political compromise to get the votes of moderate lawmakers.

The Catholic Bishops reneged on the deal, coming out in opposition to ENDA in 2010 despite the exemption. Nonetheless, the bill passed the Senate last November with 64 votes. Many of the Republicans who voted for the bill, such as Utah Senator Orrin Hatch, cited the exemption as the reason they could support it.

With the Republican-controlled House declining to bring ENDA up for a vote, gay groups called on Obama to take executive action by applying its provisions to federal contractors. (Federal employees are already protected from sexual-orientation discrimination.) Last month, the White House finally announced he would do so. Whether the order would include a religious exemption along the lines of ENDA’s immediately became the subject of debate. When the Hobby Lobby decision came down shortly afterward, the debate intensified.

To some faith leaders—including Rick Warren, the megachurch pastor who gave the invocation at Obama’s first inauguration; Michael Wear, who directed faith outreach for Obama's 2012 campaign and worked in the White House Office of Faith-Based and Neighborhood Partnerships; and Stephen Schneck, director of the Institute for Policy Research and Catholic Studies at Catholic University and a former cochair of Catholics for Obama—Hobby Lobby showed the importance of giving religious employers latitude to exercise their faith. They and several others wrote a letter to the White House calling for the nondiscrimination executive order to include a religious exemption. Jim Wallis, one of the most vocal leaders of the so-called “religious left,” also circulated a draft letter in favor of an exemption, but never ended up issuing it.