In the 1985 case of Ohio Civil Rights Commission v. Dayton Christian Schools, Inc., the Supreme Court ruled that religious organizations are not exempt from state laws prohibiting discrimination based on sex. The case arose when Linda Hoskinson, a teacher at Dayton Christian School was fired for becoming pregnant and intending to work through her pregnancy against school policy. She filed a complaint with the Ohio Civil Rights Commission (OCRC), which found probable cause to believe that she had been discriminated against due to her gender. The school argued it should be exempt from such regulations because they interfered with its free exercise of religion as protected by First Amendment rights. The court held that while religious institutions have constitutional protections under the First Amendment, these do not extend so far as allowing them to violate general laws against employment discrimination. It also noted that if there were any internal church dispute about doctrine or leadership involved in this matter, then courts would indeed need to abstain; however, no such issues were present here.

In the dissenting opinion for Ohio Civil Rights Commission v. Dayton Christian Schools, Inc., Justice White argued that the court majority had erred in its decision to grant immunity to religious organizations from civil rights laws under First Amendment protections. He contended that this ruling could potentially allow such institutions to discriminate without legal repercussions, undermining the purpose of civil rights legislation. Furthermore, he disagreed with the majority's interpretation of "ministerial exception," arguing it should not be applied so broadly as to include all employees of a religious institution regardless of their role or duties within said organization. In his view, only those who serve a primarily spiritual function (such as ministers) should fall under this exemption; otherwise, it would create an overly expansive loophole in anti-discrimination law enforcement.