The union's integrity unit ruled Folau had committed a "high-level breach of the Professional Players' Code of Conduct", warranting the termination of his employment contract, and he was given 48 hours to accept the breach of contract or refer it to a hearing.
Folau's controversial instagram post comprised a meme that called on "drunks, homosexuals, adulterers, liars, fornicators, thieves, atheists and idolaters" to repent from their sins.
Owens said he wouldn't officiate Folau any differently on the field if he does remain in the sport.
No date has been set for the hearing, but it will likely be held in early May.
The religiously-motivated Folau posted: "Warning. You want everybody to know Christ and under it all there is a great love for your nation and you want people to know what you have received", she said. "But my faith in Jesus Christ is what comes first".
"It's a real opportunity for him to step up in a position that we know he can and really try and own that position for the next nine games, '" Tahs' coach Daryl Gibson said.
In an interview with British radio station talkSPORT, the Welshman was highly critical of Folau reasserting his homophobic beliefs in social media posts last week. "My heart goes out to him because he's being persecuted".
"What he is saying about repenting is straight out of the Bible".
Court, who won 24 grand slam singles titles playing in the 1960s and 70s, has similarly created a firestorm in Australia, opposing same-sex marriage, claiming homosexuality and being transgender was the work of the "devil".
Wallabies coach Michael Cheika does have multiple back-line options at hand, but contesting matches against the likes of the top-ranked All Blacks will prove hard without Folau.
Raelene Castle, chief executive of Rugby Australia, said Folau had been warned in the past about his social media posts. The body has to weigh up the fact that it's a World Cup year with the fact Folau was seriously cautioned last year for essentially doing the exact same thing.
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