On June 30, 2014, the U.S. Supreme Court reached a decision regarding whether or not Hobby Lobby and other closely-held businesses had to pay for contraceptive measures that those companies viewed as abortion and, therefore, against those companies’ owners’ religious beliefs. The contraceptive coverage was mandated under the Patient Protection and Affordable Care Act of 2010 (“ACA”). The Supreme Court ruled in favor of Hobby Lobby and the other businesses, which means Hobby Lobby and these businesses do not have to pay for their employees to receive certain types of contraceptives. The employees still do not have to pay for the contraceptive coverage, though, as the cost will be covered by the U.S. government or the insurance providers.
So what does the Hobby Lobby decision actually mean for your business? Depending on who you ask, the Hobby Lobby decision could be the starting point for for-profit corporations to claim religious exemptions from other employment laws (i.e., discrimination based on religious reasons) or the Hobby Lobby decision could have virtually no impact since the decision only applies to a limited category of companies. In order to determine the impact it has on your business, you first must know exactly what the Supreme Court decided.
In a 5-4 decision, the Supreme Court held that under the Religious Freedom Restoration Act (“RFRA”), which is the law Hobby Lobby claimed the ACA violated, the ACA mandate to provide certain contraceptives violated Hobby Lobby’s religious freedom and a less restrictive means was available to the government. In layman’s terms, the Supreme Court said a corporation can hold the views expressed by its individual owners and the government could pay for the contraceptives rather than force Hobby Lobby to pay. The Supreme Court indicated it was limiting its decision to closely-held corporations whose owners held a sincere religious belief that the contraceptive drugs in question facilitate abortions. In its decision, the Court opined that this decision would have relatively minimal impact because most for-profit corporations are owned by multiple owners or shareholders who have varying religious beliefs or are themselves corporations that do not demonstrate sincere religious beliefs. Hobby Lobby for instance, closes its business on Sundays because it believes its employees should not work on Sunday for religious reasons. Hobby Lobby also states in its mission statement that its corporate mission is shaped by its religious beliefs. Based on these factors, the Court determined Hobby Lobby holds sincere religious beliefs.
The four justices who opposed the decision argued that as a for-profit corporation, Hobby Lobby cannot hold religious beliefs. The corporation and its owners are separate entities. The dissent also argued that allowing corporations an exemption to laws based on religious beliefs could create a slippery slope. What if a Christian owned a business and was allowed to discriminate (i.e. not hire) non-Christian individuals?
In reality, it’s likely that the Supreme Court’s decision will have little impact on most businesses. We could see more businesses attempting to seek exempt status from the ACA and other employment laws, but the government likely would appeal many of those cases up the chain to the Supreme Court. The cost to receive an exemption is far outweighed by the benefit unless your business truly possesses sincere religious beliefs. Also, if your company has not already publicly proclaimed its religious beliefs (i.e., the company’s mission statement states certain religious beliefs) then the courts are extremely unlikely to hold that your business falls in this narrow exception.
What the Hobby Lobby decision may lead to, though, is a further chipping away at the ACA as we have seen in two other recent Court of Appeals cases that shortly should be appealed to the Supreme Court. For now, we wait and see.
