Employment Law Reporter – November 2014

The Impact of Burwell v. Hobby Lobby

Has the Supreme Court “ventured into a minefield,” by its “decision of startling breadth,” as Justice Ruth Bader Ginsburg wrote in her dissent to Burwell v. Hobby Lobby? In Hobby Lobby, the Court held that the contraceptive mandate of the Affordable Care Act (“ACA”) violated the religious freedom of three closely held corporations. Following the decision, many shared Justice Ginsburg’s concern that the case would serve to open the door to further challenges to federal laws on the basis that they violate religious freedom. In addition, the case is viewed as an expansion of a corporation’s ability to assert certain rights by essentially holding that corporations are people.

Justice Alito’s position, as he wrote in the opinion, is that the holding in Hobby Lobby is “very specific,” and did not stand for the proposition that “for-profit corporations and other commercial enterprises can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.” Now, almost four months since the decision, we can examine whether the impact of Hobby Lobby has extended beyond the contraceptive mandate of the ACA, in a manner consistent with Justice Ginsburg’s analogy to a minefield.

In the case, Hobby Lobby and two other closely held corporations (under separate actions combined by the Court) objected to the ACA’s mandate requiring employers to offer birth control health insurance coverage to their employees, claiming it violated the companies’ rights under the Religious Freedom Restoration Act (RFRA). The RFRA provides that the federal government must not substantially burden a person’s exercise of religion, unless the government can show the action was to further a compelling governmental interest, and that it is the least restrictive means of furthering this interest. To claim any rights under the RFRA, Hobby Lobby and the two other companies argued successfully that, because they are closely held corporations controlled by members of a single family, they are “persons” and are therefore entitled to assert RFRA rights. The Court also held that the companies proved the birth control mandate placed a substantial burden on their exercise of religion, and the government failed to show it was the least restrictive option to further a compelling governmental interest, since it could treat the companies like it does religious non-profits, which can merely fill out a form certifying they have religious objections to providing birth control, and the non-profit’s insurer or the government must then pay for the contraceptives.

As for the case’s impact on the ACA, although the owners of the closely held corporations objected solely to the use of “morning after” pills, which account for only four of the 20 contraceptives covered under the mandate, the Court’s decision addresses the contraceptive mandate in more general terms, so it is likely that closely held corporations with strong religious objections to all the contraceptives covered by the ACA would be exempt from providing their employees most or all of the covered contraceptives.

As to the broader impact of Hobby Lobby, recently the National Right to Work Legal Defense and Education Foundation, Inc. (“NRTW Foundation”) asserted before the National Labor Relations Board (“NLRB”), that the Hobby Lobby case supports a challenge by a religious university, Pacific Lutheran University (“PCU”), to an NLRB ruling calling for a unionization election for PCU’s non-tenure-eligible professors. The NRTW Foundation contends that the conflict between contraceptive coverage and a company’s religious beliefs is analogous to mandated collective bargaining between a labor group and a religious university, and that the NLRB lacks jurisdiction over PCU. Further, the NRTW Foundation argues that PCU qualifies as a “person” under the RFRA, and is therefore entitled to assert its rights under the RFRA. The NLRB is also reviewing the same jurisdictional issue with regard to three other religious institutions.

If the NLRB rules that a religious employer is exempt from collective bargaining laws on the basis of its religious beliefs, perhaps a closely held corporation with religious ownership could claim the same exemption based on its religious beliefs for other employment laws, such as anti-discrimination laws relating to gay, lesbians, bisexual and transgender individuals. In fact, shortly after Hobby Lobby was decided, a group of faith leaders sent President Obama a letter requesting a religious exemption in his then pending Executive Order amending Executive Orders 11478 and 11246, barring employment discrimination on the basis of gender identity or sexual orientation for businesses with federal contracts, although the letter did not contain a direct reference to Hobby Lobby. As issued, the Executive Order does not include such an exemption, although it already contained an exception allowing that religious groups may hire only people “of a particular religion” to carry out their work, because the order added new protections to an order signed decades ago which contain that exception.

Further, in September, in a U.S. District Court case, Perez v. Paragon Contractors, Corp., et al., the district court judge sitting in Utah applied Hobby Lobby in holding that a member of the Fundamentalist Church of Jesus Christ of Latter Day Saints (the “FLDS Church”), famous for the conviction of its former president, Warren Jeffs, need not answer questions about potential child labor violations on the basis that to compel testimony violated the RFRA, despite the fact that neither the FLDS Church nor the lower court raised the issue of a violation of the RFRA.

Based on this brief history, it seems likely that Hobby Lobby will continue to be cited for the expanded right of corporations to be treated like people. As Justice Alito wrote in that case, “[a] corporation is simply a form of organization used by human beings to achieve desired ends. When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people.” The stage had already been set; in 2010, the Supreme Court had ruled in Citizens United v. Federal Election Commission that corporations had the right to spend money on political advertising based on a corporation’s right of free speech. And now, with Hobby Lobby, a corporation can assert its right to religious freedom, although the ruling is intended to be very specific. As it is estimated that a majority of U.S. companies, employing more than half of the American workforce, may qualify as closely held businesses, there may be a significant number of cases in which companies will assert the right to claim a religious belief in contesting a federal law they claim substantially burdens the exercise of religion.


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