LEGAL ISSUES

Arizona Businesses Worry as Governor's Pen Hovers

A bill passed by both legislative houses in Arizona raises the heartbeat of business owners in the state who worry it could lead to discrimination.
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"You are heroes, you are the sane counterpoint to Chik-fil-A and Hobby Lobby," Tom Forester, a fan of Rocco's Little Chicago Pizzeria shouted out to the Tucson-based restaurant on its Facebook page Monday.

"Hey, just want to say that all we want to do is cook you some dinner," Rocco DiGrazia posted on Facebook in reply to dozens of comments commending him for his stance on the SB 1062, the so called "Turn Away the Gays" bill now before Governor Jan Brewer. The bill would allow businesses to withhold services to customers based on the religious beliefs of the owners, among other things.

Rocco's Little Chicago Pizzeria of Tucson opposes SB 1062.

On Friday, Rocco's posted a sign in its window that reads "We reserve the right to refuse service to Arizona legislators." The sign quickly went viral on the Web, summing up the frustration that many business owners and other groups in the state feel about how out of synch the state's policy makers are with many members of the business community.

What's happening out West is actually part of a national debate simultaneously unfolding at the Supreme Court level this year, with two cases, called  Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Sebelius. The cases could change the way businesses must abide by anti-discrimination laws, carving out broad exceptions for businesses based on religion.

The cases before the Supreme Court stem from parts of the Affordable Care Act, to which some religious business owners object because they require new health plans to pay for contraception and certain kinds of fertility treatments. The Arizona bill, which does not refer to gays, lesbians, bisexuals, and transgender people specifically, arose from lawsuits brought by same-sex couples in other states against businesses that denied them wedding services based on religious objections. The language of the Arizona bill would protect such businesses from lawsuits, requiring plaintiffs to pay for the proceedings in the event they lose.

The Supreme Court cases rely on the Religious Freedom Restoration Act of 1993, which allows for carve-outs against federal laws based on religion. The Arizona law is an attempt to create similar legislation on the state level, and it could be matched in other states if the bill goes through, or depending on how the Supreme Court rules. 

In the meantime, Arizona business groups are largely against the bill.

"The response to the bill is overwhelmingly negative, but the good news at this point is every business group, every economic development group and every leadership group in the state has requested the governor to veto the bill," says Barry Broome, chief executive the Greater Phoenix Economic Council, one of Arizona's leading economic development groups.

On Friday, GPEC sent a letter to Brewer urging her to veto the legislation. "The legislation places businesses currently in Arizona, as well as those looking to locate here, in potentially damaging risk of litigation, and costly, needless legal disputes," the letter reads.

GPEC is joined by both Arizona senators, John McCain and Jeff Flake, who have also urged a veto. Brewer, a Republican, replaced Democrat Janet Napolitano when she went on to serve as Secretary of Homeland Security under President Obama. Brewer frequently votes along party lines, and SB 1062 is a Republican initiative.

Small business owners say the bill has already been bad for business. Ben Bethel, owner and general manager of Phoenix's Clarendon Hotel and Spa, says the legislation has put another bad dent in the state's reputation, following tough legislation that passed in 2010 widely seen as anti-immigrant and discriminatory.

"Lawmakers passed the [current] bill, and that alone sends a big message to the rest of the U.S., that Arizona is in the dark ages," Bethel says, adding that the state in fact is an enormous collection of viewpoints, many of them extremely open-minded.

Bethel says the timing has been poor for Arizona, which was among the hardest hit during the recession and is just now emerging, in large part thanks to tourist spending there.

Two customers have already called to say they may be cancelling their visits to Arizona and his hotel, Bethel says. One of the customers is part of a same-sex couple with children. The other customer typically stays at the hotel for a month at a time. Both said they may decide to vacation elsewhere if Brewer signs the legislation, Bethel says.

"A lot of other states can say they don’t have the [discriminatory] laws that Arizona does," Bethel says.

IMAGES: Getty Images, Courtesy Company
Last updated: Feb 24, 2014

JEREMY QUITTNER | Staff Writer | Staff Writer, Inc. and Inc.com

Jeremy Quittner is a staff writer for Inc. magazine and Inc.com. He previously covered technology for American Banker and entrepreneurship for BusinessWeek.




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