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Start Praying Now for a Ruling Against Religious Belief Exemptions

The Supreme Court will soon decide if your business has the same rights as a person, which could be a legal nightmare for you.
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Congress couldn't take Obamacare down, but businesses may still have a dog in that fight. Just not for reasons you'd expect. 

Next week, the Supreme Court will hear arguments for two cases that will decide whether your business is equivalent to a person, and whether companies can also seek exemptions from federal law based on religious beliefs.

You should pay attention because, depending on how the high court rules, you could find yourself personally liable for things that happen in your business. The decision, which the justices will likely make this summer, could also overturn hard fought for anti-discrimination laws that have been in place for employees for 50 years.

The cases, known as Sebelius v. Hobby Lobby Stores, Inc. and Conestoga Wood Specialties Corp. v. Sebelius, grew out of sections of the Affordable Care Act, which require new health plans to pay for contraception and fertility treatments.

"There are going to be tough questions on both sides, questions the Supreme Court has not directly answered before in cases, that this court may not hesitate to stay clear of," says Adam Winkler, a professor of constitutional law at University of California, Los Angeles.

Hobby Lobby Inc. and its Mardel Inc. affiliate are part of a family-owned enterprise with 14,000 employees, based in Oklahoma City, Oklahoma. The businesses, craft stores and bookstores located in 41 states, are run by evangelical Christians, although the stores themselves are not explicitly religious. Conestoga is a woodworking company owned by a Mennonite family.

Both businesses say they object on religious grounds to new federal health care requirements that they offer fertility and contraceptive services in employee plans.

Winkler says the justices will have to decide a number of fundamental questions. Among them, does the Religious Freedom Restoration Act of 1993 apply to businesses? That law currently allows for some individual exemptions to federal laws based on personal religious beliefs.

The justices will also have to determine whether the contraception and fertility requirements of the Affordable Care Act pose a substantial burden to businesses, and whether the government has a compelling interest in imposing these provisions. Lastly, the justices will have to decide whether or not a corporation is a person, entitled to the same religious exemptions that people can claim.

The last question is perhaps the trickiest to resolve, and could go against hundreds of years of case law that have used business incorporation methods to shield owners and their assets from personal liability. These laws are generally accepted as favorable for the smooth functioning of business and commerce, since they make it difficult, for example, for individuals to sue the business owners instead of the business.

"The Hobby Lobby owners are trying to pierce the corporate veil to get exemptions for their religious beliefs, but they [likely] don't want to accept the other obligations imposed on the corporation," Winkler says. For example, if a customer slips and falls in a Hobby Lobby store, they could sue the owners in addition to the company.

Given how extreme a victory for Hobby Lobby would be, the onus is on the company to definitively answer all the legal questions its case poses, Winkler and other legal experts say. By contrast, all the government has to do is win on just one count.

"Chief Justice Roberts could have serious misgivings about the unprecedented implications that Hobby Lobby’s position could have in upturning centuries of corporate law practice," Elizabeth Wydra, chief counsel Constitutional Accountability Center says. "Justice Kennedy could be uncomfortable with giving the owners of Hobby Lobby the ability to impose their personal religious views on their business's employees, who might have different religious views."

On the other hand, the conservative justices, who might be under pressure from conservative constituents to undo the ACA, could seek to prove the health care law places an undue burden on companies, Winkler says.

The Hobby Lobby case echoes laws passing in certain parts of the country, where religious conservatives have attempted to craft state laws that would exempt companies from anti-discrimination laws, for example allowing them to refuse service to patrons based on sexual orientation.  Arizona recently found itself caught up in a national maelstrom over passage of bill in the state house and senate that would have done just that, had the governor not vetoed it at the last minute.

Minority business groups are particularly concerned that if Hobby Lobby wins, it could allow businesses to discriminate based on gender and sexual orientation.

"Extending the right to religious freedom, clearly designed for an individual person, to a corporation would have repressive consequences to the American workplace," says Justin Nelson, president and co-founder of the National Gay & Lesbian Chamber of Commerce. "Increased employment litigation, damaging workplace equality, and stunted competition and growth loom as likely repercussions."

Says Winkler: "If Hobby Lobby wins, in some ways the Supreme Court will have made the Arizona law the law of the land."

IMAGE: Gallery Stock
Last updated: Mar 19, 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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