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LEGAL ISSUES

After Hobby Lobby, Many Fear a Slippery Slope Imperiling Employees' Rights

The impact of the Hobby Lobby ruling will affect businesses in ways large and small.
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At first blush, the Supreme Court's ruling this week to allow for-profit companies to exempt themselves from certain aspects of the Affordable Care Act for religious reasons would seem narrow in its scope. But after a more careful analysis, the ruling, which is a huge win for anti-abortion groups, extends far into the workplace, and could hold sweeping implications for businesses, big and small.

For those of you just tuning into the debate: Hobby Lobby, a chain of evangelical Christian crafts stores that's backed by the billionaire entrepreneur David Green, sued the government in 2012 over provisions in the Affordable Care Act that require employee health insurance policies to cover some contraception drugs to which it objects on religious grounds. The case reached the highest court in the land, which on Monday offered a 5 to 4 ruling that favored the plaintiff. 

Speaking for the majority, Justice Samuel Alito wrote that private companies have a right to special religious exceptions when it comes to the benefits they're required to offer their employees under the Affordable Care Act--namely contraception and fertility drugs, or treatments. 

The ruling seems to split hairs over a handful of prescription drugs used for contraception. It also contains sweeping language that effectivley expands the Religious Freedom Restoration Act (RFRA) that allows for religious exemptions on an individual basis. And it effectively allows any closely-held corporation to use religious beliefs to trump many previous employee rights under federal law.

Whether this ruling will prompt a flurry of businesses claiming similar relgious exemptions--or if the exemption could extend to other types of drugs, say, HIV medications and the like--is hard to tell. But the precedent set by the ruling could certainly drive additional requests for accomodations by other businesses.

"The ruling on Monday clearly extends to closely-held companies with religious objections to any form of contraceptives," says Daniel O. Conkle, an expert on constitutional law, the First Amendment, and religion at Indiana University. 

The ruling already expands the reach of some older laws. The Religious Freedom Restoration Act (RFRA) of 1993, for instance, allows for individual exemptions from federal laws based on religion where the government is unable to prove a compelling interest, or where laws could impose a substantial burden on an individual. The law was signed with large majorities by both the House and Senate. Monday's ruling represents a significant increase of RFRA' authority, legal experts say, allowing for-profit and not-for-profit companies to now use it.

The buck won't stop there, notes Justice Ruth Bader Ginsburg in her dissent:

In a decision of startling breadth, the Court holds that commercial enterprises, including corporations, along with partnerships and sole proprietorships, can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs. Compelling governmental interests in uniform compliance with the law, and disadvantages that religion-based opt-outs impose on others, hold no sway, the Court decides, at least when there is a "less-restrictive alternative."

Ginsburg goes on to elaborate a host of other medical treatments that could be held objectionable based on religion, such as blood transfusions, antidepressants, medications made from pig products, and even vaccinations.

Conkle adds that interpretation of the ruling by businesses could be even broader. "A religiously-informed small businesses might [adhere to] traditional gender roles that they think are mandated by their religion," he says. In other words, discriminating against women, including overlooking promotions or providing lower compensation might suddenly be supportable.

Others suggest the ruling could even spread beyond contraceptives and health care. In an email, Tom Witteker, the chief legal officer at the family-owned contracting company, J.E. Dunn Construction of Kansas City, Missouri put it like this:

JE Dunn is pleased the Court has recognized the effect of government mandates on family-owned businesses that seek to exercise religious principles through its policies...The Dunn family’s religious values have led JE Dunn to, among other things, commit more than 10 percent of its pre-tax earnings to charities and to direct that its insurance policies not cover any drugs, such as Plan B (the 'morning after pill'), and Ella (the 'week after pill'), that the Dunns believe, based on the teachings of their Catholic Christian faith, act as abortifacients.

The Dunns, who had filed an amicus brief in support of Hobby Lobby, are now assessing their health care options in light of the ruling, Witteker said.

IMAGE: Getty Images
Last updated: Jul 2, 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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