Supreme Court Says: Starting a Business Doesn’t Make You Lose Your Religious Freedom

Do you lose your religious freedom because you’re running a family business? On June 30, the U.S. Supreme Court said no. In a 5-4 decision, the Court ruled that David and Barbara Green and their family business, craft chain Hobby Lobby, cannot be required by the government to include forms of contraception to which they object on religious grounds in their company health insurance policy.

The Affordable Care Act (ObamaCare) currently directs most employers to include coverage of all contraceptives, sterilization procedures, and some potentially abortion-inducing drugs and devices, at no cost to the user, in their employee health insurance plans. If employers don’t comply, they face fines of $100 per day, per employee. For Hobby Lobby, that would have added up to about $475 million a year.

Until now, the Obama Administration has not allowed any conscience accommodation to owners of for-profit companies who object to the contraceptive services mandate. Even the Administration’s religious exemption is so narrow that it does not apply to most religiously affiliated institutions, including communities of Catholic sisters. The only government accommodation for which most religious employers could qualify is the ability to have a third party provide contraceptive services outside the employer-provided insurance program, if the religious employer objects to providing them itself and is willing to sign a waiver authorizing this arrangement. However, this option is not available to for-profit employers.

The Becket Fund for Religious Liberty, the nonprofit public interest law firm representing Hobby Lobby’s owners, explained its clients’ suit this way:

“The Green family has no moral objection to the use of 16 of 20 preventive contraceptives required in the mandate, and Hobby Lobby will continue its longstanding practice of covering these preventive contraceptives for its employees. However, the Green family cannot provide or pay for four potentially life-threatening drugs and devices. These drugs include Plan B and Ella, the so-called morning-after pill and the week-after pill. Covering these drugs and devices would violate their deeply held religious belief that life begins at the moment of conception, when an egg is fertilized….

“The Green family respects the religious convictions of all Americans, including those who do not agree with them. All they are asking is that the government give them the same respect by not forcing them to violate their religious beliefs.”

Under the Religious Freedom Restoration Act (RFRA), passed by Congress in a nearly unanimous vote in 1993 and signed by President Clinton, the government must demonstrate that a law serves a “compelling interest” and is the “least restrictive means” of achieving that interest before it can burden someone’s free exercise of religion. It appears that this standard was key for the majority ruling in Burwell v. Hobby Lobby this week. The Green family had argued that by forcing the federal contraceptive services mandate on their company, the government was requiring them to run their company at odds with the way they live out their faith, thus unduly burdening their free exercise.

By ruling in the Greens’ favor, the Court has recognized for the first time that a for-profit corporation can have religious rights under federal law or the Constitution. Justice Samuel Alito stated on behalf of the Court: “The plain terms of RFRA make it perfectly clear that Congress did not discriminate…against men and women who wish to run their businesses as for-profit corporations in the manner required by their religious beliefs….Our responsibility is to enforce RFRA as written, and under the standard that RFRA prescribes, the HHS contraceptive mandate is unlawful.”*

“This is a landmark decision for religious freedom,” said the Greens’ attorney, Lori Windham. “This ruling will protect people of all faiths….You can’t argue there are no alternative means [of accommodating employees who want full access to no-cost birth control] when your agency is busy creating alternative means for other people.”

Justice Anthony Kennedy, concurring with the majority, said, “Among the reasons the United States is so open, so tolerant, and so free is that no person may be restricted or demeaned by government in exercising his or her religion.”

Americans shouldn’t have to fear that they would have to run their family businesses in ways that seriously conflict with their faith and moral values just because they incorporated. As Timothy Sandefur of Pacific Legal Foundation succinctly put it before the ruling, “Whatever one thinks of the constitutionality of the ‘contraception mandate’ itself, the Supreme Court should make clear that the First Amendment applies to everyone.” In affirming that business owners have religious rights, the Court appears to have done that.

*The Court specified that its ruling in Burwell v. Hobby Lobby applies only to “closely held” companies. Closely held companies are owned and controlled by a small number of investors, perhaps five or fewer individuals, who are often family members or the founding management. The Wall Street Journal reports that about 90% of companies in the U.S. are closely held.


Kathryn Hickok is Publications Director at Cascade Policy Institute, Oregon’s free market public policy research organization.

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