In June 2014, the Supreme Court decided by a 5-4 majority in favor of Hobby Lobby Stores, which had sued over the requirement to provide coverage for contraceptives to their female employees as granted under the Affordable Care Act. During the proceedings of Burwell v. Hobby Lobby Stores, Inc., the hobby and craft company argued the mandate that requires them to cover employees with birth control goes against their religious beliefs. This ruling has the potential to undermine employee-employer relations in the workplace. As William Nixon of the law firm Love, Beal & Nixon, explains, “Politics aside, this ruling represents the potential for a fundamental shift in how employers and employees relate to each other and could impact that relationship for years to come.”
The Hobby Lobby ruling has opened up a conundrum of legal, social, and human resource questions that lawyers and businesspeople will be grappling with in the coming years. These include: How far does a company’s religious beliefs and rights go, in terms of its employees? Has this ruling potentially poked a hole in the corporate veil? Can it be used to violate the civil rights of other groups who violate an employer’s religious beliefs, such as gays or people with different religious practices? The answers to these questions will significantly impact how companies do business.
Background Behind the Supreme Court’s Ruling
The Hobby Lobby decision contains inherent problems on many levels. One is that the ruling represents the first time the Supreme Court has decided that a for-profit corporation can claim religious beliefs. Historically, a has been viewed as a separate legal entity that protects its owners from all liability except their investment. Also, in the past the Court has stayed away from cases involving religious freedom because this is protected under the First Amendment. So why did the Supreme Court select this case to wade into dubious legal waters where they hadn’t gone before?
Hobby Lobby is an arts and crafts retailer started by self-made billionaire David Green and his family, who are Evangelical Christians. With 21,000 employees and hundreds of stores, it represents the largest contributor to the National Christian Charitable Foundation, which uses its money to fund a network of conservative political groups that include the Alliance Defending Freedom, blurring the line between religion and politics.
The contraception methods the company refused to cover were ones it viewed as aborting a possible fetus, such as Plan B and Ella. The Green family maintains that any abortion and certain contraceptives are against their religious beliefs and therefore not covered in their company’s medical plan. However, it was later revealed that Hobby Lobby’s 401(k) plan invests millions of dollars in mutual funds that include companies that make contraceptives including Plan B, known as the “morning after” drug.
The Supreme Court skirted around the First Amendment’s protection of freedom of religion, and instead tried it under the Religious Freedom Restoration Act. This was enacted during the presidency of Bill Clinton in response to a 1990 Supreme Court decision that made it easy for the government to burden the exercise of religion. Passed by a Democratic congress, the act was used by political conservatives to get around the mandate of the Affordable Care Act, the bane of many conservatives since its inception, making this obviously more of a political decision than a religious one.
Immediate Effect of the Hobby Lobby Decision
One of the immediate problems with the Hobby Lobby decision is that it gives companies too much control over their employees’ basic healthcare rights in the name of expressing their religious freedoms. Kelly Walsh, owner and president of 1 Smart Career, sums it up when she says, “I believe one of the broad statements being made in this case is that by saying a company can have a religious belief if it is a ‘Closely Held’ company, then it is also being said that the religion can be imposed on other people. This is the antithesis of religious freedom, which will lead to many more lawsuits in the future as this all gets sorted out.”
Another inherent problem in the ruling is that it may have poked a hole in the corporate veil that separates a corporation from its owners, thus possibly making them liable for the actions of business. The hole comes from the idea that Hobby Lobby as a legal entity could have religious beliefs imported from its shareholders, which opens up the possibility that the owners could be held individually responsible in the event the company goes bankrupt or gets sued.
Unfortunately, the motivation for the majority decision by some members of the Supreme Court appear to be motivated more by politics than out of concern for religious freedom. Conservatives on the whole have worked hard to undermine the effects of the Affordable Care Act, and this is another prime example of it. As Erwin Chemerinsky, Dean of the UC Irvine School of Law, articulates, “The immediate losers are women, but the implications are much greater than that. Despite all of the claims that its holding was narrow, the Supreme Court’s decision is the broadest in American history in providing corporations the ability to claim an exemption to a law based on the religious beliefs of their owners.”
Future Ramifications for Employer-Employee Relations
The Hobby Lobby Supreme Court decision has opened a Pandora’s box of legal and human resource issues that will linger in the workplace. Some experts forecast that the fallout from this ruling will be minimal, whereas others see it having far-reaching effects.
Human resources expert Rebecca Mazin of Recruit Right contends that the effects of the ruling will be limited and it’s unlikely there will be significant changes, particularly in terms of the Affordable Care Act: “There are a number of popular provisions, including extension of coverage to age 26, coverage of preventive care without deductibles and co-pays, elimination of pre-existing condition exclusions, and annual and lifetime coverage limits. Changes in the Affordable Care Act will occur, but I don’t see these core items changing.”
Legal expert William Nixon believes the effects will be more long lasting and will carry over to other segments of the population. When asked what this court decision could mean for gay and lesbian rights, he answers, “If you’re following the case, you’ll find the Hobby Lobby [decision] is already having an effect on the fight for gay rights in the workplace. You may or may not be familiar with President Obama’s executive order banning employee discrimination based on sexual orientation or gender identity in the workplace. After the Hobby Lobby ruling, many religious leaders are asking the Obama administration to include an exception for religious employers in this executive order.”
Hopefully in the future, the Supreme Court will have more foresight, be less politically motivated, and more inclined to make decisions that improve the quality of life for every individual in this country, regardless of their religious beliefs or sexual orientation.
