For-Profit Corporations Can Object to Federal Laws on Religious Grounds


The United States Supreme Court’s recent Hobby Lobby decision holds that for-profit closely held corporations can object, on the basis of sincerely held religious beliefs, to the contraception mandate imposed by the Patient Protection and Affordable Care Act (“ACA”).   Although this decision is limited to the narrow issue presented, religious based employers may have grounds to object to other federal laws that infringe on their religious beliefs.

By way of background, the ACA mandates that non-exempt group health plans cover certain preventive care without costing sharing. Included within this mandate are all FDA-approved contraceptive methods.  Exceptions to this requirement have been made for grandfathered health plans, plans sponsored by churches, and plans sponsored by non-profit, religious organizations.

In Burnwell et al v. Hobby Lobby Stores, Inc. et al, three closely held for-profit corporations objected to providing health insurance coverage without cost sharing for four forms of contraception. The owners of the corporations stated that their sincerely held religious beliefs prevented them from providing contraceptive coverage that they believed to be abortifacients.  The corporations relied on the Religious Freedom Restoration Act (“RFRA”), which prohibits the federal government from substantially burdening a “person’s” exercise of religion, unless the government can demonstrate a compelling government interest that is furthered by the least restrictive means.

The Court found that closely-held corporations fell within the definition of “person” under the RFRA, but left open the question of large publicly traded corporations and other business forms. The Court also found that although the government had a compelling interest in giving access to contraception, it had less restrictive means of doing so. Specifically, for-profit corporations could follow the procedure already created for non-profit religious organizations: complete a certificate objecting on religious grounds to providing the birth control, and the cost of the contraception would then be borne by the insurer or the government.

The dissent was critical of the holding, in part because of the concern that for-profit companies would use this decision to object to a wide range of employment laws on religious grounds. However, the Court was careful to carve out employment discrimination laws in its holding, noting that such federal laws were not affected by the decision because those laws were already tailored to achieve the compelling goal of prohibiting discrimination in employment.  What remains to be seen is how this decision will affect other federal employment (or general business) laws as applied to closely-held corporations that are operated in accordance with sincere religious beliefs.  Employers should stay tuned!

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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