Supreme Court Closes Term with Significant Employment-Related Ruling

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Yesterday, the U.S. Supreme Court issued the last of its opinions for the 2013-2014 annual term. Included was Burwell/Health and Human Services v. Hobby Lobby, a case addressing a religious-based challenge to contraceptive-related regulations under the Patient Protection and Affordable Care Act of 2010 (ACA). The opinion is here.

Federal regulations under the ACA require that employer group health coverage include coverage for contraception. Churches and other religious nonprofit organizations are exempt from the requirement.  For them, the insurance company or benefit plan has to provide the coverage but the religious organizations cannot be required to pay for it. Hobby Lobby concerned whether for-profit corporations that are "closely held" — businesses set up as corporations but where the shares generally are owned by a family or other small group of people — can be required to offer (and pay for) health plans that provide contraceptive coverage or face steep penalties.

In a 5-4 decision the Supreme Court held that those types of corporations cannot be required to cover contraception if doing so conflicts with the corporate owners' sincere religious beliefs. Requiring them to provide contraceptive coverage, the Court ruled, violated a federal law that restricts the government in actions that burden religious views.  The Court ruled that the burden on for-profit corporations was not necessary because those corporations could be accommodated in the same way as nonprofit corporations.

The Court emphasized the narrowness of its ruling. It did not hold that anything a closely held corporation wants to do based on claimed religious views—such as avoid employment-discrimination laws or decline to pay taxes—is permitted. Instead, the ruling turned on the availability of a reasonable alternative to the regulatory requirement. The Court also did not say that the same ruling would apply to a publicly traded corporation. Finally, there are pending legal challenges concerning the religious exemption. The Court did not address those challenges.

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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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