For-Profit Corporations Entitled to Religious Exemption from Contraceptive Mandate

by Akerman LLP

On June 30, 2014, the Supreme Court decided the closely watched case Burwell v. Hobby Lobby Stores, Inc. The main question before the court was whether for-profit companies may assert religious grounds to avoid providing contraception coverage as mandated by the Affordable Care Act. The Court concluded that for-profit companies are entitled to assert a religious exemption to the contraceptive mandate. A copy of the court opinion can be found here.

Contraception Coverage Mandate

The Patient Protection and Affordable Care Act, Pub. L. No. 111-148 (Mar. 23, 2010), requires employers with at least 50 full-time-equivalent employees to provide those employees with certain health care benefits or else face a financial penalty. Among the required health benefits is women's preventive care, including contraception coverage. Churches and other houses of worship are already exempt from providing contraception if they object on religious grounds, and non-profits are provided special accommodations as well. See 45 CFR 147.131; 78 Fed. Reg. 39870 (July 2, 2013) (requiring insurers of such non-profits to provide contraception coverage to the non-profits' employees paid by certain federal funds, not paid by the non-profits' premiums). However, for-profit employers were not afforded this accommodation, and so several brought suit.

Do Corporations Exercise Religion?

Hobby Lobby Stores, Inc., a privately-owned, for-profit company, along with its owners, argued it was exempt based on the Free Exercise (of religion) clause of the First Amendment and the Religious Freedom Restoration Act of 1993 ("RFRA"), 42 USC 2000bb et. seq. The RFRA states that "government shall not substantially burden a person's exercise of religion" unless "in furtherance of a compelling government interest" and the government uses the least restrictive means of achieving that interest. 42 USC 2000bb-1.

The government argued that the RFRA does not grant free-exercise rights to for-profit corporations and the company owners' exercise of religion is not burdened if their companies are required to provide contraception coverage. Even if a substantial burden did exist, the government argued that the government interest in public health and equal access to women's health care is sufficiently compelling to overcome a religious exemption.

The Contraceptive Mandates Violates the RFRA

The Supreme Court concluded that the RFRA does extend protection to for-profit corporations. The Court also ruled that the contraceptive mandate substantially burdens the exercise of religion under RFRA. Finally, the Court ruled the mandate is not the least restrictive means of furthering the government's interest in allowing access to contraception, particularly because the government could extend the same accommodation it has already provided to non-profits, allowing the non-profits to avoid paying for contraception while offering employees the same benefit paid for using special federal funds.

The decision is explicitly made a narrow one, concerning only the contraceptive mandate. The ruling does not allow employers to assert exemptions to other coverage requirements, such as immunizations. Additionally, because the Court decided the matter based on the RFRA, the Court declined to reach the parties' First Amendment arguments.


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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