The Supreme Court’s Hobby Lobby Decision Carries Broad Implications for Employers

by Cozen O'Connor

The U.S. Supreme Court this week issued its long-awaited decision in Burwell v. Hobby Lobby Stores, Inc., regarding the ability of for-profit corporations to refuse to abide by regulations that require them to provide cost-free contraception to their female employees. The Court ruled in favor of Hobby Lobby, holding that the regulations imposing the contraception mandate of the Affordable Care Act violated another federal law, the Religious Freedom Restoration Act (RFRA).  Although the Court seemed to emphasize the limited nature of its holding, this case has broad implications for all corporations and all types of government regulations.

In its appeal, Hobby Lobby (a closely held, family-owned, for-profit corporation) argued that the regulations requiring companies to provide cost-free contraception to female employees in its insurance plan violated RFRA. The RFRA requires the government to meet a high burden whenever a law or regulation imposes a substantial burden on a person’s exercise of his religion.

The Court was faced with four substantive questions: (1) could Hobby Lobby be a “person” covered by RFRA; (2) if so, could Hobby Lobby exercise religion; (3) if so, were the regulations a substantial burden on the company’s exercise of religion; and, (4) if so, did the regulations serve a compelling governmental interest in the least restrictive way? The Court answered the first three questions affirmatively, establishing the ability of a for-profit corporation to be covered by the RFRA and to exercise religion. The Court answered the last question in the negative, finding that the government did not use the least restrictive means of accomplishing its interest of providing cost-free contraception under the Affordable Care Act. Thus, the Court struck down the regulations.

In answering the first three questions, the Court evaluated the purpose of RFRA, finding that Congress intended to offer broad protection for religious liberty and that the existing statutory definition of person specifically included corporations. The Court rejected the argument that a corporation could not exercise religion, citing the following rationale: corporations are made up of individuals who can exercise religion, RFRA already covers nonprofit corporations, and the for-profit nature of a corporation does not substantively change the analysis. The Court suggested that large corporations would not exercise religion and that, even if they wanted to, existing state laws on corporations provide for rules on how corporations make major decisions.

In holding that the regulations at issue did not use the least restrictive means to accomplish their goals, the Court’s opinion pointed out numerous other ways to accomplish the government’s objective of providing cost-free contraceptive care to women.  For example, the Court suggested the government could pay for the contraception mandate directly, thus sparing the corporations from the burden on their religious exercise. The Court also repeatedly noted the existing exemption for non-profit religious organizations, finding no reason why this accommodation could not be extended to for-profit, closely held corporations and that such an extension would both accomplish the government’s objective and respect free-exercise rights of the corporations.

At first blush, the Court’s ruling is limited to closely held corporations. (Although undefined by the Court, the IRS defines a closely held corporation as one where five or fewer shareholders control 50 percent  or more of the available corporate stock.) But the dissent suggested that the majority’s rationale would extend to all corporations, not just closely held ones. The Court also emphasized that its holding regarded only the contraception mandate of the Affordable Care Act and did not apply generally to other insurance coverage mandates that might conflict with an employer’s religious beliefs. Justice Ginsburg’s dissent suggests that there was no rationale limiting the Court’s holding to just this mandate. The Court stated that its holding would “provide[] no … shield” to companies that discriminated in hiring under the guise of religious freedom. However, Justice Ginsburg’s dissent suggests that the majority’s decision could allow companies to do just that. The Court also emphasized that its holding did not apply to tax laws that require all people to pay taxes, declaring that “allowing taxpayers to withhold a portion of their tax obligations on religious grounds would lead to chaos.”

This case has broad implications for employers throughout the country. First, closely held corporations now have a specific exemption from one of the Affordable Care Act’s mandates. Second, other corporations now have an avenue — RFRA — by which to assert objections to insurance mandates or other workplace laws that they feel would cause a substantial burden on their religious exercise. As long as such a belief is sincerely held, the courts will not question its reasonableness or evaluate it substantively. Third, although the RFRA does not apply to the states, several states have adopted their own mini-RFRA laws that could apply to other state laws where an employer operates. Finally, corporations should be aware that the Court’s decision was based on a statute (the RFRA) and not the Constitution — thus, Congress can change the underlying statute and provide for different rights for corporations than the Supreme Court determined exist today.

Although corporations should tread lightly given the limited nature of the Court’s opinion, additional cases that attack other aspects of the Affordable Care Act or other laws can be expected. One important feature of the RFRA is that it applies to every federal law previously passed (other than federal employment discrimination laws) or passed in the future unless the future law specifically excludes RFRA. Another important feature is that a religious belief does not have to be integral to a faith in order to qualify for protection; it need only be sincerely held. New religions can avail themselves of the RFRA just as established faiths already have. Given these considerations, we can expect to see a series of new RFRA-based challenges to a wide variety of workplace laws in the future.

The Court’s opinion is available here.



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.

© Cozen O'Connor | Attorney Advertising

Written by:

Cozen O'Connor

Cozen O'Connor on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
Sign up using*

Already signed up? Log in here

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
Privacy Policy (Updated: October 8, 2015):

JD Supra provides users with access to its legal industry publishing services (the "Service") through its website (the "Website") as well as through other sources. Our policies with regard to data collection and use of personal information of users of the Service, regardless of the manner in which users access the Service, and visitors to the Website are set forth in this statement ("Policy"). By using the Service, you signify your acceptance of this Policy.

Information Collection and Use by JD Supra

JD Supra collects users' names, companies, titles, e-mail address and industry. JD Supra also tracks the pages that users visit, logs IP addresses and aggregates non-personally identifiable user data and browser type. This data is gathered using cookies and other technologies.

The information and data collected is used to authenticate users and to send notifications relating to the Service, including email alerts to which users have subscribed; to manage the Service and Website, to improve the Service and to customize the user's experience. This information is also provided to the authors of the content to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

JD Supra does not sell, rent or otherwise provide your details to third parties, other than to the authors of the content on JD Supra.

If you prefer not to enable cookies, you may change your browser settings to disable cookies; however, please note that rejecting cookies while visiting the Website may result in certain parts of the Website not operating correctly or as efficiently as if cookies were allowed.

Email Choice/Opt-out

Users who opt in to receive emails may choose to no longer receive e-mail updates and newsletters by selecting the "opt-out of future email" option in the email they receive from JD Supra or in their JD Supra account management screen.


JD Supra takes reasonable precautions to insure that user information is kept private. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. However, please note that no method of transmitting or storing data is completely secure and we cannot guarantee the security of user information. Unauthorized entry or use, hardware or software failure, and other factors may compromise the security of user information at any time.

If you have reason to believe that your interaction with us is no longer secure, you must immediately notify us of the problem by contacting us at In the unlikely event that we believe that the security of your user information in our possession or control may have been compromised, we may seek to notify you of that development and, if so, will endeavor to do so as promptly as practicable under the circumstances.

Sharing and Disclosure of Information JD Supra Collects

Except as otherwise described in this privacy statement, JD Supra will not disclose personal information to any third party unless we believe that disclosure is necessary to: (1) comply with applicable laws; (2) respond to governmental inquiries or requests; (3) comply with valid legal process; (4) protect the rights, privacy, safety or property of JD Supra, users of the Service, Website visitors or the public; (5) permit us to pursue available remedies or limit the damages that we may sustain; and (6) enforce our Terms & Conditions of Use.

In the event there is a change in the corporate structure of JD Supra such as, but not limited to, merger, consolidation, sale, liquidation or transfer of substantial assets, JD Supra may, in its sole discretion, transfer, sell or assign information collected on and through the Service to one or more affiliated or unaffiliated third parties.

Links to Other Websites

This Website and the Service may contain links to other websites. The operator of such other websites may collect information about you, including through cookies or other technologies. If you are using the Service through the Website and link to another site, you will leave the Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We shall have no responsibility or liability for your visitation to, and the data collection and use practices of, such other sites. This Policy applies solely to the information collected in connection with your use of this Website and does not apply to any practices conducted offline or in connection with any other websites.

Changes in Our Privacy Policy

We reserve the right to change this Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our privacy policy will become effective upon posting of the revised policy on the Website. By continuing to use the Service or Website following such changes, you will be deemed to have agreed to such changes. If you do not agree with the terms of this Policy, as it may be amended from time to time, in whole or part, please do not continue using the Service or the Website.

Contacting JD Supra

If you have any questions about this privacy statement, the practices of this site, your dealings with this Web site, or if you would like to change any of the information you have provided to us, please contact us at:

- hide
*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.