Religious Exemptions for Corporations?

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The Supreme Court has agreed to hear the cases of two corporations–Hobby Lobby and Conestoga Wood Specialties Corp.–that want an exemption on religious grounds from providing their employees contraception coverage under the Affordable Care Act. The owners maintain that having to include such coverage in their corporate health care plans violates their religious rights.

In order to make their case, they will have to convince the Court that for-profit corporations as well as individuals and religious organizations have first-amendment religious rights, and also that this particular exemption from the law is constitutionally required. Lower courts have disagreed over these issues.

Do corporations have religious rights?

Advocates for the religious exemption argue that the corporate form of ownership shouldn’t stand in the way of exercising religious rights. Individuals who have a controlling interest in a corporation should be as free to follow their religion in their corporate policies as in their personal choices.

Although courts have considered corporations “persons” in some respects, they have always maintained some distinction between individual rights and corporate rights. Individuals are natural persons with natural or “God-given” rights that the state must respect. Corporations are legal entities that owe their very existence to a state charter. The state can decide which rights they need in order to carry out their social functions, such as the right to make contracts and take positions on social issues. In Citizens United, the Supreme Court went farther than courts have gone before in defining corporate spending on political campaigns as a speech right required by the Constitution. Nevertheless, some rights are still reserved for natural persons, such as the right to vote. The right to practice a religion is among the most personal of rights, and one would think it would be the last one to be associated with for-profit corporations. Individuals who share ownership of a corporation separate themselves from it by disclaiming any liabilities for its losses beyond the value of their shares. Can they at the same time expect to use the corporation as a vehicle for exercising their personal religion?

If the Court does take the novel position that corporations have religious rights, that will invite a great deal of future litigation to establish just what those rights are.

Is an exemption from contraceptive coverage a legitimate religious exemption?

Even if the Court does agree that corporations as well as individuals can claim exemptions from federal laws on religious grounds, it still will have to deal with the legitimacy of the contraceptive exemption in particular.

Eugene Volokh has provided a good summary of religious exemption law. Before 1993, the Supreme Court had ruled in somewhat conflicting ways on the issue. In Sherbert v. Verner in 1963, the Court recognized a presumptive constitutional right to exemptions on religious grounds, placing the burden on the state to show why the exemption should not be granted.

Obviously, the state had to be able to draw the line somewhere; otherwise a Muslim could claim that only governments based on Islamic law are legitimate, and that Muslims living in the United States can’t be compelled to support the government in any way, such as by paying taxes.

To distinguish cases where religious objectors win from those in which they lose, the Sherbert-era Court used what it called “strict scrutiny” when the law imposed a “substantial burden” on people’s religious beliefs (e.g., when it banned behavior that the objectors saw as religiously compelled, or mandated behavior that the objectors saw as religiously prohibited):  Religious objectors must prevail unless applying the law to them is the least restrictive means of serving a compelling government interest.

In the hypothetical Muslim case, the state could argue that collecting taxes on all incomes is the least restrictive means of serving the compelling interest of funding the government, whether each individual likes that government or not. On the other hand, a law banning head scarves would probably not be acceptable in this country, since the state would have trouble showing a compelling government interest that justified making Muslims violate their beliefs.

In 1990, the majority in Employment Division v. Smith gave legislators much more freedom to grant or refuse religious exemptions at their discretion. Laws were constitutional as long as they applied to citizens without regard to their beliefs and didn’t discriminate against any religion. However, in 1993 Congress passed the Religious Freedom Restoration Act, which essentially wrote the older Sherbert standard into law, at least with regard to federal law. (In 1997, the Supreme Court recognized the right of the states to make their own laws regarding religious exemptions.)

Even under the Sherbert standard, religious exemptions have not been easy to obtain. In the contraception cases, the corporations will first have to show that providing contraceptive coverage to their employees places a substantial burden on the exercise of their religion, since it compels them to engage in religiously prohibited behavior. This might be considered something of a stretch, since the law doesn’t require them either to use contraceptives themselves or provide them directly to others, but only share the cost if employees exercise their own freedom to use them. Perhaps more challenging, they will also have to show that the state has no compelling government interest in making contraception affordable, or that there are less restrictive ways of accomplishing that end. The Center for Reproductive Rights argues that the Court has already recognized the state’s compelling interest in preserving women’s health, and that the negative effects of unintended pregnancy have already established “the essential role of contraception as a preventive health service to prevent those health impacts.”

In some cases, courts have considered the effect that someone’s exercise of religion could have on people of other religions. In Griswold v. Connecticut (1965), the Supreme Court struck down Connecticut’s ban on contraceptives as a violation of a personal right of privacy. One could argue that the state’s compelling interest extends to protecting the individual’s right to contraceptive access, and that a corporate exemption from contraceptive coverage would expand the employer’s freedom at the expense of the employee’s freedom.

If the Court rules that corporations as well as individuals can obtain religious exemptions, then drawing the line between acceptable and unacceptable exemptions will become even more important. One hotly contested area is sure to be antidiscrimination law. Religious organizations already have a “ministerial” exemption; they are free to discriminate in favor of their own believers in filling important positions. They are also free to discriminate against women, as the Catholic Church does by refusing to ordain them. And even if the Employment Non-Discrimination Act (ENDA) is passed, churches will still be allowed to discriminate against gays and lesbians. If the argument for religiously-based corporate exemptions is upheld, some corporate owners will no doubt claim a right to discriminate on a wide variety of religious grounds.

One of the provisions of the Religious Freedom Restoration Act that I find most troubling is that the beliefs on which an exemption is based do not even have to be “longstanding, central to the claimant’s religious beliefs, internally consistent, consistent with any written scripture, or reasonable from the judge’s perspective. They need only be sincere” (Volokh). Senator Jim Inhofe of Oklahoma has said that we don’t need to worry about catastrophic climate change, since God wouldn’t allow it. If personal religious beliefs can be the basis for corporate exemptions, then a corporation could claim exemption from environmental regulations on such grounds. Hobby Lobby maintains that its real moral concern is abortion, since contraceptives sometimes work by preventing implantation of a fertilized egg. But if the effect of their exemption is that fewer health insurance policies cover contraception, the result could easily be more unwanted pregnancies and more abortions. The corporation’s position doesn’t have to be reasonable in order to be upheld.

The state cannot compel individuals to think rationally, but maybe it needs to be less permissive when it comes to corporate and public policy. Those who dislike federal regulation in general–which includes a number of our current Supreme Court justices–may welcome exceptions for anyone with a sincere objection, no matter what it is. But corporate behavior has too many public consequences to be too easily exempted from public laws. If a corporation dislikes a law, let it make an argument for changing it in the public forum, providing facts and reasons that people of all religious perspectives can understand.

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