On July 1, 2014, the Supreme Court ruled that for-profit employers have the right to sue the federal government under the Religious Freedom Restoration Act of 1993 (RFRA) if their owner’s exercise of religion is substantially burdened by any action of the federal government, unless the government can show it has a compelling interest in the action, and the action is the least restrictive means of furthering it.
The Court found that rules issued under the Patient Protection and Affordable Care Act (PPACA), which require employer health coverage to include contraceptive benefits, substantially burdened a corporation’s owners. The Court also found that while the government does have a compelling interest in requiring employer coverage to include benefits for contraceptives, it had failed to show that the mandate was the least restrictive means of furthering that interest largely because the Court felt the government already had an accommodation in place for religious nonprofit employers that would work equally well in the case of a for-profit employer.
The Court’s decision was split 5-4, with Justice Alito writing the majority opinion and Justice Kennedy providing a concurring opinion. In citing the RFRA and applying its benefits to a for-profit-company for the first time, the Court may have opened up the door for all individuals and organizations to integrate their faith beliefs more closely with their business practices.
Justice Alito noted that the companies bringing the action were “closely held” family businesses, something which could distinguish this case from others in the future (e.g. a suit that might be brought by a publicly held corporation). However, Justice Alito relied on the definition of person as including corporations, and did not hint at a reason to treat a publicly held corporation differently than a closely held corporation. He merely suggested that such suits would be rare because it would be impractical in most circumstances for shareholders of large companies to agree on such an action. Justice Ginsburg wrote a comprehensive dissent objecting strongly to giving RFRA rights to commercial companies. She noted that the issue of whether or not the contraceptive mandate was a burden on the exercise of a person’s religion should have been broadened to include the affected employees.
Practically speaking of major interest and importance here is that both Justice Alito and Chief Justice Kennedy spoke in positive terms about the government’s need of accommodation for nonprofit religious employers (Reg. §54.9815-2713A). That, along with the fact that the framework for the accommodation had already been devised and implemented by the government and that it is one that is less restrictive than the means the government wished to impose on for profit employers won the case for the plaintiff’s. So while it was not a blanket endorsement for all situations, it comes pretty close to it if Hobby Lobby is subsequently used as the model case going forward [click this link to read more http://www.nytimes.com/2014/07/27/magazine/what-the-hobby-lobby-ruling-means-for-america.html?mabReward=RI%3A5&_r=0].
[The religious employer accommodation is often challenged because its critics say it is not a real alternative as the employee ends up with the contraceptive benefit as a result of having employer coverage, albeit supplied by the insurer for free rather than being paid for by employer-paid premiums. Justice Alito stated that the accommodation would “not impinge on the plaintiffs’ religious belief that providing insurance coverage for the contraceptives at issue here violates their religion, and it serves [the government’s] stated interests equally well.” Justice Kennedy underscored this by saying that “there is an existing, recognized, workable, and already-implemented framework to provide coverage.]