Hobby Lobby, Benefit Corporations, and Religious Nonprofits

Ruling in favor of Hobby Lobby, the Supreme Court decided that companies with religious objections cannot be required to provide health coverage for certain contraceptive services. In this week’s conversation, scholars discuss the implications of this decision for religious freedom and explore the wider role of religion in American public life.

By: Stanley Carson-Thies

The free exercise of religion extends beyond worship and religious belief to organizational decision-making in the world outside of churches. Furthermore, the set of private community-serving entities cannot be neatly bifurcated into mission-oriented religious nonprofits and mission-devoid secular businesses. Those are two of the significant conclusions we can draw from Monday’s Supreme Court decisions in theHobby Lobby and Conestoga Woods cases.

The Religious Freedom Restoration Act (RFRA), the 1993 super-law that Congress adopted with sweeping majorities and President Clinton proudly signed, is the religious freedom guarantor that the Christian owners of the two companies had been counting on in their lawsuit against the federal government. They were seeking to avoid having their health insurance plans cover the four contraceptive drugs and devices they are convinced act as abortifacients. The federal government’s retort? RFRA is not relevant to your cases: secular businesses are excluded from RFRA’s protection and, besides, engaging in business is wholly different than engaging in religious exercise.

The government’s position lost. Nothing in RFRA excludes from its jurisdiction businesses or corporations (by the way, nonprofits and houses of worship are “corporations,” too!). This is clear from how the terms in RFRA are defined, as Justice Alito noted in his majority opinion; it is also clear from the history of RFRA, as University of Virginia church-state expert Douglas Laycock documented for the Court in an amicus brief. RFRA itself further protects “any exercise of religion” and not only acts of worship, religious teaching, and the like. So the Court majority assessed the contraceptives mandate, as applied to these closely held companies, by RFRA’s tests: Does it substantially burden the owners’ religious exercise? Does it represent a compelling government interest? Is it the least-restrictive means the government has to assert that interest? Ultimately, it found the mandate wanting. The government can, and must, find a way to ensure the companies’ women employees easy access to contraceptives in a way that is less burdensome to the owners’ religious convictions.

In the process of getting to this conclusion, Justice Alito’s majority opinion makes two points often overlooked in discussions of the practice of institutional religious freedom in our day. And Justice Kennedy’s concurrence, alas, was in step with all too many discussions in neglecting to make one other vital point.

First, a corporation is a way for persons to get things done, not just a shield against liability. Some have criticized Hobby Lobby’s owners for asserting the freedom to imprint their personal religious values on the company, while also claiming the freedom from personal liability that the corporate form provides. Justice Alito highlighted a different, and vital, rationale for forming corporations: “A corporation is simply a form of organization used by human beings to achieve desired ends.” And thus, he said, “protecting the free-exercise rights of corporations…protects the religious liberty of the humans who own and control those companies.” Reduce religious freedom to an individual right, and much of what religious people do in the world will be left unprotected.

It is also not an either-or classification. One question that occupied many before the decision was handed down was this: Is it only nonprofit entities, or also commercial entities, that should enjoy religious freedom? However, Justice Alito points out, this is not a very helpful distinction. The world of organized entities isn’t split neatly into those two parts, for companies can have social and religious missions. Moreover, more than half of the states “now recognize the ‘benefit corporation,’ a dual-purpose entity that seeks to achieve both a benefit for the public and a profit for its owners.” Interpretations of religious freedom that assume a bifurcation simply cannot do justice to reality.

Finally, over-regulation will produce increasing religious freedom problems. This is an issue often overlooked in religious freedom discussions, and, alas, also overlooked by the Hobby Lobby court. Justice Kennedy: “[I]n a complex society and an era of pervasive governmental regulation, defining the proper realm for free exercise can be difficult.” Protecting religious exercise will become even more difficult as our society becomes even more religiously and morally heterogeneous. Governments therefore should scale back, or pluralize, their regulatory activity, if religious freedom is to be honored as it must be.

Stanley Carlson-Thies is founder and president of the Institutional Religious Freedom Alliance, a nonpartisan think tank that promotes the church-state freedoms that enable faith-based organizations to make their best contributions to the common good. 

This piece was originally authored on July 2, 2014 for the Religious Freedom Project at Georgetown’s Berkley Center for Religion, Peace, and World Affairs.