Lexington, KY – The Supreme Court handed down a pair of decisions yesterday that have the potential to affect the business landscape in the coming years. In Burwell v. Hobby Lobby Stores, Inc., the case dealt with a provision of the Affordable Care Act that requires employer-provided insurance plans to cover contraception. In Harris v. Quinn, home health care workers contested an Illinois law that required them to pay union fees regardless of actual membership when a public sector union operates on their behalf.
Hobby Lobby arose out of two cases where employers contested regulations promulgated by the Department of Health and Human Services under the ACA. These regulations require that, if the employer provides health insurance, that insurance must meet minimum coverage standards, which include contraception. The owners of three closely held businesses argued that this requirement violated their freedom of religion. In a 49-page majority opinion of a 5-4 decision, Justice Samuel Alito stated that the Religious Freedom Restoration Act of 1993 (RFRA) precludes the contraception provisions of these regulations under the ACA when sincerely-held beliefs are involved.
“Under RFRA, a Government action that imposes a substantial burden on religious exercise must serve a compelling government interest, and we assume that the HHS regulations satisfy this requirement,” Alito wrote. “But in order for the HHS mandate to be sustained, it must also constitute the least restrictive means of serving that interest, and the mandate plainly fails that test.”
The court found that closely held businesses could be exempt from these requirements in the same way that religious nonprofits currently are, although it is unclear as of now how businesses will receive these exemptions. The court didn’t rule on the First Amendment merits of the case, as it found the regulations violate RFRA and didn’t reach further.
In a concurrence, Justice Anthony Kennedy suggested that the government may have failed to provide the least restrictive means of providing contraceptive coverage, but he did note that government could easily create an accommodation that would work.
“The accommodation works by requiring insurance companies to cover, without cost sharing, contraceptive coverage for female employees who wish it,” Kennedy wrote. “That accommodation equally furthers the Government’s interest but does not impinge on the plaintiffs’ religious beliefs.”
Lexington lawyer, Doug McSwain, a partner at Wyatt, Tarrant & Combs said the ruling came down to the interpretation of terms. “In large part, the whole basis of the interpretation of RFRA was due to the fact that ‘person’ was not defined in RFRA itself, but rather the Court’s majority had to resort to the Dictionary Act which applies to all federal statutes when the context does not otherwise require,” McSwain said. “Here, the Dictionary Act defines ‘person’ to include not just natural persons, but also artificial ‘persons’ (i.e., legally created entities, albeit fictitious ‘people’ as opposed to human beings), such as corporations, partnerships, etc.”
In a blistering dissent, Justice Ruth Bader Ginsberg wrote, “In a decision of startling breadth, the Court holds that commercial enterprises, including corporations, along with partnerships and sole proprietorships, can opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.”
“The decision, however,” McSwain said, “as Justice Ginsburg’s dissent observes, clearly has implications for any corporation regardless whether closely held, large or small in size. That is the ‘breadth’ of the decision with which the dissent strongly objects.
“Anticipating that this might be a problem, the majority tries to limit its impact by sticking only to closely held corporations, and offering observations that the courts and state law can deal with whether large shareowner corporations truly have religious beliefs, and if so, how their owners’ differences in beliefs, can amount to the corporation’s belief,” McSwain said.
In Harris v. Quinn, home health care workers objected to an Illinois requirement that they pay partial dues, or agency fees, to public sector unions, even if they don’t wish to belong to the union. The petitioners in this case contended that this arrangement prohibited their First Amendment rights, as they believe it would compel them to subsidize speech by the union that they did not support. The respondents argued that these workers were the recipients of the benefits of collective bargaining and other union work on their behalf, and would as such be free riders without the agency fees collected.
In another 5-4 Alito-written decision, the court struck down Illinois state law insomuch as it applied to these workers. Rather than rule that these laws regarding agency fees are unconstitutional per se, the court found that these workers weren’t actually state employees, and thus the agency fee arrangement did, in fact, burden their First Amendment rights. The court’s analysis showed that these personal assistants were not completely answerable to the state and weren’t eligible for many benefits available under state employment, although the state did compensate the workers. The court did, however, narrow the scope of an earlier decision holding that state employees could be compelled to pay agency fees to public sector unions for work related to the collective-bargaining process, signaling an antipathy for such laws and agreements.