Two weeks ago, the Supreme Court handed down its much-awaited decision in Hobby Lobby, holding that closely held business corporations are “persons” endowed with religious rights. Then it followed up with an even more stunning order granting a temporary injunction to Wheaton College, which objects to signing forms that certify its eligibility for exemption from the “contraceptive mandate.” In addition to their troubling reasoning about the scope of religious rights, these decisions send strong messages about race and gender: religiously motivated conduct that is racially discriminatory is still unlawful—religious conduct that undermines gender equality, not so much.
We write to acknowledge that some of the arguments made by Hobby Lobby’s opponents were weak. They made it easy for the Court to shoot their (that is, our) position down. The results pose a serious threat to the ability of employees and their dependents to gain access to contraceptive services. We believe there are better arguments to be made, drawn from history as well as legal doctrine.
These cases were not constitutional decisions—instead, they involved the Religious Freedom Restoration Act of 1993 (RFRA). RFRA was designed by Congress to mimic the constitutional law of religion before Justice Scalia’s majority opinion in a 1990 case sharply restricted the free exercise clause. Much like the conscientious objector cases from the 1960s and 70s, the recent interpretations of RFRA are decisions based on a statute with profound constitutional implications. Hobby Lobby and Wheaton College are vitally important decisions. Together, they add up to a major expansion of what lower courts thought was the scope of RFRA—and a significant contraction of the countervailing government interests and equality rights.
In Hobby Lobby, opponents argued that a line should be drawn between non-profit and for-profit religious corporations. This was the position taken by the Obama administration and adopted by the four liberal Justices who dissented. This theory leads to the view that religious people must check their religion (and religious rights) at the marketplace door. The pro-exemption side argues that religious freedom for businesses means freedom from government regulations that restrict owners’ ability to conduct their business according to their beliefs. Despite their differences, both sides assume that there is a trade-off between recognizing that corporations can be religious “persons” and laws that protect employees and consumers.
Justice Alito’s majority opinion emphasized that it was only deciding the rights of closely held corporations, like Hobby Lobby and the other two companies involved in the case. There is no principled basis for distinguishing between a closely held and publicly traded corporations, however, just as there is none in the line between for-profit and non-profit. Hobby Lobby is a closely held business run by the Green family, but has over 16,000 employees nationwide. Co-plaintiff Conestoga Wood Specialties Corporation also is a closely held family-owned corporation, with 950 employees and five factories located in North Carolina and Pennsylvania. Only one of the three plaintiff companies, Mardel, which sells religious office and educational supplies, is actually a small closely held religious corporation. The scale and the nature of Hobby Lobby and Conestoga Wood make it hard to see any meaningful distinction between the closely held and publicly traded corporate forms.
Other positions taken by the parties on both sides of the controversy are equally faulty, as demonstrated by both legal doctrine and history. First, the argument from history. The pro-exemption camp commonly claims that intrusive regulations arose recently, with the appearance of the modern regulatory state. The idea is that the expansion of the federal government in the modern era has subjected businesses to sweeping regulations that reflect progressive politics and interfere with business owners’ conservative religious beliefs. The implication is that before the “nanny” state, business actors operated without government interference.
Far from the imagined golden age without regulation, however, early American law regulated economic activity—and religious corporations. Our history reflects support for religious entities, coupled with willingness—indeed, determination—to subject religious corporations to regulation. That determination was partly the legacy of anti-clerical sentiments inherited from Europe. But the adoption of such regulations in the early national period primarily reflected the development of a distinctly American approach, in which opposing the aggrandizement of power and property by religious corporations bespoke a commitment to the value of religious freedom. Regulations applied to religious corporations gave expression to this understanding. Indeed, the first general incorporation statutes, starting in the 1780s, were written expressly for religious institutions, which were allowed to incorporate upon completion of a few simple procedural requirements—a much easier process than incorporation at the time for business ventures or municipal bodies, for example, which required legislative approval for each incorporation.
Under these laws, religious institutions in America have long taken the corporate form. And their activities have crossed the supposed boundary between commercial and noncommercial activities. The experience of religious organizations with corporate structure dates back to well before any division between for-profit and non-profit appeared in federal legislation. The Methodist Book Concern, for example, whose operations were based in New York City and Cincinnati, was the largest publishing house in the world by 1850. Such religiously affiliated institutions were commonplace, as were other types of “faith-based” services that defy the distinctions between religious and economic—or religious and secular activities drawn today.
Contrary to the laissez-faire assumptions of many judges and lawyers, American history is full of controls imposed on religious corporations. In Pennsylvania, where Conestoga Wood is based, religious corporations were restricted to a maximum of five acres of land and an income of no more than £500 in the 1790s. Many other states restricted property and income in similar ways across the nineteenth century. When Oklahoma, the home of Hobby Lobby, was first organized as federal territory in 1890, it was subject to federal territorial statutes, which limited all religious organizations to a maximum of $50,000 in property.
What do we learn from this history? First, the binary divisions offered in Hobby Lobby (for-profit/charitable; closely held/public; religious/secular and so on) do not reflect the complexity and variety of American religious and commercial life, both in history and in the present. Second, the assertion that the regulation of such religious corporations is hostile to religion and inimical to religious freedom is false. Across the country and for much of American history, these regulations co-existed with great religious growth and innovation. In other words, regulation need not entail repression, and traditionally has not operated to the detriment of religion in American life.
This history should remind us that the regulation at issue in Hobby Lobby and Wheaton College, whether imposed by state or federal government, should not be automatically or viscerally confused with attacks on religion. The long American tradition of regulating religious corporations without undermining religious freedom makes the recent Affordable Care Act decisions just two in a long line of regulatory measures. To be true to the patterns set across American history, no corporation would have been eligible for exemption, either non-profit or for-profit—all would have been held to the standards imposed by law.
Hobby Lobby was right about a central question, however. People can, and should be allowed to, express their religious beliefs by forming business enterprises under business incorporation laws and by conducting their businesses in conformity with their faith. The case that the majority cited to establish this proposition was Braunfeld v. Brown (1961), a case involving Jewish merchants who closed on Saturdays in observance of the Jewish Sabbath. They claimed an exemption from Pennsylvania’s Sunday closing law, saying they already lost one day’s business each week. The majority upheld this case as evidence that religion and commerce often overlap. What the Court failed to mention is that the Braunfeld plaintiffs lost. Even though the challenged regulation made the plaintiff’s business less profitable, that was deemed too “indirect” a burden on religious practice to trigger constitutional protection.
Braunfeld is a peculiar case for the majority to use as support for its decision. After all, the challenged regulation in Hobby Lobby also makes operating a business in conformity with religious faith more expensive, but does not compel business owners to violate their beliefs. The ACA subjects employers who refuse to provide comprehensive healthcare plans to potential economic costs in the form of fines or government assessments (whether the costs of such fines and assessments would exceed the costs of providing compliant plans remains open to dispute). Under Braunfeld’s logic, facing costs like this is not a substantial burden. A careful reading of the Sunday Closing Law cases—sorely missing from the Court’s decision—provides a cautionary note for both sides of the controversy.
Braunfeld assumed that businesses can be religious “persons” (and that religious persons can express their religion by the way they conduct their business enterprises). But businesses are no more entitled to exemptions from laws that burden their religious practice than are natural persons. This is true of laws that proscribe murder, theft or abuse, and other behaviors such as racial discrimination (which the Court asserts in Hobby Lobby is immune from claims to religious exemptions). It should be equally true of laws—such as the regulations in both Hobby Lobby and the Sunday Closing cases—that don’t prevent people from acting as they choose but merely make them pay a price for it. It is especially clear that laws that regulate the provision of a benefit—such as social security, tax exemptions, and so on—are regulations that have traditionally received substantial deference from the Court, as in Bowen v. Roy (1986), where the Supreme Court held that a religious objection to awarding social security numbers did not trigger a right to bar the government from such record-keeping measures.
Once we see it for what it truly is, the proper way to analyze claims for exemption made by religious businesses as well as non-profits becomes clear. Employer-based health insurance under the ACA delivers a large government subsidy (in the form of a tax exemption) to employees, funneled through their employers. This in turn permits employers to lower the cost of their compensation packages. In 1982, in Bob Jones University, the Court considered the right of a Christian university to escape the application of federal laws against race discrimination. Then, the justices firmly held that the government has the authority to regulate the conduct of private organizations that receive government subsidies in the form of tax-exemptions. The only difference between Hobby Lobby and that case is that in the case of employer-based health care plans, the tax exemption/subsidy is funneled through employers instead of being delivered directly to employees. The Wheaton College case is even closer to Bob Jones. There are no grounds for objecting to regulatory requirements that are attached to the receipt of tax exemptions (or to other forms of government largesse).
Yet in 2014, we seem to have forgotten the rights of women, many of whom have their own religious interests and rights, and none of whom are forced to accept any form of contraception under the so-called contraceptive mandate (the regulation in question does not actually force either employers or employees to do anything). The majority in Hobby Lobby expressly announced that it would still protect race—women, however, are in the crosshairs; and other issues of gender, including laws requiring same sex couples’ equal access to commercial services, are now in substantial doubt. Only by recognizing the long tradition in law of religious freedom and regulation in America, can we overcome the differential treatment that the Court has imposed on women workers.
Sarah Barringer Gordon is Arlin M. Adams Professor of Constitutional Law & Professor of History at the University of Pennsylvania. She is co-editor of Studies in Legal History, the book series of the American Society for Legal History, published by Cambridge University Press.
Nomi Stolzenberg is the Nathan and Lilly Shapell Chair in Law at the University of Southern California Law School. She is the director of USC’s Program on Religious Accommodation and co-directs USC’s Center for Law, History and Culture.