What the Hobby Lobby Ruling Means for Small BusinessBy
Small businesses from Bible bookstores to Halal food producers are likely to challenge government regulations on religious grounds in coming years, thanks to this week’s U.S. Supreme Court decision in Burwell v. Hobby Lobby Stores. But the ruling probably won’t spark a plethora of Affordable Care Act lawsuits from privately held businesses, experts say. That’s because the smallest U.S. companies aren’t required to provide insurance, and about three-quarters of midsize and larger companies already include contraception in their employees’ health coverage.
“For most businesses, it’s not going to be a huge deal,” says David Dross, who leads the pharmacy practice at benefits consultant Mercer (MMC). “Even prior to the Obamacare guidelines, 70 or 75 percent of employers—minus religious organizations like Catholic churches and hospitals—were covering birth control.” A 2010 report (PDF) from the Kaiser Family Foundation showed that 62 percent of small and midsize companies (those with fewer than 200 employees) offered contraceptives as part of their insurance coverage.
Kaiser’s Laurie Sobel, senior policy analyst for women’s health policy, notes that contraception coverage saves health plans money by preventing unwanted (and costly) pregnancies—especially since employers must also cover maternity services under the ACA. “For that reason, I don’t think we’ll see a lot of companies coming out of the woodwork” to declare their right to opt out of contraceptive coverage because of religious objections, she says.
The ruling’s bigger impact may be felt over the next decade, as a host of other government regulations draw court challenges from family-owned and privately held businesses that cater to religious customers. In fact, although Justice Samuel Alito attempted to craft the majority’s 5 to 4 decision narrowly, legal experts agree with Justice Ruth Bader Ginsberg, whose blistering dissent predicted that the decision will allow corporations, partnerships, and sole proprietorships to “opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.”
“The most obvious case would be if you have a closely held business that is religious in nature, like a Christian bookstore or Torah publisher, that is there to serve a certain faith’s needs,” says Lori Windham, senior counsel at the Becket Fund for Religious Liberty. “You can imagine government restrictions that would impact their ability to do what they need to.” Windham was on the legal team that represented Oklahoma City-based craft chain Hobby Lobby.
Companies that exist primarily for religious reasons might theoretically object to providing counseling programs for alcoholics, or insurance coverage for women if they object to women working outside the home, says Keith McMurdy, a partner in the New York City-based law firm Fox Rothschild.
Steven Friedman, an attorney in the New York City office of Littler Mendelson, foresees many religious-based challenges from private companies. “In a way, the sky is the limit because there are a lot of religious beliefs out there that don’t comport with the requirements of U.S. law.”