Corporations Can’t Use Contraceptives

For those of you who go to church, how often do you see corporations in attendance? Not employees or stockholders of corporations, but the corporations themselves, the certificate and articles of incorporation sitting in a pew and going up for communion. I don’t belong to or attend any church but am pretty sure that they do not.

People in the United States have the right under our Constitution to freely exercise their religious beliefs and also to not have that right unduly burdened by government action. Many people are claiming that various aspects of the Affordable Care Act (popularly known as Obamacare) is violating their religious beliefs, especially the contraceptive mandate. The mandate was argued at the Supreme Court last week in the Sebelius v. Hobby Lobby Store, Inc. and Conestoga Wood Specialties Corp. v. Sebelius.

In those cases, for-profit businesses (note the Inc. and Corp. in the litigants’ names) argued that the ACA’s contraceptive mandate violated their religious liberties. Here is the actual issue: Whether the Religious Freedom Restoration Act of 1993 (RFRA), 42 U.S.C. §§ 2000bb et seq., which provides that the government “shall not substantially burden a person’s exercise of religion” unless that burden is the least restrictive means to further a compelling governmental interest, allows a for-profit corporation to deny its employees the health coverage of contraceptives to which the employees are otherwise entitled by federal law, based on the religious objections of the corporation’s owners (emphasis added).

The National Constitution Center has a very good analysis and expectations by Constitutional scholar Lyle Denniston and attorney/Harvard law professor Alan Dershowitz. Both see in the tea leaves that the Court will decide the case on narrow grounds, either that the Religious Freedom Restoration Act does not apply to corporations or that it does but only to closely held entities. Knowing the Roberts court, I would agree. But that is not how I’d rule.

I would reject the companies’ arguments on the basic grounds that neither the RFRA nor the free exercise clause apply to corporations: that corporations are not people and do not have religious rights. The text of the RFRA applies only to persons. But what of the fact that corporations are owned by people (stockholders)? That does not matter. Corporations are legal entities separate from their owners. Business owners choose to form corporations or LLC’s (limited liability companies) so that they will not be personally liable for the business. For example, if a corporation can’t pay its bills, absent personal guaranties, the creditors cannot hit the individual owners. The same is true for lawsuits: in order to hit an owner personally in an action against a corporation, a plaintiff must pierce the corporate veil which is not easy to do. This is called limited liability. It is not a constitutional right but a protection granted by the states. Business organizations that do not enjoy limited liability include sole proprietorships (not even an entity–really the person doing business in his own name) and partnerships. The owners of these businesses are personally liable for company debts and judgments.

If Hobby Lobby wins, it can decide if it’s employees are sponge-worthy.

Because a corporation is an entity separate from its owners, its providing of healthcare to its employees is the action of the corporation itself, not its owners. The owners are of course free to use or not use contraceptives in their own lives.

In short, if you want to form an entity separate from yourself so that you can protect yourself from liability, then you should not be allowed to use your personal beliefs to circumvent a law that applies to your company. When your company enters the marketplace, it must follow the rules of the marketplace. I don’t think any business, whether a limited liability entity or not, should be allowed exemption from a neutral business requirement but I’d be willing to compromise: if you organize as a sole proprietorship or partnership, you can claim that your company shares your religious beliefs because it can’t be separated. I don’t see Hobby Lobby doing that.

Snoop Dogg has a pocket full of rubbers and his employees do too:

Chris DeMatteo is an attorney and the sole member of DeMatteo Legal Solutions at 2911 Dixwell Ave., Ste. B10, Hamden, CT. Call (203) 691-6594 or visit the office website. Attorney DeMatteo represents clients in criminal, juvenile and civil matters in all of Connecticut's courts.