On June 30, 2014, the U.S. Supreme Court ruled in Burwell v. Hobby Lobby that closely-held, for-profit corporations are not required to comply with the Affordable Care Act’s (ACA’s) contraceptive mandate if doing so would violate the owners’ sincerely held religious beliefs. How will this affect employers?

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U.S. Supreme Court Exempts Some For-Profit
Corporations from Contraceptive Mandate
Publication Date: 22 July 2014 | Author(s): Scott Wagner, Katelyn Winslow
Member Firm(s): FordHarrison Country: United States
On June 30, 2014, the U.S. Supreme Court ruled in Burwell v. Hobby Lobby that closely-held, for-
profit corporations are not required to comply with the Affordable Care Act’s (ACA’s) contraceptive
mandate if doing so would violate the owners’ sincerely held religious beliefs. Instead, the majority
in the 5-4 decision held that employers with religious objections to the mandate should be
permitted to utilize the “religious exemption,” a procedure that is already available to religious non-
profit organizations that object to the mandate. This exemption shifts the cost of providing
contraceptives to the organization’s insurance carrier or another third party. Exempt employers are
circumvented, but employees still have free-access to mandated coverage.
Recognizing that the precedent set in Hobby Lobby had the potential to allow future plaintiffs to opt
out of more than the contraceptive mandate, the majority attempted to narrow the applicability of
the holding to closely-held, for-profit entities that are owned by individuals whose “sincere”
religious beliefs are in opposition to contraception, or certain forms of contraception. However,
recent case law has already widened the holding in this case, so the status of the contraceptive
mandate and the impact of Hobby Lobby remain unclear.
The Contraceptive Mandate
The ACA’s contraceptive mandate requires covered employer-sponsored health insurance to offer
cost-free coverage of all FDA approved contraceptive methods. The companies in this case
objected to providing coverage for certain contraceptive drugs that prevent an already fertilized
egg from developing into a viable pregnancy, claiming doing so would violate their owners’
religious beliefs that life begins at conception. Companies who fail to comply with the mandate are
subject to penalties of up to $100 per employee per day, which would have cost one of the
plaintiffs up to $1.3 million a day.
Violation of Religious Freedom Restoration Act
The companies filed suit under the Religious Freedom Restoration Act (RFRA), which prohibits the
government from taking action that substantially burdens a person’s exercise of religion unless that
action is the least restrictive means of furthering a compelling governmental interest. Prior to this
holding it was not clear whether a for-profit corporation would be considered a “person” for the
purposes of bringing a claim under the RFRA. However, the Court in Hobby Lobby held that for-
profit companies do have standing to bring claims under RFRA and that the contraceptive
mandate violates the plaintiffs’ rights protected under the statute.
The Court held that the economic penalty resulting from failing to comply with the mandate (not
offering contraceptive coverage in their employer-based health plan) is a substantial burden and is
not the least restrictive means of furthering the government’s interest in providing cost-free access

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to contraceptives. The Court held that the government’s interest could be furthered by offering for-
profit companies an exemption from the mandate, like the aforementioned religious exemption.
Although, the majority opinion emphasized that the holding applied narrowly to the facts presented
by the Hobby Lobby plaintiffs and that the decision rested on the religious exemption as the least
restrictive means of furthering the government’s interest in providing contraceptive services, the
scope of that holding was widened three days later. In Wheaton College v. Burwell, a religious
non-profit college objected to filing the religious exemption form, because the form notifies the third
party that the employer will not be providing contraceptive services, which in turn causes the third
party to provide those services to its employees. The college claimed that filing the form would
make it complicit in the provision of contraceptives by triggering the obligation for someone else to
do so. The Court held that instead of filing the form, the college could write a letter to the
government stating its objection to the mandate, which would trigger the exemption and block the
government from enforcing the mandate against the college. In a fifteen-page dissent, Justice
Sotomayor accused the majority of retreating from its position in Hobby Lobby, stating the Court’s
action “evinces disregard for even the newest of this Court’s precedents and undermines
confidence in this institution.”
Employers’ Bottom Line: Although the Court’s decision in Hobby Lobby is narrow, employers
clearly can expect more litigation over the contraceptive mandate and, possibly, other provisions of
the ACA.
Taken from the Ius Laboris Knowledge Base: www.globalhrlaw.com
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