Over the past year or so, several dozen business owners have sued the federal government over a provision in the 2010 Affordable Care Act that requires many employers to include free coverage of contraceptive services in their employees’ health insurance plans. The business owners contend that, like religious institutions, they should not be forced to pay for services that conflict with their religiously based objections to birth control, sterilization or emergency contraception.

The lawsuits filed by businesses generally have not drawn as much attention as those brought by faith-based schools, hospitals and charities objecting to the contraception mandate on the same religious grounds. But that might be about to change. On May 23, 2013, the 10th Circuit Court of Appeals in Denver will hear oral arguments in Hobby Lobby Stores, Inc. v. Sebelius,1 the first such case involving a sizable business to reach the appeals-court level.

The owners of Hobby Lobby, a chain of 525 arts and crafts stores, contend that, as evangelical Christians, they should not be forced to provide their 13,000 employees with insurance coverage that includes emergency contraception. They argue that requiring coverage of the morning-after pill and similar contraceptives, which they believe may abort pregnancies rather than prevent them, would violate their religious liberty rights. Although Hobby Lobby’s business is not intrinsically religious, the owners say, the corporation nevertheless adheres to certain practices that reflect their Christian commitments, including closing on Sundays.

But unlike houses of worship, which are exempt from the mandate, and religiously affiliated nonprofits, which will receive some form of regulatory protection from it, for-profit businesses such as Hobby Lobby are fully subject to the mandate. They also have a more difficult time claiming religious liberty rights than houses of worship or religious nonprofits. While constitutional and statutory protections for religious liberty clearly apply to individuals and faith-based organizations, it is unclear whether they also apply to for-profit enterprises. So before it can rule on whether Hobby Lobby should be exempt from the contraception mandate, the 10th Circuit Court of Appeals first must determine whether the company has the same religious liberty rights as individuals and religious organizations.

A similar question arose in a different context in a recent and well-known case: Citizens United v. Federal Elections Commission (2010). In Citizens United, the Supreme Court ruled that corporations have full-fledged rights under the free speech clause of the First Amendment. Now, the cases challenging the Affordable Care Act’s contraception coverage mandate are forcing courts to decide whether the First Amendment’s guarantee of religious liberty (known as the “free exercise clause”) and a 1993 federal law intended to bolster religious freedom (the Religious Freedom Restoration Act, or RFRA) also apply to businesses.2

Supporters of businesses like Hobby Lobby say that nothing in the text of the First Amendment or the RFRA specifically prohibits courts from applying them to companies. Moreover, they say, the line between religiously affiliated nonprofit entities and religiously motivated business owners is not always obvious. They argue that some for-profit businesses operate with as much religious motivation as large religiously affiliated nonprofits, such as universities and hospitals, which have a range of interests and concerns – including financial ones. For example, they say, operators of a butcher shop that observes Jewish or Muslim dietary laws, or a store that specializes in Christian music and art, may have a more plausible claim to be “exercising religion” than a university that is affiliated with a church.

In its defense of the mandate, the federal government contends that courts in the U.S. have tended to view faith-based nonprofits as part of faith communities while seeing businesses – even those run by deeply religious people – as inherently secular, money-making enterprises. This argument swayed a federal district court, which in November 2012 rejected Hobby Lobby’s request for an injunction against the contraception mandate, prompting the company to appeal to the 10th Circuit.

The federal government also argues that granting for-profit businesses the same religious free-exercise rights as churches and faith-based nonprofits would allow them to use religious liberty claims to contest other employee rights, such as the right to collectively bargain or freedom from discrimination based on sex, race or religion.

If the 10th Circuit determines that the religious liberty protections of the Constitution apply to Hobby Lobby, the focus would then shift to the merits of the case – specifically to the application of the RFRA. That law states that no federal law shall “substantially burden a person’s exercise of religion” unless the government shows that application of the law to the person furthers a “compelling governmental interest.” Thus, in Hobby Lobby and similar cases working their way through the courts, judges must decide whether the duty to participate in an insurance plan that covers pregnancy-prevention services for employees “substantially burdens” an employer’s sincerely held religious beliefs. If the 10th Circuit and other courts conclude that such a burden exists, then they must determine whether the government nevertheless has a compelling interest in requiring the employer to provide such coverage.

The 10th Circuit seemed to acknowledge the importance of this case when it granted “en banc” review, which means that all of the court’s judges, rather than the usual three-judge panel, will hear the case. Federal appeals courts usually grant en banc review only to cases they believe to be significant.

A poll conducted by the Pew Research Center in February 2012, around the time the Obama administration announced it would modify the birth control insurance mandate in response to criticism that the rule would force some religious organizations to violate their religious beliefs, found that about six-in-ten Americans (62%) had heard at least a little about the issue.3 Among those who were aware of the issue, opinion was closely divided over whether religiously affiliated institutions should be given an exemption from the rule: 48% said they should be given an exemption, while 44% said they should be required to cover contraceptives like other employers.


1 Kathleen Sebelius is the secretary of the Department of Health and Human Services (HHS). (return to text)

2 For more information on the free exercise clause and the RFRA, see “A Delicate Balance: The Free Exercise Clause and the Supreme Court.” (return to text)

3 Under the original regulations drafted by HHS and other federal agencies in 2011, the contraception mandate would not apply to churches or other religious organizations if their primary purpose is to inculcate religious values and if they primarily serve and employ people of their faith tradition. Thus, religiously affiliated social service providers such as schools, hospitals and charities were generally not exempt from the mandate. In February 2012, the Obama administration sought to address criticisms that the mandate imposes undue burdens on these nonprofits. In the case of religiously affiliated nonprofits that do not qualify for the full exemption, the administration proposed that the groups would still need to provide insurance coverage for women’s reproductive health, but they would not have to bear any of the financial costs for these services; the insurance companies would have to bear all the expenses for the part of the plan that provides contraceptives. A year later, on Feb. 1, 2013, HHS responded to continued criticism from religious groups by proposing a new modification. Under these newest rules, religiously affiliated charities that are not automatically exempt from the contraception mandate would be able to purchase insurance plans for their employees that do not offer contraceptive services. But if they do so, their insurance company will be required to enroll the nonprofit’s female employees in a separate policy that covers only contraceptive services. The insurer would be required to provide these services to employees at no cost. For more details, see the Pew Research Center’s analysis “The Contraception Mandate and Religious Liberty.” (return to text)