The Effects of the Hobby Lobby Decision on Small Businesses

deny contraception, Hobby Lobby ruling, Illinois small business law attorney, Hobby Lobby decision, Hobby Lobby, mandated healthcare, contraception, small business, Gierach Law Firm, The United States Supreme Court’s (SC) ruling in Burwell v. Hobby Lobby has had a polarizing effect throughout the United States. While some celebrate the decision as providing expanded legal protections for a business owner’s religious freedom and liberty, opponents attack the ruling as being antiquated and devastating to women’s reproductive rights. Others cannot wrap their heads around the decision at all because they do not understand the actual effects that the SC’s ruling could have on their daily lives. In reality, this narrow ruling may not affect that many people, but the ruling could be important for small business employers who have been mandated to provide healthcare to their full-time employees under the Affordable Care Act (ACA), because many of their businesses could be considered closely held companies and thus within the scope of the ruling.

Understanding the Hobby Lobby Ruling

In 2012, Hobby Lobby, a corporation that sells arts and crafts products, filed suit in the U.S. District Court for the Western District of Oklahoma claiming that they should not be required to provide contraception to employees as mandated under the contraceptive mandate provided by the U.S. Department of Health and Human Services (HHS). Though Hobby Lobby is willing to provide more traditional forms of contraception, such as the birth control pill, they did not want to be required to provide health insurance that allowed female employees to access four different FDA approved contraceptives, which Hobby Lobby believed could prevent the implantation of a woman’s unfertilized egg.

This original case made it all the way to the SC after the U.S. government appealed a ruling by the U.S. Court of Appeals for the 10th Circuit, which granted Hobby Lobby the status of being a person with religious freedom and demanded the ending of enforcement of the contraception rule by the government. After heavy debate and hearing the arguments of both sides, the SC, in a 5-4 vote, ruled that the contraception mandate that explicitly required employers to provide employees with access to no-cost contraception was a violation of the Religious Freedom Restoration Act.

What the Hobby Lobby Ruling Means for Small Businesses

The Hobby Lobby decision can be considered an extremely narrow ruling, yet unlike some people believe, it does not allow all corporations and businesses to deny access to contraception for its female employees. In fact, Hobby Lobby currently provides birth control pills and comparable medications to its female employees, even after the ruling. However, what the ruling did do was expand the first amendment rights of religious freedom and expression contained within the U.S. Constitution to apply to ”closely held corporations” that operate for-profit so that they can exercise their religious liberty and deny contraception care and still be in compliance with the ACA when acting upon a “sincerely held religious belief.”

A closely held company is defined by the Internal Revenue Service (IRS) as being any corporation that has 50 percent or more of the value of that corporation’s outstanding stock held either indirectly or directly by no more than five individuals during the last half of each tax year. In America, closely held companies account for around 90 percent of all U.S. companies, and are typically those companies that have a small amount of investors who are the partners, management or families that founded that company. Thus, from a technical standpoint, many small businesses that are for-profit and closely held could decide to deny certain contraception coverage if they believed that being compelled to do so would violate their first amendment rights.

However, the Hobby Lobby decision does not compel a company to provide or not provide contraception. Instead it provides a company with the legal right to not provide free access to contraception, while still being in compliance with the ACA, if that company can prove that they have a compelling religious belief that would support their decision to not provide access to the contraception in question.

If you are interested in learning more about the legal responsibilities that the ACA imposes on your small business, contact the Illinois small business law attorneys at the Gierach Law Firm in Naperville, Illinois today. We can help to answer any and all business law-related questions that you may have.