Businesses and Religious Freedom

Cite this article as: Jason Mance Gordon, "Businesses and Religious Freedom," in The Business Professor, updated January 2, 2015, last accessed April 8, 2020, https://thebusinessprofessor.com/knowledge-base/businesses-and-religious-freedom/.
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Freedom of Religion and Businesses
How does Freedom of Religion affect business? Businesses have limited religious protections.

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How does freedom of religion affect business practice?

Generally, for-profit businesses covered by Title VII of the Civil Rights Act of 1964 may not discriminate against employees on the basis of religion. There is an exception for religious organizations whose primary purpose necessitates religious practice or affiliation among its employees. Aside from the prohibitions on employment practices, common law holds that closely-held corporations may have religious protections similar to those of citizens.

  • Note: This issue came to the forefront of consideration in the case, Burwell v. Hobby Lobby Stores, Inc., The Court found that the religious beliefs of owners of the closely-held entity were sufficiently tied to the religious beliefs of the owners to be susceptible to protection under the 1st Amendment. The court’s holding exempts closely-held businesses from laws that mandate or prohibit certain conduct conflicting with that belief.
  • Example: ABC, LLC is a small restaurant with 25 employees. ABC is solely owned by a family of devout Christians. ABC refuses to hire any employees who are not Christian. Further, ABC refuses to offer a health insurance plan than covers subscriptions for birth control. ABC’s failure to hire non-Christians may constitute illegal discrimination. The common law, however, allows a closely-held business entity to adopt the religious beliefs of its owners. As such, refusing to sponsor a health insurance plan that contains provisions conflicting with the owner’s religious beliefs is likely legal. This example demonstrates the fine line between business practices that discriminate against others based upon religious belief with practices that cause a business to violate its own beliefs.

Discussion: Why do you think the government makes an exception to the employment discrimination laws allowing religious organizations to discriminate? What is your view of the holding in the Hobby Lobby case that a business entity can adopt (and enforce) the religious rights of its owners?

Discussion Input

  • It is important to balance a citizen’s freedom of speech under the 1st Amendment against the goals of protecting individuals against unfair treatment. Religious organizations exist to further their religious mission. Allowing that organization to staff employees who personally believe in the organization’s mission supports the organization’s religious freedom. The court as embraced the belief that preserving this right is more important than preventing the harm caused by the discrimination.

Practice Question: John is the sole owner of Outdoor, LLC, a hunting and fishing store. Outdoor is located in a town that has an ordinance requiring all downtown shops to be open on weekends for customer shopping. The ordinance is part of an economic revitalization effort in the town. John has 15 employees in his shop. He observes fundamental Christian beliefs. He refuses to open his shop on Sundays in observance of his beliefs. He also refuses to hire any women employees because he believes that women should not work and should be subservient and remain in the homes of their fathers or husbands. Are there any legal issues with John refusing to open on Sundays or refusing to hire women?

Proposed Answer

  • In this situation, there are two issues at stake. First, John is protected from actions by the Government that infringe on his freedoms of religion. However, Federal law (Title VII of the Civil Rights Act of 1964)  prohibits discrimination on the basis of sex by covered entities. Here, John has 15 employees and is subject to the statute. His business is separate from him, as it is an LLC, but it is closely-held. As such, his personal rights align closely with those of the business. While it seems straightforward that this is a case of discrimination that violations Title VII, it is possible that subjecting John to liability for sex discrimination would violate his 1st Amendment rights (or those of his business). In Burwell v Hobby Lobby, the Supreme Court found that forcing the store to provide health plans covering birth control violated the closely-held business’s rights. While it has not done so in the case of sex-based discrimination, it is foreseeable that a court could extend this logic to John’s situation.

Academic Research

Corbin, Caroline Mala, Corporate Religious Liberty: Why Corporations Are Not Entitled to Religious Exemptions (January 23, 2014). American Constitution Society Issue Brief, January 2014. Available at SSRN: https://ssrn.com/abstract=2384136

Ciocchetti, Corey, Religious Freedom & Closely Held Corporations: The Hobby Lobby Case & Its Ethical Implications (September 12, 2014). Oregon Law Review, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2495506

Garnett, Richard W., Accommodation, Establishment, and Freedom of Religion (June 25, 2014). 67 Vand. L. Rev. En Banc 39 (2014); Notre Dame Legal Studies Paper No. 1424. Available at SSRN: https://ssrn.com/abstract=2459005

Ahdar, Rex, Companies as Religious Liberty Claimants (2016). Oxford Journal of Law and Religion, 2016. Available at SSRN: https://ssrn.com/abstract=2791239

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