Are people organized as corporations entitled to constitutional rights?
The Supreme Court’s recent decision in Burwell v. Hobby Lobby addressed a seemingly narrow issue: whether the Obamacare regulation requiring corporate employers to provide insurance plans that cover contraception violates the Religious Freedom Restoration Act in cases where the employers in question have religious objections to some or all contraceptives. But the Court’s ruling also makes a crucial broader point: that people are not required to give up fundamental legal rights when they organize themselves into a corporate body. That principle has important implications for constitutional law. It is a vital protection for individual rights in a society where we unavoidably conduct much of our business and charitable activities by using corporate organizations.
It is indeed true that corporations are not people. But those who own and operate them are.
RFRA was enacted in 1993 with overwhelming bipartisan support. It protects religious freedom by requiring the federal government to prove that laws that “substantially burden” the free exercise of religion are the least restrictive means to protecting a “compelling” government interest. The owners of Hobby Lobby Stores and other businesses involved in the case objected to being forced to provide insurance for some forms of contraception because they belong to the small minority of Americans who believe that some or all types of artificial contraception violate the dictates of their religion.
People Organized as Corporations are People Too
The government had argued that RFRA does not apply to commercial corporations because they are not “persons” covered by the act, and because they cannot engage in the “free exercise” of religion. Justice Samuel Alito’s majority opinion effectively refuted the former argument. As he points out, “[a] corporation is simply a form of organization used by human beings to achieve desired ends… When rights, whether constitutional or statutory, are extended to corporations, the purpose is to protect the rights of these people… [P]rotecting the free-exercise rights of corporations like Hobby Lobby, Conestoga, and Mardel protects the religious liberty of the humans who own and control those companies.”
The fundamental point here is that people organized as corporations are people too. Even Justice Ruth Bader Ginsburg partially recognizes this in her dissenting opinion; she accepts that RFRA does apply to nonprofit religious corporations, such as those established by churches. The latter, of course, are no more natural “persons” than for-profit corporations are.
The claim that corporations aren’t entitled to constitutional and statutory rights because they are not people is not limited to attacks on the Hobby Lobby decision. Especially since the Supreme Court’s controversial 2010 decision in the Citizens United corporate-funded speech case, many have deployed this reasoning to justify denying corporations free speech rights, or even all constitutional rights of any kind.
It is indeed true that corporations are not people. But those who own and operate them are. In modern society, people routinely use corporations for a wide range of activities. Numerous employers, churches, schools, newspapers, charities, and other organizations all use the corporate form. When they do so, their owners and employees should not have to automatically check their constitutional and statutory rights at the door.
If we consistently apply the principle that corporations are not entitled to constitutional rights because they are not real people, then the government would be free to censor newspapers and TV stations that use the corporate form, including the New York Times and CNN. Similarly, it would be free to take corporate property without paying the “just compensation” required by the Fifth Amendment, or search it in ways that would otherwise be forbidden by the Fourth Amendment’s ban on unreasonable searches and seizures. It could also regulate or ban services at houses of worship owned by the many religious organizations that use the corporate form. CNN, the New York Times, and the Catholic Church are no more “real” persons than Hobby Lobby Stores is.
How People use For-Profit Corporations to Exercise Religion
Even if people organized as corporations are entitled to constitutional and statutory rights, some critics of Hobby Lobby still claim that they have no rights under RFRA, because a for-profit corporation is purely a profit-making enterprise and therefore cannot engage in the free exercise of religion. Justice Ginsburg advances that theory in her dissent, and it has been taken up by others.
In response, Justice Alito points out that the law permits commercial corporations to pursue a wide range of objectives and does not require them to sacrifice all other goals to maximizing profit. If such corporations can, for example, pursue charitable objectives, they can also pursue religious ones.
I would add that even if profit is the sole purpose of a particular firm, its owners can still choose to accept moral or religious constraints on the pursuit of that objective. An obvious example is a business whose owners choose to close on the Sabbath because they believe they have a religious duty to do so. Keeping the Sabbath is not the main purpose of the business; profit is. But the Sabbath is a moral constraint on the means the owners use to pursue that purpose.
Critics of the Hobby Lobby decision—most of them on the political left—readily understand that corporations can and sometimes should adhere to secular moral constraints on profit-maximization. For example, many praised firms that refused to invest in apartheid-era South Africa, even though such investments may have been profitable. In an earlier era, some firms refused to do business with employers of slave labor. Just as these and other secular moral principles can impose constraints on profit-maximization, even if promoting those principles is not the main objective of the firm, the same goes for religious constraints on commercial behavior.
Had the Court ruled that either corporations in general or for-profit ones specifically cannot “exercise religion,” it would have led to the gutting of legal protection for religious freedom in numerous commercial contexts. Both theories apply not only to RFRA but to the Free Exercise Clause of the First Amendment. Work preformed by and for profit-making corporations is a major part of modern society. People should be able to exercise their religious freedom when owning and operating such entities no less than other organizations.
I am an atheist myself, and have little sympathy for the principles espoused by the Hobby Lobby plaintiffs. Like the vast majority of Americans, I have no moral objections to contraception. But religious freedom, like other important rights, cannot be limited to those cases where the majority approves of the beliefs of those exercising it. Indeed, the protection of individual rights is especially important when they are exercised by a small minority espousing unpopular views. In this context, it is worth noting that secular people are also a small and often unpopular minority in a nation where the vast majority is religious. If the government can override the religious freedom of unpopular religious minorities whenever they happen to use the corporate form, it can do the same thing to atheists and agnostics, who routinely show up as the least popular religious minority in most surveys.
Because contraception is popular and religious objections to it widely reviled, there is no danger that the Court’s ruling will somehow create a state of affairs where large numbers of people lack access to birth control. People who consider it important to work for an employer with an insurance policy that covers it will still be able to choose from the overwhelming majority of employers who have no religious objections to providing them. Moreover, the few dissenting employers may have to offer workers other offsetting benefits (or pay increases) in order to effectively compete for desirable employees. For some workers, higher pay or more generous benefits of other types may be more valuable than insurance coverage for contraceptives.
The Hobby Lobby decision is limited to “closely held” corporations and does not address the status of publicly traded corporations under RFRA. As the majority points out, the shareholders of major publicly traded corporations are unlikely to agree to follow highly restrictive religious constraints on their business dealings - especially, I would add, ones that are highly unpopular, such as rejection of contraception. But Justice Ginsburg rightly emphasizes that the logic of the majority’s argument ultimately applies to corporations of all types, even if some are far more likely to actually claim RFRA exemptions than others. The same point applies to constitutional rights, as well. For example, publicly traded corporations are surely entitled to Fourth Amendment rights against “unreasonable” searches and seizures and Takings Clause protections against the condemnation of their property without compensation. Unlike Ginsburg, I regard this aspect of the logic of Hobby Lobby as a feature, not a bug.
Questions related to the legal status of corporate entities are not the only ones at issue in the Hobby Lobby case. The federal government and the dissenting justices also argued that even if for-profit corporations do have rights under RFRA, the law would not bar the contraception mandate because the latter is the “least restrictive means” to achieving various “compelling” government interests. The argument is unpersuasive. There are many other ways that the federal government can expand access to contraception, including directly subsidizing it (as the Supreme Court majority points out), and legalizing the sale of birth control pills over the counter.
Like individuals, corporate entities should not automatically prevail in RFRA cases, First Amendment cases, or other cases in which they assert that the government has violated their rights. In some situations, the regulation at issue really can withstand appropriate judicial scrutiny. But people should not be automatically barred from asserting their rights merely because they happen to be organized as corporate entities. Regardless of whether it got the other issues in the case right, the Hobby Lobby majority performed a valuable service by vindicating this important principle.
NOTE: This post adapts some material previously published on the Volokh Conspiracy blog.
Ilya Somin is Professor of Law at George Mason University School of Law. He is the author of Democracy and Political Ignorance: Why Smaller Government is Smarter, and The Grasping Hand: Kelo v. City of New London and the Limits of Eminent Domain (forthcoming). Somin's work has appeared in numerous academic journals and popular media, including the Yale Law Journal, the Stanford Law Review, the Los Angeles Times and USA Today. He is a regular contributor to the Volokh Conspiracy blog, affiliated with The Washington Post.
The claim that if corporations are not considered people then the government could censor newspapers owned by corporations and seize corporate property without compensation ignores the fact that freedom of the press and protections for uncompensated seizure of property in the First and Fifth Amendments respectively is not conditioned on the form of ownership.
Posted by: Creigh Gordon | October 5, 2014 at 07:40 PM
"People organized as corporations" makes as much sense as "people organized as an automobile." Corporations are not people, "made in the image of God" and to ascribe freedom of religion to property is an insult to human dignity.
Posted by: Creigh Gordon | October 5, 2014 at 07:35 PM
The real focus in the Hobby Lobby case should have been on whether anyone's religious freedom entitles them to exemption from an essentially nonreligious arrangement, just because it in small part benefits people who don't follow that religion. If my religion abhors automobile travel, for example, that should not give me the right to excuse myself from providing parking spaces at my business serving the general public. The power to circumscribe the rights of people outside of your religious sphere cannot reasonably be deemed a constitutionally protected exercise of religion.
Posted by: Jerry O'Brien | October 2, 2014 at 09:08 AM
To put Ginsburg's argument (and the parallel argument against Citizens United) more starkly, the claim seems to be that only people organized to do things that, in the view of a few judges, are right, and true, and selfless, and noble, deserve to be permitted to exercise rights under the Constitution (or RFRA). People engaged in something as crass and ignoble as merely making a living (and providing jobs, filling wants and needs, paying taxes, innovating, lowering prices through competition, etc.) obviously deserve second class status when it comes to fundamental rights.
Do critics of these decisions really want to live in a world in which the Supreme Court grants and withholds rights to and from huge swaths of Americans on such wildly subjective grounds? One set of rules for the nobles, another for the serfs. Sounds grand.
Posted by: Matt | October 1, 2014 at 09:21 PM
HHS has written proposed regulations to comply with the Hobby Lobby decision, and they are up for public comment via the web:
http://www.regulations.gov/#!docketDetail;D=IRS-2014-0029
HHS is seeking to make eligibility for exemption as narrow as possible by allowing only for-profit, non-public, narrowly held corporations to even apply for it. Thus, they are maintaining that a nonprofit that is not specifically religious (i.e., a church) is ineligible, and so are publicly traded narrowly held corporations, and so are widely held corporations. I am writing a paper to submit to them as a comment on why all corporations ought to be eligible, provided that the corporation can provide evidence of sincere religious objections (which *does* knock out 99% of corporations).
Posted by: Eric Rasmusen | October 1, 2014 at 10:26 AM