Hobby Lobby Decision

By June 30, 2014 Businesses

On June 30, 2014, the Supreme Court offered their Hobby Lobby decision related to the Affordable Care Act.  In their decision, they limited the scope of their findings to closely held corporations.  This may cause some confusion over who the ruling covers and who it affects.

The Hobby Lobby case focused on the mandate in the Affordable Care Act to provide contraceptive coverage to employees.  In this case, the owners of Hobby Lobby argued that the use of contraceptives violated their deeply held religious beliefs.  They also argued that they should be exempt from the mandate due to the religious freedom clause in the first amendment.  Hobby Lobby was joined by Conestoga, a cabinet manufacturer.

The Supreme Court found that, for closely held corporations, the religious freedoms of the owners extended to the practices of the business.  The 5-4 decision allows an exemption for closely held corporations from the contraception mandate, but also opens the door to other potential religious and freedom of speech issues for smaller companies.

The scope of the ruling is intended to cover companies whose owners also control the operations of the company.  Closely held corporations have more than 50% of their shares owned directly or indirectly by five or fewer individuals.  This particular ruling will not affect the vast majority of publicly traded companies.