2A. Do Religious Exemption Rights Extend To Commercial Behavior?

(For an introduction to this series of posts, see here.)

Let us turn now more closely to the issues raised by Hobby Lobby, but take them one at a time. The first issue is: Should religious exemption rights even be seen as applicable to commercial activity, or should they be limited to objectors’ noncommercial activities (such as Amish parents’ not sending their children to school past age 14, or people’s consumption of hallucinogens for religious purposes)? I think the answer is that the Court shouldn’t, and likely won’t, recognize any “noncommercial activities” limitation on the Religious Freedom Restoration Act.

1. To begin with, let’s consider some hypotheticals that don’t invoke the hot political passions generated by the employer mandate, or by questions related to abortion. In all of them, assume that we are in a jurisdiction in which the federal Religious Freedom Restoration Act or one of its state analogs applies. And assume, for now, that the store is owned by the owner directly, rather than by a corporation that is owned by the person. (I’ll turn to the corporation question in the next post.)

Imagine that a newly enacted law requires all markets to sell state lottery tickets — an attempt by the legislature to raise more money for the state. And say that a particular market is owned by a United Methodist who believes it’s against his religion for any business that he owns to sell lottery tickets. (Some Mormons and Muslims also believe gambling is sinful.)

Or imagine the same as to a law requiring all markets to sell beer and wine — though I realize this is probably politically less likely — and a Methodist or a Muslim market owner objects to this because he thinks selling wine is sinful. Or say that a law requires all gas stations to operate seven days a week, and say that a particular gas station is owned by a Jew or Seventh-Day Adventist who believe that it is wrong for any business that he owns to operate on the Sabbath. All the store owners sue, seeking an exemption from the lottery ticket mandate, alcohol mandate, or the seven-day-a-week mandate.

2. Should the claims be rejected, on the grounds that they relate to the store owners’ commercial activity? I don’t think so.

The premise of RFRAs is that “laws ‘neutral’ toward religion may burden religious exercise as surely as laws intended to interfere with religious exercise,” and that “governments should not substantially burden religious exercise without compelling justification.” Those conclusions are just as applicable to laws that tell people what they may or may not do in commerce as to laws that people what they may or may not do outside it.

Many religious behavior codes, after all, purport to govern all aspects of their adherents’ lives, not just the domestic or ritual aspects. The commandment not to work on the Sabbath, for instance, is largely focused on economic activity, especially for Christian Sabbatarians. Muslims restrict the charging of interest on loans, and historically many Christian groups have taken the same view. Jewish law has still more commandments specifically focused on business practices. And even rules that don’t focus on economic activity, but that ban participating in gambling or alcohol distribution, may come into play in people’s economic lives.

Indeed, many secular people take the same view as to secular moral codes; consider calls (often coming from the Left) for businesspeople to act in a “socially responsible” way when running their businesses. It should be unsurprising that religious people believe that their religious views should govern their economic lives. And it would be surprising to see RFRA interpreted as drawing a commercial activity / noncommercial activity line (a line that appears nowhere in the statute).

Of course, commercial activity often affects third parties, and regulations of such activity are often aimed at protecting third parties. There may thus be good reason to reject some requests for exemptions from such regulations, because the regulations may be seen as the least restrictive means of serving the compelling interest in serving those parties.

But of course regulations of noncommercial activity are often aimed at protecting third parties, too. Concern about third party effects, under the text and logic of RFRA, is accommodated by the compelling interest provision, not by categorically excluding commercial regulations from RFRA’s scope.

To be sure, an owner or a co-owner of a business could often avoid the burden on his religious beliefs by selling the business and going into a different line of business that is not bound by the law. But that itself would be a substantial burden.

First, it would often require a substantial financial sacrifice. Selling a business isn’t cheap, and the owner may have occupation-specific skills that don’t translate well into other fields — and financial burdens count as substantial burdens for RFRA purposes. Second, it would often require the person to leave an occupation that he may find especially rewarding, whether for emotional reasons (e.g., because it lets him be his own boss, or because the business has been in his family for generations) or other personal reasons (e.g., because it lets him work close to home).

3. The Supreme Court’s Sherbert/Yoder-era constitutional exemption precedents, which RFRA incorporates by reference, also seemed to take the view that religious exemptions apply to commercial activity as well as to other activity. The unemployment compensation cases — Sherbert v. Verner (1963), Thomas v. Review Bd. (1981), Hobbie v. Unemployment Appeals Comm’n (1987), and Frazee v. Illinois Dep’t of Econ. Sec. (1989) — all held that fired employees had the constitutional right to get unemployment compensation from the government based on the employees’ decisions in the economic sphere: refusing to work on the Sabbath, and refusing to work on military production. Selling one’s labor is of course more important to more people’s economic lives than selling goods, but both are commercial activity.

Likewise, Braunfeld v. Brown (1961) entertained a religious exemption claim brought by businesspeople based on their decision to close their stores on Saturdays. The claim was unusual by today’s standards: there was no law barring Saturday closing, but there was a law mandating Sunday closing, so the challengers claimed that the law indirectly undermined their bottom line (since they couldn’t be open either day of the weekend), rather than compelling them to do what their religion forbade. Partly because of that, the Court rejected the claim.

But Braunfeld didn’t suggest that commercial activities couldn’t form the basis for religious exemption claims, simply because of their commercial nature. And when the Court distinguished Braunfeld two years later in Sherbert, the Court didn’t suggest that Braunfeld was inapplicable because it involved commerce (again, perhaps because Sherbert itself involved commercial activity, namely employment).

4. The one case often pointed to by the “no exemptions for commercial activity” arguments is United States v. Lee (1982). In Lee, Amish employers claimed that it was against their religion to contribute money to the social security system (or to get social security benefits). The Court agreed that the law imposed a substantial burden on the objectors:

We … accept appellee’s contention that both payment and receipt of social security benefits is forbidden by the Amish faith. Because the payment of the taxes or receipt of benefits violates Amish religious beliefs, compulsory participation in the social security system interferes with their free exercise rights.

It then concluded that this burden was nonetheless constitutional under strict scrutiny, because “[t]he state may justify a limitation on religious liberty by showing that it is essential to accomplish an overriding governmental interest.” It reasoned that there was a compelling interest in maintaining “mandatory and continuous participation in and contribution to the social security system.” And it concluded that, given the nature of the tax system, any exemption “will unduly interfere with fulfillment of the governmental interest”:

Unlike the situation presented in Wisconsin v. Yoder [where the Court held that the Amish were constitutionally entitled to an exemption from a state law compelling education of children past age 14], it would be difficult to accommodate the comprehensive social security system with myriad exceptions flowing from a wide variety of religious beliefs. The obligation to pay the social security tax initially is not fundamentally different from the obligation to pay income taxes …. There is no principled way …, for purposes of this case, to distinguish between general taxes and those imposed under the Social Security Act. If, for example, a religious adherent believes war is a sin, and if a certain percentage of the federal budget can be identified as devoted to war-related activities, such individuals would have a similarly valid claim to be exempt from paying that percentage of the income tax.

The tax system could not function if denominations were allowed to challenge the tax system because tax payments were spent in a manner that violates their religious belief. Because the broad public interest in maintaining a sound tax system is of such a high order, religious belief in conflict with the payment of taxes affords no basis for resisting the tax.

So to this point, Lee is just like the other religious exemption cases. It asks whether a law substantially burdens religious practice. It concludes that requiring people to do something that their religious beliefs forbid is indeed a substantial burden.

It then asks whether the law serves a compelling government interest, and whether granting the exemption would inevitably and substantially undermine the government interest. If the answer to those two questions is yes, it concludes that the exemption should be rejected — not because of the commercial nature of the conduct, but because the exemption necessarily undermines a compelling government interest.

But then, after Lee explained why no exemption must be granted, the Court went on to add a separate section:

Congress and the courts have been sensitive to the needs flowing from the Free Exercise Clause, but every person cannot be shielded from all the burdens incident to exercising every aspect of the right to practice religious beliefs. When followers of a particular sect enter into commercial activity as a matter of choice, the limits they accept on their own conduct as a matter of conscience and faith are not to be superimposed on the statutory schemes which are binding on others in that activity. Granting an exemption from social security taxes to an employer operates to impose the employer’s religious faith on the employees. Congress drew a line in § 1402(g) [a limited statutory exemption, which Lee could not take advantage of], exempting the self-employed Amish but not all persons working for an Amish employer. The tax imposed on employers to support the social security system must be uniformly applicable to all, except as Congress provides explicitly otherwise.

I’m inclined to doubt that this language — when read in the context of prior decisions (such as Braunfeld, Sherbert, and Thomas) and later decisions (Hobbie and Frazee) — means that, once one chooses to “enter into commercial activity,” religious exemption claims are no longer available. The language comes after the Court in Lee applied the normal religious exemption analysis. It stresses one aspect of that normal analysis (that the tax “must be uniformly applicable to all,” which is the reason the Court concluded that granting exemptions would undermine the compelling interest).

Moreover, Lee has been treated as generally rejecting religious objections to tax obligations, regardless of whether the taxes stem from taxpayer decisions to engage in traditional commercial activity. See Hernandez v. Commissioner (1989) and various lower court cases.

But in any event, Lee is the strongest support for the “no religious exemptions as to commercial activity” argument. I doubt the Court will accept this argument, but of course it’s hard to be certain.