So What If Corporations Aren’t People?

Obamacare forces some business owners to choose between operating their businesses in a way that violates their deeply held religious principles or running them into the ground.
February 3, 2014 • Commentary
This article appeared on Forbes​.com on February 3, 2014.

Obamacare, both as written and as executed, violates the Constitution in so many ways. The latest example has arrived at the Supreme Court by way of the “contraceptive‐​mandate” cases—Sebelius v. Hobby Lobby and Conestoga Wood Specialties Corp. v. Sebelius—which will be argued March 25.

Here’s the issue: Among the Affordable Care Act’s thousands of pages is a requirement that companies with more than 50 employees provide coverage for certain medical services or else face severe penalties. These mandated services include methods of contraception that prevent the implantation of a fertilized egg, which some people believe means destroying life. Obamacare thus forces some business owners to choose between operating their businesses in a way that violates their deeply held religious principles or running them into the ground.

Several of the companies affected by the contraceptive mandate sued the government, with conflicting rulings emerging from the lower courts. Last week, I proudly filed an amicus brief on the Cato Institute’s behalf supporting these challengers.

The question here is not whether a for‐​profit corporation has religious beliefs or enjoys a right to freely exercise religion. The real question is whether individuals who wish to conduct their business lives in accordance with their religious beliefs forfeit the right to do so when they organize their businesses as corporations.

That question answers itself. A corporation is a legal fiction created to foster economic activity, not a construct to shelter businesses from religious influence. There’s nothing inherent in the corporate form that requires people who use it to surrender their right to conduct business in a way that comports with their morality. And Congress, in passing the Religious Freedom Restoration Act—which has broader protections than even the First Amendment—didn’t intend to restrict the religious liberties people enjoy in their business affairs based solely on how those affairs are organized under civil law.

Whether a corporation can exercise religion may be an interesting philosophical question, but there’s no need for a court to address it when legislation regulating that corporation also restricts the religious liberty of the individuals who own it and direct its affairs. The key fallacy in the government’s position is its assumption that because a corporation has a distinct legal status, there’s no personal dimension to corporate decision‐​making.

The reality, of course, is that a corporation can act only at the direction of human beings. Any government compulsion of a corporation is thus also felt by those individuals.

People don’t check their religious values at the office door. Indeed, the Supreme Court has recognized repeatedly that a person may exercise religion in virtually every phase of life. For many people, religion determines the school they attend, the food they eat, the person they marry, and the place they work. It dictates how they lead their lives, how they raise their children, and how they are mourned when they die. For that reason, the Court has declined to limit free exercise rights to any particular activity.

Inevitably, a great deal of religiously motivated action occurs in the workplace. Indeed, corporate decision‐​makers are often faced with moral choices—ranging from wages to working conditions to competitive practices—that squarely implicate religious teachings. And when these officials believe that they’re bound by faith to steer their corporation in a particular direction, that action is plainly rooted in the individual’s religious belief.

The government simply can’t force people to forfeit their free exercise rights when they incorporate a business—just as it can’t force them to forsake these liberties when they enter the workforce, attend school, or engage in any other secular pursuit. More to the point, there’s nothing about the act of incorporation (or commerce generally) that necessarily amounts to a waiver of individual free exercise rights.

The best way for the Court to approach these cases is to affirm that the right to “exercise” one’s religion includes the freedom to implement one’s religious beliefs in every phase of life—and that a law compelling action by a corporation can also amount to a substantial burden on the free exercise rights of those who create and control it. Such a holding would do no more than ensure that individuals retain the same rights to exercise religion in their professional endeavors as they do in other aspects of their lives.

The fact is that the corporate form is an essential tool for operating successfully in the complex modern economy. The choice the government would put to pious businesspeople is, therefore, untenable: Subject yourself to a severe competitive disadvantage by surrendering the protection of the corporate form, or lose the right to order your professional live in accordance with your faith.

Nobody should have to choose between the two.

About the Author
Ilya Shapiro

Ilya Shapiro is the director of the Robert A. Levy Center for Constitutional Studies at the Cato Institute and publisher of the Cato Supreme Court Review.