Balkinization: <i>Hobby Lobby</i> Part III-B: Is it necessary that the government-imposed pressure to violate a religious obligation be substantial?

Hobby Lobby Part III-B: Is it necessary that the government-imposed pressure to violate a religious obligation be substantial?

Marty Lederman

In two recent posts, I argued the following about the upcoming Hobby Lobby case, which will be argued on Tuesday morning, March 25th:

(i) that, contrary to the assumptions of the plaintiffs and many federal courts, there is in fact no legal duty for the owners of Hobby Lobby and other employers to do anything their religion allegedly forbids--namely, offer the company's employees a health-insurance plan that includes contraception coverage, since there is no legal duty to offer an employee plan in the first instance;

(ii) that, even in the absence of a legal duty, a plaintiff-employer might in any event satisfy a prerequisite of RFRA's "substantial burden on religious exercise" requirement if it could plead and demonstrate that federal law places substantial pressure upon it to retain employee health insurance (which must, in turn, include contraception coverage);

(iii) that federal law likely does not impose such substantial pressure on most employers to retain such plans;

(iv) that a complex array of federal laws and market forces and labor markets might, in combination, make it difficult for some employers to drop their health-insurance plans and still be able to recruit and retain some (unknown) number of higher-income employees;

(v) that in some of those cases, the inability to retain such employees might impose substantial pressure on employers to keep their plans--pressure that might or might not be attributable to the federal laws that contribute to the preferences of certain employees to receive compensation in the form of employer-subsidized health insurance rather than wages;

(vi) but that, in any event, the plaintiffs in Hobby Lobby and Conestoga Wood have not pleaded facts to establish that federal law imposes such "substantial pressure" on those employers owing to its effect on their employees' preferences. Hobby Lobby has made a very general allegation (paragraph 139 of its complaint) that “[t]he Mandate places Plaintiffs at a competitive disadvantage in its efforts to recruit and retain employees”; but the plaintiffs have not alleged any facts to explain why that is so, to demonstrate to what extent such a disadvantage would be a function of federal law (as opposed to the competitive dynamics markets involving other private actors), or to show that such a competitive disadvantage substantially pressures Hobby Lobby to retain its plan and thereby (purportedly) transgress its owners' religious obligation.

My former OLC colleague Ed Whelan, writing at National Review's Bench Memos, contests "the fundamental tenet" of my argument. (He also questions my account of "the role that federal law plays in pressuring employers to provide health insurance." I briefly address that criticism below.)

Ed does not take issue with my principal contentions--in particular, that federal law does not mandate that employers offer employee contraception insurance coverage; and that any pressure that some employers will feel to retain plans including such coverage will result from an array of variables and considerations, including not only their employees' preferences (which will be influenced in part by the federal tax exclusion for employer premium payments and which will vary among employees based on their family incomes), but also the elasticity of the relevant labor market; the relative degree of the employer's own cautiousness and risk tolerance; the nature and income levels of its workforce; the viability and desirability of the insurance exchanges over time; the costs of administering the employer's insurance plan; the employer executives’ preferences for retaining that plan; its competitors’ practices; and more.

If I understand Ed's counterargument correctly, however, he thinks it should not matter whether and to what extent federal law is responsible for pressuring some employers to retain their insurance plans, nor how important it is to the employer in question to retain such a plan--that is to say, he does not agree with me that RFRA requires, at a minimum, that the law impose substantial pressure on the plaintiff employer to drop its plan, rather than merely contributing to a modest preference in favor of the status quo.

Ed describes as "absurd" my premise "that it matters why an employer is providing health insurance": If the employer is doing so and would prefer to continue doing so, that's the end of the matter. (Or that's how I understand his post, anyway.) All that is necessary, on this view, is that the employer "freely choose[s]" to engage in the activity in question--here, providing health insurance--before the challenged law comes into play. If the new law then offers someone a choice between acting in a way that her religion proscribes, and altering her previous behavior in a way that she simply would prefer not to do, the state has thereby placed a "substantial burden" on her religious exercise, regardless of how important it is to the individual to engage in the latter activity, and what the specific role of federal law might be in putting pressure on her to change that behavior.

Whatever the possible virtues might be of this proposed rule, it does not resemble anything the Supreme Court has ever imposed in the Free Exercise doctrine that RFRA incorporates, nor is there any reason to think that Congress intended such a radical expansion of the religious-exemption regime.

The "substantial burden" standard requires, at a minimum, that the state itself "put[] substantial pressure on an adherent to modify his behavior and to violate his beliefs," which is what occurs, for example, "[w]here the state conditions receipt of an important benefit upon conduct proscribed by a religious faith, or where it denies such a benefit because of conduct mandated by religious belief." Thomas v. Review Board, 450 U.S. at 717-18 (emphasis added).

This makes sense. After all, recall that what the Court was doing in the cases that RFRA incorporates was construing a constitutional provision "prohibiting" the free exercise of religion (in contrast to the adjacent clause referring to "abridging" freedom of speech). When the state imposes a legal duty to act contrary to one's religious obligation, that can, of course, consist of a prohibition on religious exercise, regardless of the sanction the state attaches to a violation of that duty, because most of us feel a civic obligation to comply with validly enacted benefit. (The defendants in Wisconsin v. Yoder, for instance, were only fined five dollars for violating the Wisconsin compulsory school attendance law.) In the "indirect burden" cases such as the Sherbert line, then, the Court was striving to identify those state actions short of direct legal compulsion that had the same practical effect on religious exercise as does a specific legal command that prevents such exercise--as Solicitor General Fried put the point in his brief in Hobbie v. Unemployment Appeals Comm'n, where "the [state] action bears so heavily on an individual's choice as to have virtually the preclusive effect of a direct prohibition."

Placing substantial pressure on such exercise can be akin to "prohibiting" it--or so the Court held in the Sherbert line of cases, anyway (the Reagan Justice Department disagreed (see pp. 17-19) and would have required an actual prohibition). By contrast, modestly discouraging such exercise by offering an alternative that merely prevents the individual from doing something she otherwise would "freely choose to do," all things considered, is a far cry from a prohibition. And it is therefore not surprising that (as far as I'm aware) there are no cases in which the Court found that indirect encouragements or disincentives created a cognizable burden, except where the resulting pressure to alter one's religious conduct was, indeed, substantial. (Eugene Volokh agrees (see pp. 21-24 of his account of the law): "A burden might be insubstantial because it imposes too small a secular cost to count.")

Imagine, for instance, that a religious employer has long permitted her employees to use a company bulletin board, and then Congress passes an "equal access" law prohibiting employers from discriminating against employee speech supporting abortion, or unionization, or idolization, or something else to which the employer is religiously imposed, in a way the employer concludes would make her complicit in wrongdoing. Cf. Board of Educ. of Westside Comm. Schs. v. Mergens. The law does not require that the employer host the disfavored speech; it also allows the employer to simply cease providing employee access to the bulletin board--something the employer would not have "freely chosen" to do, based on magnanimity, or a desire for good employee relations, or what have you. Surely the Court would never have held that such a law imposed a substantial burden on her religious exercise.

Or consider another example from the Court's own Free Exercise jurisprudence: In Tony & Susan Alamo Foundation v. Secretary of Labor (1984), an employer did not provide cash wages to coreligionist "associates" employed in commercial activities, and claimed the right to an exemption from the requirements of the Fair Labor Standards Act because to accept wages for their services would be contrary to the associates' religious beliefs and “vexing to their souls.” The Court held that the FLSA did not even impose a constitutionally cognizable burden on their exercise of religion, since it afforded them the option of "returning the amounts [of cash compensation tendered] to the Foundation . . . voluntarily." Obviously, that option was not entirely cost-free, and it would require the employer and employees to alter their longstanding practice of not tendering wages in the first place, a practice they had (in Ed's words) "freely chosen." Nevertheless, the Court was quick to conclude, unanimously, that "[w]e . . . fail to perceive how application of the Act would interfere with the associates' right to freely exercise their religious beliefs."

Ed offers two hypotheticals in response. In one, he imagines a federal law requiring that any store that sells beef to the public must also sell comparable pork products. Wouldn't such a law impose a substantial burden on a kosher butcher, even though he would still have the choice to go into another line of work? Well, yes, perhaps it would--if it effectively put the butcher to a choice between violating religious tenets and closing up a shop that he has worked years to develop, and to which he has devoted most of his working life. That's a pretty big deal, indeed--the threat of it would place substantial pressure on most of us, at least in cases where we like our jobs or don't have many alternative options. (Whether such a burden could ever support a right to a religious exemption, on the other hand, is not at all clear: In United States v. Lee, the Court pronounced an apparently categorical rule that "[w]hen 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." It is not unreasonable to think that Congress enacted RFRA against the backdrop of that holding in Lee, and intended the statute to incorporate it. That is one major question that will be at issue in Hobby Lobby.)

Ed's other example is a variation on the landmark Sherbert case, in which the Court held that South Carolina imposed a cognizable burden on Adele Sherbert's religious exercise by denying her unemployment benefits if she declined to accept a job offer in which she would have had to work on her sabbath day. "Are we really to believe that her Free Exercise claim would have failed," Ed asks, "if, say, she was from a wealthy family and, by some objective standard, was under no pressure to work (but in fact did want to)?" It's hard to imagine a "wealthy Sherbert" would ever bother to file suit to recover several weeks of unemployment benefits in such a case, but if she did . . . well, then, yes, I assume the Court would not have come out the same way in that hypothetical case, since "the pressure upon her to forego [her sabbath observance]" would not have been "unmistakable." 374 U.S. at 404. (I am putting aside here the alternative reading of Sherbert, that later adopted by the Court in Smith--namely, that the constitutional vice in the case was that South Carolina refused to treat sabbath observance as a "good cause," thereby discriminating against religious reasons for unemployment. Such discrimination is an independent ground for a Free Exercise violation; but there's nothing of the sort going on in Hobby Lobby.)

Accordingly, I'd suggest that it has hardly been "absurd," as Ed accuses, for me to assume that "it matters why an employer is providing health insurance."

Two less important points:

1. Ed argues that giving Hobby Lobby the choice of avoiding the possible violation of religious obligation by reducing its size so that it is no longer a "large employer"--which would require it to trim its workforce from 13,000 employees to fewer than 50 fulltime employees--would impose sufficient pressure under RFRA. Perhaps so. But the premise of the example is mistaken as a matter of law under the ACA. Even if Hobby Lobby reduced its workplace to 20 employees from 13,000, any health-care plan it offered would still have to include contraceptive coverage.

2. Ed argues that my "account of the role that federal law plays in pressuring employers to provide health insurance [is] as one-sided and misleading." He agrees with me that what I called the longstanding “widespread employer practice” of providing health insurance to employees has been “primarily attributable to two things”: (a) “a federal government subsidy to employees” [a tax exclusion for employer premiums received], and (b) the fact that “the insurance the employees could obtain on the open market, using their own wages, was not nearly as attractive as employer-provided insurance.” Ed claims, however, that I "attribute[] only the first factor to federal law," without considering whether "the second factor almost surely flows directly from the first."

Well, I didn't discuss--one way or the other--whether the more generous provisions of employer plans have traditionally been attributable to federal law. But I have no reason to disagree that the open market for insurance has been "a much smaller, remnant market, and thus less stable than the employer market, and the main reason is federal tax policy." And I thus agree that federal law has been largely responsible for the prevalence of employer-provided insurance for lo these many, pre-ACA decades.

One of the whole points of the ACA, however, is to establish exchanges in which insurance can be purchased without regard to preexisting conditions, and thereby narrow the historical disparity between those who do, and those who do not, receive employer-based insurance. That is to say--as I've tried in these posts to explain--the new law will make exchange-based insurance a better option for many employees, and in so doing should diminish appreciably that particular, previous source of the employer incentive to offer insurance (driven by employee demand). To be sure, employer plans will remain more valuable for some employees, largely because of the longstanding federal tax exclusion, and such employee preferences--and the labor market for such employees--will be an important factor in the decisions of some employers to retain their health insurance plans.

Posted 5:34 PM by Marty Lederman [link]