Protecting Your Business
Can you live out your faith as a for-profit business owner?
In our first blog post, we discussed the importance of employee handbooks, employee agreements, and carefully defining an employee’s role for religious organizations in light of the U.S. Supreme Court’s recent decisions in Our Lady of Guadalupe School v. Morrissey-Berru, __ U.S. __ (2020) and Bostock v. Clayton County __ U.S. __ (2020). As we discussed, Bostock expanded anti-discrimination coverage under Title VII of the Civil Rights Act of 1964 to include sexual orientation and transgender individuals in certain employment situations. Most likely, other federal and state courts interpreting statutes that include protections based on “sex” may follow the Bostock interpretation and application. So, this raises an important question: What can Christian business owners do to protect their livelihood while also continuing to exercise their faith and use their business as their ministry? To begin, businesses should evaluate the application of the federal Religious Freedoms Restoration Act (“RFRA”) and state equivalents that can provide important protections for the free exercise of religion in the marketplace and business context. But first, some background about RFRA is helpful.
Religious Freedom Restoration Act of 1993 (RFRA)
Congress enacted RFRA in 1993 in response to the Supreme Courts’ decision in Employment Division v. Smith, a decision roundly criticized because it narrowed free exercise rights under the First Amendment to the U.S. Constitution. In response, RFRA provides statutory protection for the exercise of religious liberties, prohibiting a substantial burden on those rights by the Government unless the Government “demonstrates that application of the burden to the person (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” 42 U.S.C. 2000bb-1(a), (b). In this context, the “exercise of religion” includes “any exercise of religion, whether or not compelled by, or central to, a system of religious belief,” 2000cc-5(7)(A), and that the statues must “be construed in favor of a broad protection of religious exercise, to the maximum extent permitted by the terms of [the law] and the Constitution.” 2000cc-3(g).
In 2014, the Supreme Court reviewed the application of RFRA in response to objections to the government mandate that businesses provide certain abortifacients under the Patient Protection and Affordable Care Act of 2010 (ACA). In that case, Burwell v. Hobby Lobby Stores, Inc., 573 U.S. 682 (2014). the Supreme Court affirmed that RFRA protects the religious exercise of closely-held businesses and their owners when faced with a substantial governmental burden on that exercise. As the Court held, RFRA generally prohibits the “Government [from] substantially burdern[ing] a person’s exercise of religion even if the burden results from a rule of general applicability.” In a 6-3 opinion in favor of the owners and the business, the Supreme Court recognized that “[a] corporation is simply a form of organization used by human beings to achieve desired ends” and that furthering a for-profit corporation’s religious freedom also “‘furthers individual religious freedom[,]’” namely that of its owners. The Supreme Court explained further that “free exercise in this sense implicates more than just freedom of belief. . . . It means, too, the right to express those beliefs and to establish one’s religious (or nonreligious) self-definition in the political, civic, and economic life of our larger community.” The Court acknowledged that these protections apply even when Christian men and women “deem it necessary to exercise their religious beliefs within the context of their own closely held, for-profit corporations.”
So how does Hobby Lobby and RFRA intersect with the Court’s decision in Bostock? In Bostock, Justice Gorsuch recognized that RFRA “operates as a kind of super statute, displacing the normal operation of other federal laws” and that “it might supersede Title VII’s commands in appropriate cases.” Justice Gorsuch noted, however, that a RFRA defense was not before the Court. Harris Funeral Homes, Inc., one of the parties in that case, had attempted to advance a RFRA claim in the lower courts, but the Sixth Circuit Court of Appeals, the federal circuit with jurisdiction over Kentucky, rejected the RFRA argument, holding that a transgender employee’s Title VII rights did not substantially burden the sincere religious exercise of the business owner because “‘tolerating an employee’s’ understanding of her sex and gender identity is not tantamount to supporting it.” Additionally, the Sixth Circuit ruled that presumed customer biases toward transgender individuals in the business could not constitute a substantial burden under RFRA. So, what can a business owner do to protect their business and their faith? Here are two recommendations we give to any business:
Review and update policies and handbooks. In Hobby Lobby, the Court took note of the business’s statement of purpose to “[honor] the Lord in all [they] do by operating the company in a manner consistent with Biblical principles.” Having policies and an employment handbook laying out the code of conduct expected of employees and having your employees annually certify they have received a copy, have read it, and agree to adhere to its contents can bolster a religious freedom defense when faced with a lawsuit under federal discrimination laws.
Document everything. In addition to a faith-based defense such as RFRA, employers can still protect themselves from retaliation claims under Title VII if they can demonstrate they had a legitimate, non-discriminatory reason for the adverse action. How do you prove this? With evidence of documented employee misconduct, poor performance reviews, etc. The word “legitimate” is important - the given reasons cannot be a pretext for prohibited discriminatory conduct.
One of the founding partners of Doane & Elliott, P.S.C. represented a Kentucky business in successful litigation against the federal government relying upon RFRA to enjoin the government from enforcing the ACA abortifacient mandate due to the owner’s religious objections. And we can assist you as well. At Doane & Elliott, P.S.C., we live by the principle that “the best risk management is risk avoidance.” Given the broad and sweeping effect the Supreme Court’s ruling in Bostock will have on the future of employment litigation, we can assist business owners to review their employment policies and handbooks and consider other appropriate steps to protect your businesses and the free exercise of your faith.
This article is for general purposes only and should not be considered legal advice. If you would like to speak to the attorneys at Doane & Elliott, P.S.C., please call (502) 225-3290 or email them at either matt@cornerstonelawky.com or clint@cornerstonelawky.com.