In perhaps the biggest case of its term, the Supreme Court ruled Monday that "closely held," for-profit corporations like Hobby Lobby Inc. cannot be compelled to pay for employees' contraception if they object on religious grounds.
So, what is a closely held corporation?
The Internal Revenue Service has spelled it out in plain terms in a Q&A on its website. Generally, it fits two descriptions:
- Has more than 50% of the value of its outstanding stock owned (directly or indirectly) by five or fewer individuals at any time during the last half of the tax year; and
- Is not a personal service corporation.
According to the IRS, more than 90% of all businesses in the U.S. fit the definition of "closely held," a statistic House Minority Leader Nancy Pelosi cited in her denunciation of the decision.
"Although the Court restricted their ruling to ‘closely-held’ companies, this ruling will immediately affect the lives of millions of women across the country. Over 90% of America’s businesses are ‘closely-held,’ including such large employers as Koch Industries and Bechtel," Pelosi said in a statement.
"Women should not be forced to jump through extra hoops to secure the fundamental health care they need. Allowing employers and CEOs to limit the health care available to employees is a gross violation of their workers’ religious rights. It’s just not her boss’s business. No employer should have the right to limit the health choices of its employees, male or female."
Publicly traded companies, while making up a smaller share of businesses overall, account for almost half of employment in the U.S. Still, closely held companies comprise 52% of the American workforce, according to a 2002 study from New York University.
Conservative Justice Samuel Alito, who wrote the 5-4 majority opinion in the case, took pains to emphasize that the court's decision was narrow in scope.
From the decision:
" We do n ot hold, as the principal dissent alleges, that for-profit corporations and other commercial enterprises can 'opt out of any law (saving only tax laws) they judge incompatible with their sincerely held religious beliefs.'
"Nor do we hold, as the dissent implies, that such corporations have free rein to take steps that impose 'disadvantages ... on others' or that require 'the general public [to] pick up the tab.' And we certainl y do not hold or suggest that 'RFRA demands accommodation of a for-profit corpo ration's religious beliefs no matter the impact that ac commodation may have on ... thousands of women employed by Hobby Lobby.
"The effect of the HHS-created accommodation on the women employed by Hobby Lobby and the other companies involved in these cases would be p recisely zero. Under that accommodation, these women would still be entitled to all FDA-approved contraceptives without cost sharing."
Alito also added the decision would not give for-profit companies an opening to prevent coverage of other, non-contraceptive benefits — though nothing is stopping potential future lawsuits.
"This decision concerns only the contraceptive mandate and should not be understood to hold that all insurance-coverage mandates, e.g., for vaccinations or blood transfusions, must necessarily fall if they conflict with an employer’s religious beliefs," Alito wrote.
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- Health Care Industry
- Hobby Lobby
- Justice Samuel Alito