Religious Freedom Restoration

Anew liability exposure for municipalities and their insurers may be developing with the nationwide passage of religious freedom restoration laws designed to place restrictions on governmental regulations that burden the exercise of individual’s religious practices and beliefs. The most notable development is the recent Supreme Court Hobby Lobby decision.

At the state level, there has been a groundswell of support for such legislation. While lawsuits based on such statutes have been sporadic, the greater attention given to these laws may usher in a new type of civil rights legislation against governmental and municipal entities that are accused of enforcing laws and regulations that impact religious exercise rights.

RFR Laws

On April 1, the state of Mississippi enacted the Religious Freedom Restoration Act, joining 18 other states that have enacted religious freedom restoration (RFR) laws. The legislative pre-amble of the Mississippi law states that, “laws that are neutral towards religion may burden religious exercise as surely as laws intended to interfere with religious exercise.” The statute provides that “government shall not substantially burden a person’s exercise of religion even if the burden results from a rule of general applicability,” unless the government can establish that application of the burden is in furtherance of a compelling governmental interest and is the least restrictive means of furthering that governmental interest. The Mississippi law confers a private right of action to a person whose exercise of religious rights has been burdened to sue the government including political subdivisions to obtain legal relief against the application of the law, rule, local ordinance or regulation.

The statute further states that the law shall not be construed as impacting the First Amendment Establishment Clause and that “granting” of governmental benefits, funding including exemptions that are permissible under the First Amendment shall not be a violation of the statute, but that “granting” does not include the denial of governmental benefits, funding or exemption. The bill does not create employee rights against non-governmental employers.
Many states enacted RFR laws after the U.S. Supreme Court held in the City of Boere v. Flore that the federal Religious Freedom Restoration Act (RFRA) could not be applied to the states via the Fourteenth Amendment to the U.S. Constitution. The RFRA was enacted in response to the U.S. Supreme Court ruling in Employment Division v. Smith, that a law that burdened a person’s exercise of religion was not unconstitutional if it was a neutral law of general applicability.

In Smith, the Supreme Court held a state law that outlawed the use of peyote did not infringe on a Native American’s free exercise rights because the law’s impact on religious use was incidental. The plaintiff challenged their disqualification to receive unemployment compensation benefits based on their having used peyote in a religious ceremony. Under Smith, the right to be free of governmental restriction on the exercise of religious rights must flow from a law of particular application impacting the exercise of religious rights, such as a law that would bar the wearing of a burka in a school or other public setting.

Public Debate

The Mississippi RFR follows on the heels of Arizona’s recently passed bill that was vetoed by the Arizona governor following protests by civil rights and industry groups. The flashpoint for debate has been whether RFR legislation would be used by private employers or the providers of public accommodations or services to resist compliance with anti-discrimination laws or ordinances that confer rights or privileges to same sex groups or individuals. In some instances, providers of public services, such as a bakery, have been subjected to governmental sanctions for refusal to provide services to same sex couples in violation of anti-discrimination statutes.

Some state RFR laws impose a higher burden on the government in justifying legislation that is found to burden a person’s free exercise rights. Connecticut’s RFR provides that the state or a political subdivision may not burden a person’s exercise of religion unless the government demonstrates a compelling state interest and establishes that its regulation is the least restrictive means of furthering that compelling state interest.

Public Entitites

As RFR laws provide for a cause of action against public entities with respect to legislative and regulatory activity, the resurgent legislative activity in this arena may generate increasing litigation and costs to public entity insurers. These laws provide an arena for litigants to challenge public entities on whether the government has a compelling state interest for legislation that is professed to burden a person’s exercise of religious belief.

At least one court has held that a state RFR law was not violated where the government was not the party to the lawsuit. In Elane Photography, LLC v. Willcock, the New Mexico Supreme Court held that a company that refused to photograph a same sex commitment ceremony discriminated against the customer in violation of state law, but did not violate the New Mexico Religious Freedom Restoration Act because the government was not the complaining party. Most lawsuits involving claims of a breach of a public accommodations law are brought by the injured party, not by the state, therefore, in the absence of a governmental sought injunction or fine, a state RFR claim as a defense to private litigation might fail.

Hobby Lobby

At the federal level, the most notable case involving a RFR claim was played out before the Supreme Court in Burwell v. Hobby Lobby Stores, Inc., a case dealing with whether the federal RFRA is violated by the Affordable Care Act requirement of providing employer health insurance coverage for contraceptives, which was claimed to infringe on the religious beliefs of the company owners. The Hobby Lobby case presented the confrontation between governmental decisions on entitlements and a business owner’s rights to operate a business consistent with their religious beliefs. Hobby Lobby argued that the government cannot demonstrate a compelling interest in requiring the employer to provide insurance coverage for certain forms of contraception.

The Supreme Court held that the RFRA conferred rights to persons associated with a corporation, such as shareholders, officers and employees and that protecting the free exercise rights of closely held corporations protected the religious liberty of persons who own and control the company. The Court held that a federal agency mandate that an employer-sponsored insured health plan afford contraceptives, over the objection of the owner’s religious based objections, violated the RFRA.

The court found that the government failed to satisfy the RFRA’s least restrictive means standard of regulation because the government could have assumed the cost of coverage and noted that the government has provided accommodations to religious nonprofit organizations. The court further noted that the RFRA could not serve as a shield for employers that might cloak illegal discrimination as a religious practice. The court also commented that the decision concerned only the contraception mandate and not all insurance coverage mandates, meaning that employers could not object to coverage for blood transfusions or vaccinations on religious grounds.

Civil Rights

The Hobby Lobby case and the state RFR laws harbor a new scrutiny of governmental regulation, and may likely usher in a new civil rights front, creating additional liability exposure for public entities and their insurers.
A recent Texas federal court case involved a school district that required that high school students wear an ID badge with a radio frequency identification chip. The student objected to wearing the badge and contended, in part, that the chip was the “mark of the beast” as described in the Bible, and that the requirement to wear the badge infringed on her faith.

The Texas federal court held that the Texas Religious Freedom and Restoration Act required proof that the government substantially burdened the person’s free exercise of religion and that there is no violation if that burden is in furtherance of a compelling governmental interest and is the least restrictive means of further that interest. The court concluded that even if the student viewed the badge as “the mark of the beast,” she was not able to show that carrying the badge imposed a substantial burden on the observation of a central religious belief. The court noted that the student was not required to affirm or deny any belief; that she was not required to wear the badge on her chest or around her neck; and that she could choose not to participate in those activities that required display of the badge.

The court concluded that the badge requirement did not place a substantial burden on her free exercise rights and that the school’s compelling interest in providing security on campus is furthered by the badge requirement. The court also noted that the school had provided accommodations that were declined, which under the Texas statute precluded a cause of action.

By comparison, a school district requirement that a Native American boy wear his long hair in a bun or in a braid tucked into his shirt was found to offend a sincere religious belief and was held invalid under Texas law. The school district’s interest in hygiene, preventing disruption or avoiding safety hazards were not viewed as compelling interests to justify the burden on the student’s exercise of his religious belief.

Debate Continues

The focus of the recent debate over state RFR laws has been generated by concerns of private entities discriminating against minorities under the premise of religious freedom. The enforcement of public accommodations laws for the benefit of those minority groups who are protected by state law will no doubt be defended as a compelling state interest. While laws preventing discrimination in the provision of public accommodations should pass muster even under a compelling interest standard, one could certainly anticipate an increase in litigation challenging governmental enforcement actions. While many state RFR laws have been on the books for years, recent publicity afforded these laws have a tendency to engender litigation. For local governments and their liability insurers, the additional obligations that come with protecting a person’s free exercise of religion puts them in a precarious position of choosing which interests to protect.

In states with RFR laws, local governments must be careful in regulating activity both at the legislative level and the enforcement level. Any contemplated regulation or ordinance should be weighed against the potential for religious infringement. The collision of the interests that need to be considered may result in fewer government regulations, but create more claims of discrimination. In Mississippi for example, a grassroots effort has led to a sticker campaign for local businesses that reads, “We don’t discriminate. If you’re buying, we’re selling.”

Lawsuits under state RFRs are more likely to arise over less high profile disputes, such as school district imposition of hygiene and safety rules where the public official might not have fully appreciated the impact of the rule on an individual’s religious beliefs and customs. For public officials, this may mean greater attention and sensitivity to the religious concerns and objections of persons who are the subject of a policy or requirement. The type of interactive dialogue called for under disability discrimination laws might need to be imported into this arena. Insurance underwriters might be interested in learning how a prospective account addresses this risk, akin to reviewing anti-discrimination policies and procedures.