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What Role Should Religious Values Play in Business?

What Role Should Religious Values Play in Business?
Image credit: ohrh.law.ox.ac.uk

The decision by the Supreme Court earlier this week to hear an appeal to Obamacare forcing companies to provide contraceptive insurance coverage, over objections of owners who resist such coverage as a matter of their faith, will once again bring up a subject of much debate among business owners: Are the for-profit companies they have founded, own and manage extensions of themselves and eligible for Constitutional rights?

It is one of the thorniest of judicial issues today. Known in the legal world as “corporate personhood,” the concept says that companies are like people in the eyes of the law, and therefore have rights bestowed on them by the Founders.

For decades, courts rejected the idea. People have Constitutional rights. Companies don't. But then came the famous Citizens Union decision from the Supreme Court in 2010, which said companies could spend what they wanted on political campaigns, because curtailing that would violate companies' First Amendment rights to free speech.

So, if companies have a First Amendment right for speech, shouldn't they have the same right to religious expression?

That is what the court will decide, but, for business owners today, the issue continues to be a tricky one. For one thing, many entrepreneurs see the companies they have created as extensions of themselves. In fact, their personal values and belief systems are often part of their company's values.

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Sometimes, those are overtly religious values. Take Hobby Lobby, the retail chain that successfully fought Obamacare on religious grounds and whose case is one of three that the Supreme Court has agreed to consider. Christian values are so strong at the company that the stores are closed on Sunday and religious music plays for shoppers. The company's founders took their deeply held religious beliefs and made them part of the corporation's culture. Personal and corporate values became one.

It actually happens more than one would think on a smaller scale. Here in New York, the go-to place for technology products is a local business called B&H [http://www.bhphotovideo.com/]. But don't try to go there on Friday afternoons or Saturdays. The store is closed, because the owners are Orthodox Jews. The store theoretically could be open, staffed by gentiles, but the values of the owners' religion call for honoring the Jewish Sabbath, so much so that the company doesn't even take orders online from Friday evening to Saturday evening.

Of course, corporate personhood goes beyond store hours, and can run counter to the beliefs of the employees that work there, as in the case with mandatory contraceptive coverage. The fear for opponents of corporate personhood is that the individual rights of employees are more likely to be trampled by the Constitutional rights of employers.
But we are not talking about discrimination here. Companies given Obamacare exemptions can't all of a sudden decide that they can violate employment laws and not hire women or racial minorities. It is the time-tried and tired tendency to assume that, in capitalism, companies always are itching to do wrong by their own employees, in blind pursuit of profit. (It is interesting that opponents of capitalism often apply the word “evil,” so imbued with religious overtones, as the favorite adjective for “corporations” when discussing the companies they want to atheize.)

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In fact, the market serves as a pretty good regulator to limit corporate behavior if companies are afforded personhood. Say Hobby Lobby and companies like it prevail and are exempt from paying for contraceptive coverage. The company can be upfront about that issue in its hiring process. If you want to work our registers, you have to pay for your own contraception. At the same time, competitors could use lack of contraceptive coverage as a selling point in attracting the best employees, conceivably stealing them away from Hobby Lobby.

And there is an additional market dynamic. Ultimately, the Supreme Court is deciding whether corporations can choose to deny certain care on religious grounds. That doesn't mean companies will automatically deny such care. Again, it seems short-sighted from a market perspective to hold back on some coverages if you are in competition for employees. (That competition isn't as fierce now, because of relatively high unemployment, but it will be once the jobless rate is normalized.) Also, consumers aware of these policies may choose to take their custom elsewhere, because the owners' decisions may run counter to their own beliefs. Workers and customers can vote with their feet – and their wallets.

Most companies won't take advantage of a religious exemption because they will see it as bad business. After all, the good book of many boards leans more toward balance sheet than Bible. So, at its heart, the Supreme Court decision will be about choice. It will be about the freedom of corporations to choose what they offer in insurance coverage, and freedom to make those decisions based on corporate religious values, born from the shared values of the founders and owners and often codified in the very culture of those companies.

Is having a choice, with transparency and evaluative knowledge about the consequences for employees and consumers, really that bad? We'll find out soon enough.

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Ray Hennessey is Editorial Director of Entrepreneur.com.

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