Why Is Indiana's RFRA So Controversial? This Blogger's Analysis.

Since Indiana's passage of its Religious Freedom Restoration Act earlier this week (see prior posting), there has been a flood of commentary on what the Act really means and its true impact.  The commentary, some from those with a political agenda and some from those without one, ranges from the assertion that IRFRA does little to change current law to the assertion that it creates a license to discriminate against the LGBT community.  So here is my attempt to suggest some perspective on the statute.

(1)  The heart of the statute-- the substantial burden/ compelling interest/ least restrictive means requirement-- is similar to that in the federal RFRA and those of numerous other states.  What makes these tests stand out is the U.S. Supreme Court's recent decisions that give the tests new salience.  With Hobby Lobby and Holt v. Hobbs, the Supreme Court has transformed the substantial burden and least restrictive means tests into geometrically more powerful tools to use to challenge refusals to provide religious exemptions.

(2)  Traditionally it was assumed that the federal RFRA would be used by minority religions to fend off broad regulations that might be enacted without a careful weighing of idiosyncratic religious practices that are important to often discrete and insular groups with comparatively small numbers of adherents.  Since Hobby Lobby and the explosion of same-sex marriage cases, it is largely the Christian majority (or a segment of it) that asserts it is the victim of the majoritarian process, seeking exemptions that have a negative impact on minority groups that have broadly been the victims of past governmental discrimination.

(3)  Since Hobby Lobby. the power of RFRA exemptions has been magnified because they can be asserted by fairly large economic enterprises whose owners have religious reservations about a regulatory requirement.  Indiana's RFRA may have expanded the reach of RFRA exemptions beyond those contemplated by Hobby Lobby.  In defining the persons protected by the law, it enumerates all sorts of business entities, including "a corporation."  It does not limit this to a "closely-held corporation" as the Supreme Court did in Hobby Lobby.  It may be that a separate clause in the Indiana law has that effect, but that is unclear.  Under Sec. 7, a business entity is covered if it

exercises practices that are compelled or limited by a system of religious belief held by ... the individuals who have control and substantial ownership of the entity, regardless of whether the entity is organized and operated for profit or nonprofit purposes.

It can be argued that only a closely held corporation would be controlled and substantially owned by the same individuals.  But this depends on whether "substantial ownership" means a substantial percentage of the business or merely that the person has a substantial amount of money invested in the company.  CEO's of publicly held corporations often own millions of dollars of the company's stock, but still own only a small percentage of the company.

(4)  Enacted as the Supreme Court is about to hear oral arguments in same-sex marriage cases, and in the wake of numerous high-profile cases on religious refusals by businesses to furnish goods and services to same-sex couples, the law has become a symbol of the clash between conservative Christian views on sexuality and the movement of expanded LGBT rights.  Some have pointed out, accurately, that Indiana's statewide public accommodation law does not include a ban on sexual orientation discrimination.  So business that wish to discriminate on that basis do not need an exemption. [corrected]

However, Indiana's statute also applies to local governmental entities in the state.  According to the Indiana ACLU, four localities have ordinances that provide enforceable protections against discrimination on the basis of sexual orientation and gender identity-- Indianapolis, Lafayette, New Albany and Tippecanoe County.  The new IRFRA will be able to be invoked as a defense in proceedings charging discrimination under these local laws.  This aspect of the law creates particular political and economic problems for the city of Indianapolis that hosts numerous national conventions and sporting events.

(5)  Indiana's new law makes it clear that IRFRA defenses can be asserted in lawsuits between private parties; not just in suits in which the government is a party.  Thus a same-sex couple suing for breach of contract when goods are initially promised and then refused might be met by a religious freedom defense. The sale of goods provisions of the Uniform Commercial Code arguably imposes a substantial burden on religious exercise of the business that discovers it has agreed to violate its own religious principles by facilitating a same-sex wedding.  (This argument is more difficult when services rather than goods are the subject of the contract, and the plaintiff relies on the common law of contracts for enforceability.  Although the statute covers not just statutes, but also "customs" and "usages" of any governmental entity.)

Affirmative relief (damages or an injunction) is only available however against a governmental entity.  And the statute specifically provides that it does not create a cause of action against a private employer by any applicant, employee or former employee.

For other commentaries on IRFRA, see Josh Blackman's Blog and the postings to which he links. And the Washington Post reports today that Indiana lawmakers now say they will act to amend IRFRA to make it clear that it does not permit discrimination against gays.