Public vs Private Companies

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Photo by Paul Riismandel

Coverage of the Hobby Lobby case seems to be consistent in saying that the U.S. Supreme Court is essentially deciding the question of whether not-specifically-religious corporations can exercise religious rights. The issue in this case is requiring insurance coverage for federally determined forms of contraception but if the decision is based on the ability of companies to exercise religious rights then it could also extend to whether companies can choose under what circumstances they will offer their services.

It struck me this morning that the question isn’t really whether corporations can exercise religious rights. The real question is: at what point in the pursuit of profit do individuals diminish or forego their right to religious expression? Those siding with the government in this case are afraid that companies will be able to use the guise of religious belief to get around the expense of some legal mandates. After all, if the Green family (Hobby Lobby) can claim religious belief avoid paying for some expensive forms of birth control for their employees why can’t the Walton family (Walmart) do the same?

If the court recognizes that the owners of companies can run their companies in accordance with their religious beliefs then how do they draw a line between companies that can and companies that can’t? If all companies can exercise religious beliefs then how can they enforce any laws for which a company can argue a religious belief to evade that law? Do they do it on the basis of how profitable a company is? (and is that overall net income, net income per employee, net income per share?) Perhaps they base it on the number of employees or the number of people who have an ownership position in the company. (What’s the magic number?)

As I viewed the question through the lens of when people can exercise religious rights rather than if corporations can exercise them the answer seems obvious by asking another question: who owns the corporation?

For privately held companies the owners of the corporation retain their right to religious expression through their corporation. If a company is publicly held they no longer hold that right even if, like Mark Zuckerberg and Facebook, an individual or family holds controlling interest in the corporation.

The reason for this distinction is simple. In a privately held company the owners of the company are using their own assets. With a publicly traded company they have relinquished control of who may purchase an ownership stake in the corporation and thus they can’t reliably speak for all stakeholders when making decisions regarding the exercise of religious rights. By choosing to tap the capital available by becoming a publicly traded entity they sacrifice the opportunity to exercise private religious beliefs through their corporation.

That makes it nice and simple.