Reports from today's arguments in the Hobby Lobby case are driving me crazy. Word is that Justices Breyer and Roberts are thinking about a religious exemption for "closely held" companies. This kind of exception is all about results and has no principled basis in the law. But what else is new from this Supreme Court?
But I want to focus on one aspect about this notion of exempting "closely held" companies from following the law to the detriment of their female employees. Just what is a closely held business?
Well, Koch Industries for one. From Wikipedia:
In 2013, Forbes called it [Koch Industries] the second largest privately held company in the United States (after Cargill), with an annual revenue of $115 billion, down from the largest in 2006. If Koch Industries were a public company in 2013, it would have ranked 17 in the Fortune 500.[
Others include Cargill, Toys R Us, Ernst and Young, PricewaterhouseCoopers, Chrysler, GMAC Financial Services,
The Koch brothers each own 42% of Koch Industries. Does having two brothers owning 84% of a company along with a few others make it closely held? Most lawyers would think so.
What about Walmart? Also from Wikipedia:
The company is the world's largest public corporation, according to the Fortune Global 500 list in 2014, the biggest private employer in the world with over two million employees, and is the largest retailer in the world. Walmart remains a family-owned business, as the company is controlled by the Walton family, who own over 50 percent of Walmart. It is also one of the world's most valuable companies
Does having a family in control of the largest public corporation make it closely held? Why or why not? Justices, you must explain. Does closely held mean 2 owners, 10 owners, 50 owners?
This possible exemption flies in the face of the history of corporate law. A corporation, no matter who owns it, is a legal fiction which shields the liability of its owners from claims against the company. It doesn't matter whether the company has one owner or 2000, the liability shield is the same. And, because Hobby Lobby is a corporation (regardless of who owns it), it is taxed as such.
In this case, the Hobby Lobby owners want the tax deduction for employer-sponsored health care without providing the benefits the law now requires:
"What is erroneously described as a “mandate” simply means that if corporations choose to take advantage of the tax benefits for compensating employees in health insurance rather than wages, the insurance has to meet minimum coverage standards. As is often the case with specious religious freedom arguments, the corporation wants it both ways, to get the tax benefits without providing the full benefits to employees. And if the corporation wanted to argue they have no practical choice but to offer coverage, then according to the logic of their own arguments, the religion of the managers is not being burdened; they’re not paying for the contraception or making the decision to include it in insurance plans."
Hobby Lobby is arguing that it has the right to force its owners' religious beliefs on their employees, at the same time it wants to preserve its tax deduction for employer-sponsored health care. That argument does not depend on the nature or number of owners. There is simply no principled way in which to grant this wish on the grounds that the company is closely held. And granting such a wish will only lead public companies to clamor for the same treatment, and there would be no principled way to deny it to them.
Be afraid folks, be truly afraid.