The case involves a baker who refused to bake and decorate a wedding cake for a same-sex couple. The baker asserts that his baked goods reflect his creative expression. He further contends his refusal to bake and decorate a cake for a same-sex couple is protected conduct under the First Amendment rights to religious liberty and freedom of speech. The couple challenged this refusal, filing a complaint with the Colorado Civil Rights Division. They alleged a violation of Colorado’s Anti-Discrimination Act (the “Act”) that expressly protects against sexual orientation discrimination.

The Colorado Civil Rights Commission found that the bakery violated the Act and the Colorado Court of Appeals and Colorado Supreme Court affirmed. The courts found that the baker’s refusal violated state law and did not interfere with the bakery’s freedom of speech or free exercise of religion.

Religious Rights of Businesses

The theory that religious exemptions apply to for-profit businesses, as they do to individuals, is based on the belief that businesses have religious rights. This theory was affirmed by the Supreme Court in Burwell v. Hobby Lobby Stores, Inc., 134 S. Ct. 2751 (2014). Before Hobby Lobby, courts had restricted questions of religious freedom to individuals. In Hobby Lobby, the Supreme Court interpreted the Religious Freedom Restoration Act (RFRA) to apply not only to individuals but to closely-held corporations (a term the Court did not define). As such, the Court found Hobby Lobby, a for-profit corporation, could assert its “sincerely held religious practice” to excuse its noncompliance with the contraceptive mandate of the Affordable Care Act.

Contemporaneous decisions, in Windsor v. United States, 570 U.S. ___ (2013), and Obergefell v. Hodges, 576 U.S. ___ (2015), tackled the constitutionality of state and federal bans on same-sex marriage benefits. The Supreme Court held that same-sex marriage bans were unconstitutional. In the wake of these decisions, state legislatures have introduced hundreds of pieces of legislation attempting to create a religious exemption for otherwise discriminatory conduct towards LGBTQ+ individuals or couples. To date, few of these bills have become law, with a notable exception in Indiana.

In March 2015, Indiana enacted its state Religious Freedom Restoration Act. The law permitted corporations and individuals in legal proceedings to assert that their exercise of religion has been or is likely to become substantially burdened. Supporters argued that it would allow businesses to refuse service to engaged gay couples looking for matrimonial services (e.g., caterers, bakers, photographers). The broadly worded language of the bill also would have provided a defense to employers who sought to treat LGBTQ+ employees differently. As Indiana had no LGBTQ+ employment protections, such disparate conduct likely would not have violated state law, even absent the language of the state RFRA. The bill turned out thousands of protesters, including large organizations, who left or threatened to leave Indiana over what was deemed state-sponsored intolerance. These protests pressured Indiana into modifying the law to expressly provide that LGBTQ+ individuals could not lawfully be denied service. By that time, the state had lost an estimated $60 million in investment. Indiana continues to deny statewide anti-discrimination protections to LGBTQ+ individuals.

Federal legislation is underway to enact broad religious exemptions, including for businesses, under the name of the First Amendment Defense Act (FADA). FADA would prohibit the federal government from taking “discriminatory action” against any person or corporation on the basis of that person’s or corporation’s belief that same-sex marriage is immoral or inappropriate. Discriminatory actions listed in the bill include a change in federal tax treatment, a change in grant status or a charitable contribution, and a change in federal benefit status. Under FADA a business could argue that it qualifies as a federal contractor despite its refusal to extend health-care benefits to same-sex spouses of employees. A federal employee could cite FADA to justify a refusal to process Social Security checks for a same-sex spouse seeking survivor benefits. FADA has over 170 sponsors in Congress.

The state and federal efforts to enshrine religious exemptions have dovetailed with litigation to establish the same effect. Although Hobby Lobby did not address LGBTQ+ protections (it was limited to contraception coverage), the holding opened the door to litigation addressing whether a corporation could deny protection to its LGBTQ+ employees based on sincerely held religious beliefs. Post-Hobby Lobby and Obergefell, the interplay between religion and LGBTQ+ discrimination is increasingly litigated. For example, in EEOC v. R.G. & G.R. Harris Funeral Home, 201 F. Supp. 3d 837 (E.D. Mich. 2016), the EEOC sued a funeral home on behalf of a transgender employee, alleging wrongful termination because she was transgender. The employer terminated the person for dressing in accordance with her gender rather than with her sex assigned at birth. The funeral home argued that RFRA prohibits the EEOC from applying Title VII to force the funeral home to violate its sincerely held religious beliefs. The district court adopted this rationale and its decision now is on appeal before the Sixth Circuit. On appeal the EEOC continues to advocate that a religious exemption cannot justify a secular employee’s disparate treatment of an LGBTQ+ individual.

Implications of a Ruling for Masterpiece Cakeshop

Masterpiece Cakeshop addresses the ability of a business to deny service to a prospective customer. The case does not address employment nor revolve around employment law but will serve as a touchstone for the reach of RFRA-type laws. A victory for Masterpiece Cakeshop would strengthen the argument that religious beliefs trump notions of nondiscrimination and allow disparate treatment of individuals (customers or employees) based on their LGBTQ+ status (and potentially other forms of legally protected status). Such a result would protect an employer’s termination of a gay employee on the basis of that employee marrying his same-sex spouse. It could also protect, for example, a religiously motivated employer who does not provide transition-related medical services to a transgender employee or spousal benefits to a same sex spouse.

A ruling for the bakery would likely lead to a slew of case filings testing the landscape between religious liberty and principles of nondiscrimination. Justice Ginsburg warned of such an eventuality in her 35-page dissent in Hobby-Lobby. She noted that by extending religious rights to businesses the Court had “ventured into a minefield.” She asked:

Would the exemption the Court holds that RFRA demand, for employers with religiously grounded objections to the use of certain contraceptives, extend to employers with religiously grounded objections to blood transfusions (Jehovah’s Witnesses), or antidepressants (Scientologists), or medications derived from pigs, including anesthesia, intravenous fluids, and pills coated with gelatin (certain Muslims, Jews, and Hindus), or vaccinations (Christian Scientists, among others)?”

Perhaps recognizing the public accommodation aspect of the Hobby Lobby ruling, Justice Ginsburg noted that it had long been settled that religious beliefs were not a basis of exemption from generally held laws, and that there was no reason to revisit these rulings, In support of her argument, Justice Ginsburg referenced Newman v. Piggie Park Enterprises, Inc., 256 F. Supp. 941, 945 (D.S.C. 1966) (owner of restaurant chain refused to serve black patrons based on his religious beliefs opposing racial integration), aff’d in relevant part and rev’d in part on other grounds, 377 F.2d 433 (4th Cir. 1967), aff’d and modified on other grounds, 390 U.S. 400 (1968); In re Minnesota ex rel. McClure, 370 N.W. 2d 844, 847 (Minn.1985) (born-again Christians who owned closely-held, for-profit health clubs believed that the Bible proscribed hiring or retaining an “individua[l] living with but not married to a person of the opposite sex,” “a young, single woman working without her father’s consent or a married woman working without her husband’s consent,” and any person “antagonistic to the Bible,” including “fornicators and homosexuals” (internal quotation marks omitted)), appeal dismissed, 478 U.S. 1015 (1986); and Elane Photography, LLC v. Willock, 309 P.3d 53 (N.M. 2013) (for-profit photography business owned by a husband and wife refused to photograph a lesbian couple’s commitment ceremony based on the religious beliefs of the company’s owners), cert. denied, 572 U.S. ___ (2014).

Implications for Employers

A ruling for the bakery would impact workplace dynamics and likely lead to an increase in LGBTQ+ discrimination. It would in no way impact employers who have or who wish to implement LGBTQ+ inclusive policies and practices. It also would in no way preclude employers from setting the expectation within their workforce that inclusion means protecting and affirming the rights of LGBTQ+ individuals. Absent forthcoming legal precedent to the contrary, to the extent an employer faces tension at work between the religious beliefs of one employee and the LGBTQ+ status of another employee, the best practice remains to treat sexual orientation and gender identity protections as the legal standard and to handle religion-based employee objections as one would a religion-based objection on the basis of race or any other protected category—by addressing a solution to fit the needs of the objector, not by restricting the movement or entitlements of the person being objected to.

At oral argument on December 5, the baker’s attorney argued that the government cannot force a person “to express messages that violate religious convictions” and that requiring the bakery owner to “sketch, sculpt, and hand-paint cakes that celebrate a view of marriage in violation of his religious convictions” would violate that right. Counsel for Colorado argued that the bakery, as a commercial enterprise holding itself open to the public, cannot invoke religious beliefs to avoid application of a generally applicable anti-discrimination law, which “extended to LGBT people the same protections used to fight discrimination against race, sex and persons of faith.”

Justice Ginsburg and Justice Kagan pressed the baker’s counsel to explain where the line could be drawn: after admitting that it would not be compulsion of speech to require a baker to sell a pre-made cake, he suggested that a custom cake is protected speech. The Justices asked whether florists, jewelers, and hairstylists also could claim First Amendment protections to refuse service to customers. Justice Sotomayor expressed concern that a rule in which expressive speech trumps public accommodation laws against discrimination could have an impact on race discrimination and other civil rights laws.

Justice Kennedy—historically a champion for LGBTQ+ rights—challenged Colorado’s position. He pressed counsel for Colorado on whether the application of the anti-discrimination law in this case expressed impermissible hostility to religious views. Justice Kennedy later stated: “[T]olerance is essential in a free society. And is most meaningful when it’s mutual. It seems to me that the state in its position here has been neither tolerant nor respectful of Mr. Phillips’ religious beliefs.” Some commentators since have suggested that those comments referred to what Justice Kennedy deemed to be the very summary, even rude treatment of the baker’s arguments by the Colorado Civil Rights Commission.

Justice Gorsuch suggested that the requirements of the anti-discrimination law amounted to compelled speech. He also asked whether a baker would have to serve a customer who wants a red cross to celebrate the Red Cross, but also provide the same red cross to someone who wishes to celebrate the KKK. At the close of oral argument, Justice Sotomayor noted the importance of public accommodations law in changing discriminatory views and promoting an inclusive society:

[T]he problem is that America’s reaction to mixed marriages and to race didn’t change on its own. It changed because we had public accommodation laws that forced people to do things that many claimed were against their expressive rights and against their religious rights. It’s not denigrating someone by saying . . . : If you choose to participate in our community in a public way, your choice, you can choose to sell cakes or not. You can choose to sell cupcakes or not, whatever it is you choose to sell, you have to sell it to everyone who knocks on your door, if you open your door to everyone.