In Hobby Lobby v. Sibelius and other recent litigation, a number of business corporations have asserted that the corporation itself practices a religion and is entitled under the Constitution to Free Exercise thereof.
Whose religion does a corporation have? If a corporation has rights to exercise religion, how do we know what religion the corporation have? When a group of people come together to form business, and then sell stock to outsiders, do the founders and employees lose their religious rights? When an employee joins a corporation does that person have to adopt the corporation's religion so long as they are employed?
Corporations are composed of human beings. Most of those human beings, however, are disenfranchised under current corporate law: current law makes the corporation's board of directors the ultimate authority in the corporation, but gives employees no vote for directors. Instead, the board of directors is elected by shareholders, typically on the basis of one vote per share owned. Shareholder voting is profoundly anti-democratic on a number of levels: First, voting is per share, not per person, so one voter may have many more votes than others. Second, shares may be held (and voted) by persons with little or no connection to the corporation -- diversified portfolios more interested in the profits of the corporation's competitors or suppliers, hedge funds that may arrange their affairs to profit if the corporation does poorly, investment funds managed for foreign sovereigns that may be more interested in their own national interests than the corporation or the American economy. Third, shares -- and therefore votes -- are freely bought and sold. And finally, the actual human beings who depend on and compose the corporation are not necessarily shareholders and have no vote at all unless they are.
The current share-based voting system is defensible so long as business corporations remain largely economic institutions devoted to producing useful products and services to sell in the marketplace. Generally, we depend on the profit motive as directed by the rules of the marketplace (including contract, tort, anti-fraud, safety, truth-in-advertising, environmental and zoning laws) to direct corporate activities in useful directions. Shareholder voting weighted by investment is a reasonable mechanism to press corporations to pursue profit within this system even if some corporate officeholders might be more inclined to preserve their positions or increase their personal status. The stock market, we expect, will constantly assess company profits and prospects and quickly reward and punish relative success and failure in that.
But the stock market has no special expertise in religion or politics. We generally do not believe that political loyalty, the public good, or religious commitments should be freely bought and sold, or that those with more money to invest have a special incentive to monitor corporate religious actions. Nor do we expect that religions must be profitable to be socially worthwhile. Moreover, when the rules that govern markets are put up for sale, we know that the result is corruption: the rules will quickly serve simply to further enrich those who can pay to buy rules that benefit them or those who have rules to sell.
So the stockmarket-based corporate governance system becomes radically inappropriate -- a violation of the ordinary norms of democratic, self-governing, republics -- when business corporations enter politics and religion. In those areas, equal citizens -- not money -- must rule.
The time has come for the states to reform corporate governance to satisfy basic democratic republican norms. If a corporation is to have a religion, the establishment ought to have majority support, and dissenters should have the right of tolerance. The same is true for corporate political advocacy: if the corporation is going to represent the people associated with it, they should have a say in determining what position it takes.
This corporate governance statute reforms corporate governance to reflect the recent expansion of corporate importance. If business corporations are going to act as associations of citizens asserting a joint religious or political view, they ought to follow minimum democratic norms.
The Corporate Religious & Political Freedom Restoration Act
- Whereas, citizens do not forfeit their fundamental rights to their religious consciences, political commitments or moral views, by associating with a business corporation as an employee or investor,
- Any business corporation organized in or doing business in this state, may exercise a religion, participate in politics, lobby or electioneer.
- The corporation shall determine the religious tenets to which it subscribes and the political positions or candidates for which it will advocate by majority vote of the persons affected, including at a minimum all employees and investors.
- Voting shall be in a free and fair election conforming to the ordinary norms of democratic governance, including the principle of one human being one vote.
- Voting may be direct, in the form of a binding referendum on the issue at hand, or indirectly for a democratically elected representative body that will make determinations for the corporation.
- Any corporation that adopts a religion shall provide for the rights of dissenters, including the dissenter's right to freely exercise a dissenting religion or no religion at all.
- Before corporate funds are used to promote any religion or exercise of religion, to advocate for any change in law or regulation, or to support or oppose any candidate for political office, such expenditure shall be ratified by a majority vote of the persons affected, including at a minimum all employees, investors and other persons with a potential claim to such funds.
- If corporate funds are used to promote any religion or exercise of religion, to advocate for any change in law or regulation, or to support or oppose any candidate for poltical office, any person affiliated with the corporation as an employee or investor who dissents from such expenditure shall be entitled to a rebate of such person's pro-rata share of such expenditure.