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'Religious Freedom' Laws: How Do They Apply to Your Business?

Indiana's new 'religious freedom' law has been garnering a lot of attention since Gov. Mike Pence signed it into law on Thursday. The bill would purportedly give legal protections to business owners who refuse service to LGBT customers on the basis of religious freedom.

There are threats of business boycotts and boasts of discrimination, and voices from Apple's Tim Cook to the NCAA have stated their concerns over Indiana's new law. So let's take a look at how this new legislation could affect your business.

Religious Freedom Laws in Context

As some have noted, 19 states have so-called religious freedom laws, and another 10 have bills in the works. Most are based on the federal Religious Freedom Restoration Act (RFRA), which only applies to the federal government. And while there are similarities in the laws, Indiana's new statute has some distinct differences.

The RFRA was passed in response to the erosion of protection for Native American religious ceremonies, and both it and nearly all of its state counterparts apply to government action. This means governments can't "substantially burden" an individual or religious group's free exercise of religion, like a state denying unemployment benefits to people who used peyote during a religious ceremony.

Indiana's Religious Freedom Law

While other state laws apply to government burdens on religious exercise, Indiana's applies to disputes between private parties. This is the distinction that has many believing that business owners can discriminate against gay and lesbian customers and use the law to protect against civil prosecution.

Critics of Indiana's law also point out that most states with religious freedom laws also have state laws that prohibit discrimination based on sexual orientation, but Indiana is not one of them. Therefore, absent a local ordinance banning discrimination, it may be possible to business owners to legally refuse to serve gays.

So while business owners may face reduced revenue and the possibility of boycotts or the social stigma of refusing to serve LGBT customers, such refusals may be legal in Indiana and beyond until the law is challenged in court.

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