Divided Supreme Court of Montana Says Statute Defining Religious Order as Employer (For Workers’ Compensation Purposes) is Not Unconstitutional

On the last day of 2012, and in a split decision, the Supreme Court of Montana reversed a trial court’s summary judgment decision that had earlier determined that the requirement to provide workers’ compensation coverage for a religious colony’s members engaged in commercial activities contained in House Bill 119 (2009 Mont. Laws. ch. 112 § 30) violated the colony’s rights under the Free Exercise Clause and the Establishment Clause of the First Amendment to the U.S. Constitution, and also violated the colony’s right to equal protection under the laws of the U.S. Constitution and the Montana Constitution [see Big Sky Colony, Inc. v. Montana Dep’t of Labor and Industry, 212 MT 320 (Dec. 31, 2012)].  

Big Sky Colony, a signatory to the Hutterite Brethren Church Constitution (Hutterite believers follow the teachings of Jacob Hutter, an Austrian Anabaptist who was martyred in 1536, practice their faith and live in a communal lifestyle in colonies in Minnesota, North Dakota, South Dakota, Montana, Washington, and parts of Canada). The Department of Labor and Industry initially determined that the Workers’ Compensation Act did not apply to the Colony or its members due to the fact that the Colony did not pay “wages” to its members for their services. In 2009, however, HB 119 amended the definitions of employer and employee contained in § 39–71–307, MCA, so as to include them. The trial court found that the statutory changes were not neutral, that since the Hutterite faith demanded that its members engage in commercial activities with nonmembers for remuneration, the burdens posed by HB 119 fell upon only the Hutterite religion. Utilizing strict scrutiny, the trial court rejected the State’s claim of any compelling state interest.

The Supreme Court disagreed, finding instead that HB 119 regulated the Colony’s engagement in commercial activities in the same manner that the workers’ compensation system regulated the commercial activities of other employers in Montana. Finding the statute “facially neutral” and that it imposed only an incidental burden on religious conduct, as opposed to a prohibition on religious conduct, and citing (inter alia) South Ridge Baptist Church v. Industrial Comm’n of Ohio, 911 F.2d 1203 (6th Cir. 1990)–rejecting the church’s claim that the compulsory payment of workers’ compensation premiums was “sinful”–and Jimmy Swaggart Ministries v. Board of Equalization, 493 U.S. 378, 110 S. Ct. 688 (1990)–rejecting the Ministries’ claim that paying sales and use taxes on revenues related to sale of religious “merchandise”–the majority held that the inclusion of religious organizations that engage voluntarily in commercial activities within the workers’ compensation system did not single our religious beliefs. The Colony had not made its case for discrimination and denial of religious rights. Justice Nelson joined Justice Rice in dissenting.