What Religious Freedom Bills in Indiana and Arkansas Mean for Entrepreneurs

All across the nation, a number of states are toying with so-called "Religious Freedom" bills. Proponents argue that these laws are intended to protect the religious rights of small business owners, while many critics see these bills as a thinly veiled attempt to discriminate against gays and lesbians. Republican Indiana Governor Mike Pence is facing stiff opposition signing legislation recently that seemingly allows Indiana businesses to deny service to lesbian, gay, bisexual and transgender individuals.

Here is a rundown of what you need to know about this important political issue that will affect business and entrepreneurship in 2015. 

1
Where did this law come from?

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Paul Mansfield Photography/Moment/Getty Images

Indiana's bill "provides that a state or local government action may not substantially burden a person's right to the exercise of religion unless it is demonstrated that applying the burden to the person's exercise of religion is: (1) essential to further a compelling governmental interest; and (2) the least restrictive means of furthering the compelling governmental interest."

Interesting tidbit -- Indiana's RFRA has its roots in the Federal Religious Freedom Restoration act which was introduced into Congress in 1993 by two Democrats -- Ted Kennedy and Chuck Schumer. That bill was meant to protect the individual expression of religious belief from government interference, though the original Federal law was invoked during the controversial Hobby Lobby Supreme Court Decision that held that a private business could be treated as an individual with religious beliefs that could be protected. 

On Facebook, Schumer has slammed Indiana's move: "If ever there was a compelling state interest, it is to prevent discrimination. The federal law was not contemplated to, has never been, and could never be used to justify discrimination against gays and lesbians, in the name of religious freedom or anything else."

2
Protest Have Gotten Heated

A small business -- Memories Pizza -- became an unlikely player in the political fight over the bill when a local reporter scoured Indiana looking for a business that plans to deny service based on the new law. “If a gay couple came in and wanted us to provide pizzas for their wedding, we would have to say no,” co-owner Crystal O'Connor told ABC57. Faced with threats and protests, the business temporarily suspended operations, and a GoFundMe page set up to help the owners netted nearly a million dollars in donations as of this writing. 

Related: How Crowdfunding Can Help Your Business Grow

3
Corporate Opposition

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Photo: Tim Cook/Twitter

The Indiana-based governing body of college sports, the NCAA, expressed dismay and disapproval of the new bill in Indiana, saying "we are deeply committed to providing an inclusive environment for all our events. We are especially concerned about how this legislation could affect our student-athletes and employees.”

Apple CEO Tim Cook joined other tech industry titans in denouncing the law. He tweeted: "Apple is open for everyone. We are deeply disappointed in Indiana's new law and calling on Arkansas Gov. to veto the similar #HB1228."

4
Small Business Response

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Photo: openforservice.org

Business owners in Indiana are naturally concerned about a business downturn due to bad publicity and boycotts, so some are proactively opting to join grass-roots campaigns such as "Open for Service,"  an initiative that supplies small business owners with a sticker and places them in a directory that demonstrates they will not deny service to any patron fro any reason. 

Related: Small Business Saturday

5
Walmart Plays a Role

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Photo: Walmart

 Corporate giant Walmart, which is based in Arkansas, is poised to be a major player in this debate. They posted to Twitter their statement on the religious freedom law: "Every day, in our stores, we see firsthand the benefits diversity and inclusion have on our associates, customers and communities we serve. Today's passage of HB1228 threateds to undermine the spirit of includion present throughout the state of Arkansas and does not reflect the values we proudly uphold. For these reasons, we are asking Govenor Hutchinson to veto this legislation."