The US Supreme Court yesterday vindicated two Christian-owned companies, Hobby Lobby and Conestoga Woods, that have a pro-life objection to including in their employee health plans certain contraceptive drugs and devices. In a 5-4 decision, the Court said that the government did not meet the test set up by the Religious Freedom Restoration Act (RFRA), a 1993 law passed with overwhelming support in Congress and proudly signed into law by President Bill Clinton.

The controversy is over the contraceptives mandate in the 2010 health care reform law, which requires employers' health plans to cover a wide range of contraceptive drugs and devices, including some the companies and others regard as abortifacients. Churches are exempt from the mandate; after widespread protest, religious nonprofits such as colleges and hospitals were offered an "accommodation": the insurer provides to the organization a health plan excluding objectionable contraceptives and then announces to the employees that those contraceptives will be paid for by the insurer. No relief at all was offered to companies like those in the cases decided yesterday: religion has no place in commerce, the government claimed. Some 100 lawsuits, by businesses as well as religious nonprofits, have been launched against the contraceptives mandate.

Besides the relief granted to the two companies and others with similar religious claims, what's most important is the Supreme Court's rejection of the government's effort to make business a religion-free zone.

Companies aren't churches, but they are established to pursue particular ends in particular ways, and it isn't inconsistent or illegal, Justice Alito's majority opinion notes, for a company to pursue social-justice or religious aims while it seeks reasonable profit. Protecting a company's religion-based policy decision about health coverage "protects the religious liberty of the humans who own and control those companies."

Of course, companies are comprised of more than their owners and managers, so yesterday's decision is being bitterly protested as giving narrow-minded owners theocratic power over their employees who, after all, have their own rights and their own religiously grounded views about contraceptives. The major dissenting opinion, from Justice Ginsburg, claims that the decision will authorize companies to use religion as an excuse to make all manner of biased decisions at the expense of employees: no insurance coverage of vaccinations, unequal wages for women, racist and anti-gay decisions, and so on.

That's a vast over-reading of what the Court said. The Court said that for-profits aren't excluded from RFRA's protection of the exercise of religion (just look at the definitions of terms)—but that only sets in motion a series of tests: Does the law impose a "substantial burden" on the religious exercise of the organization or person? Does the government have a "compelling interest" to impose the burden? And if so, is it pursuing the "least restrictive" means of asserting that interest? There was no doubt the two companies have sincere religious convictions about the contraceptives; nor was there any doubt that they would incur massive financial penalties if they simply excluded the contraceptives or dropped health coverage entirely. The Court didn't challenge the government's claim that the contraceptives mandate was a compelling government interest to protect women's health and equality. Rather, it stressed that the government had not sought the least restrictive way to pursue its goal, for it can promote the interests of the women employees without the heavy imposition on the religious freedom of the employers. The government can, for example, require the insurers to directly pay for the contraceptives—as in the accommodation for religious nonprofits—or can create a program to directly supply or pay for the contraceptives itself.

This decision gives no carte blanche to employers to manufacture religious pretexts to save money on employee expenses, to prevent employees from obtaining products or services the owners object to, or to exclude the government from protecting employee rights.

Rather, the decision importantly vindicates business as a realm where employers can made decisions based on religion, charitable impulses, humanitarianism, social justice, and other motivations, and not just maximization of profit. And it vindicates religious freedom as a check on even the best-motivated government regulatory actions. In our advanced societies so centred on commerce and government regulation, it is a signal achievement for a highest court to come to the aid of religion and civil society.