In a decisive ruling issued July 18, 2024, the U.S. District Court for the District of Columbia dismissed claims by Gordon College that its rights under the Religious Freedom Restoration Act (RFRA) and the First and Fourteenth Amendments were violated when the Small Business Administration denied forgiveness of a $7 million loan. The court found that the college, a religious nonprofit in Wenham, Massachusetts, did not qualify for forgiveness under the Paycheck Protection Program (PPP) due to exceeding the 500-employee cap, underscoring the limits of RFRA’s protective scope when applied to neutral, generally applicable laws.
Gordon College’s attempt to use the Religious Freedom Restoration Act (RFRA) to avoid repaying a Paycheck Protection Program (PPP) loan not only misinterprets the intent of RFRA but also endangers the very protections the Act was designed to uphold.
RFRA, enacted to safeguard individuals and institutions from government actions that substantially burden their exercise of religion, mandates that any such government action must be in furtherance of a compelling interest and pursued through the least restrictive means. It was never intended as a blanket shield against all forms of governmental regulation or financial obligations, particularly those stemming from broadly applicable and neutrally enforced laws like the terms of PPP loans.
The PPP, established by Congress in response to the economic devastation caused by the COVID-19 pandemic, was designed to provide forgivable loans to small businesses to help them maintain payroll and cover essential operational expenses. Its aim was to prevent massive layoffs and keep businesses afloat during an unprecedented economic downturn.
Gordon College, a private Christian institution located in Wenham, Massachusetts, received a $7,046,037 PPP loan but was denied loan forgiveness on the grounds that it exceeded the SBA’s 500-employee threshold. Founded in 1889, Gordon College has approximately 1,500 undergraduate students. The College argued that enforcing this cap substantially burdened its religious exercise, thereby violating RFRA. According to the College, the 500-employee limit forced it to alter its internal management and governance structures, which it considers integral to its religious mission. By potentially having to reduce its workforce to comply with the cap, Gordon College claimed its ability to fulfill its religious and educational objectives would be compromised.
However, this argument fundamentally misinterprets the nature of the burden RFRA aims to address. The College failed to demonstrate that the 500-employee cap interfered with any specific religious practice. Instead, their contention broadly conflated operational constraints with religious freedom.
Such a misuse of RFRA undermines its integrity. Extending RFRA’s application to cases where there is no clear connection between the regulation and religious exercise dilutes its protective power. RFRA is meant to shield against laws that force institutions to choose between their religious beliefs and legal compliance. In this case, however, the PPP’s employee cap is a neutral, generally applicable criterion that does not single out or target religious institutions.
Furthermore, the attempt to use RFRA to evade financial obligations risks fostering a perception that religious institutions seek preferential treatment rather than protection from genuine burdens on their religious practices. This perception could erode public support for RFRA, making it more challenging to defend in situations where its application is most needed.
While RFRA remains a crucial tool for protecting religious freedom, its application must be carefully considered to ensure it addresses genuine burdens on religious exercise. Misapplying RFRA to avoid financial obligations not only weakens its intended protections but also risks its future viability as a shield against truly coercive governmental actions. Gordon College’s case serves as a cautionary tale of the potential pitfalls in extending RFRA beyond its rightful scope, underscoring the need to preserve the Act’s integrity for the essential role it plays in safeguarding religious liberty.
Case: Gordon College v. U.S. Small Business Administration, (D DC, July 18, 2024)
