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Constitutional Amendments and Business Law

14th Amendment and Business Application

Businesses must be aware that the 14th Amendment entitles all individuals to equal protection under the law. There are three levels of scrutiny to determine whether a law is discriminatory.

Equal protection is one of the sections of the Constitution that results in the most lawsuits; the clause states that all people in the United States are guaranteed the same treatment under the law. Because corporations are persons under the law, the equal protection clause applies to them, as well. When a person challenges a statute, ordinance, or law under the grounds of equal protection, the court will apply one of three levels of scrutiny to the law being challenged. One of the classic examples involving the equal protection clause was the case of Brown v. Board of Education of Topeka, which revolved around the issue of separate schools for white and black students. There, the Supreme Court unanimously ruled that the policy of using separate educational facilities for white and black students constituted unequal treatment and violated the equal protection clause of the 14th Amendment.

The lowest level of scrutiny is rational basis, which states that the law must be rationally related to a legitimate government interest. The next level of scrutiny is intermediate scrutiny, which is typically for laws related to gender, disability, or illegitimacy. This level is invoked when a state or federal entity passes a statute that negatively affects protected classes, such as people over 40. The law must further an important government interest and must do so by means that are substantially related to that interest. The highest level of scrutiny, strict scrutiny, is the standard courts use to decide if a law is constitutional and is often used for laws that are alleged to discriminate on the basis of race, national origin, alienage, religion, or fundamental rights. The legislature must pass the law to further a compelling governmental interest and have narrowly tailored the law to achieve that interest. Also, there must not be a less restrictive alternative.

For example, suppose the City of A passes a law requiring "all black employees to receive one-third of the compensation that a white employee receives for performing the same job." Because this law classifies on the basis of race, it will be subject to strict scrutiny, the highest level of scrutiny. On the other hand, if the City of A passed a law requiring "all female employees to receive one-third of the compensation that male employees receive for performing the same job," the treatment/classification based on gender could be subject to the intermediate scrutiny test, given that gender is sometimes considered a "quasi-suspect" classification. Rational basis is the lowest, or most lenient, level of scrutiny. For example, suppose a state passes a law that prohibits the practice of acupuncture without a license. If Mr. X wants to practice acupuncture without a license and challenges this law, he will likely lose under the rational basis test.

Levels of Scrutiny Under the Equal Protection Clause

There are three levels of scrutiny under the equal protection clause of the 14th Amendment: strict scrutiny, immediate scrutiny, and rational basis. Rational basis is the most lenient; strict scrutiny is the most rigorous.