Businesses weigh options, reactions on controversial legislation

Arkansas lawmakers and Gov. Asa Hutchinson are on track – as were their counterparts in Indiana – to go against concerns of large employers and influential businesses like Wal-Mart Stores, Apple and Acxiom and approve legislation the businesses believe discriminatory. Only time will tell the extent of real corporate reaction when their concerns don’t sway legislative votes or fail to garner a veto.

A bill that supporters say will protect religious freedom and opponents say will allow for discrimination easily passed the Arkansas Senate on March 27. The 35-member body passed House Bill 1228 by a 24-7 margin. The House approved the bill Feb. 13 with a 72-20 vote. The measure prevents state and local governments from taking actions that would violate a person’s religious beliefs unless a “compelling” interest can be shown. In theory, a caterer could invoke the law to not do business with a gay couple if it was against the business owner’s religious practices.

Sen. Uvalde Lindsey, D-Fayetteville, was the only Senator from the Northwest Arkansas and Fort Smith areas who voted against HB 1228. The only Republican in the Senate to vote against the bill was Sen. Jeremy Hutchinson of Benton. He is the nephew of Gov. Asa Hutchinson.

On Monday (March 30) minor amendments placed on the legislation in the Senate were approved 11-5 by an Arkansas House committee. The bill now goes to the House for another vote to approve the legislation with the amendments.

Gov. Hutchinson supports the bill, stating that it is “important that we balance religious freedom privileges” but adding that workplaces have to be “free from discrimination.”

Officials with many businesses and organizations – including Apple, Salesforce, Yelp, the National Football League, and the NCAA – have condemned a similar bill recently signed into law in Indiana and the Arkansas law that may soon find its way to Hutchinson’s desk. The businesses and organizations say such laws open the door to discrimination against lesbians, gays, bisexuals and transgendered.

ARKANSAS CORPORATE INPUT
Wal-Mart Stores has asked legislators and the Governor to reject HB 1228. When asked by The City Wire how they might respond if the bill does become law, Wal-Mart provided this statement: “Every day, in our stores, we see firsthand the benefits diversity and inclusion have on our associates, customers and communities we serve.  It all starts with the core basic belief of respect for the individual. And that means understanding and respecting differences and being inclusive of all people. While HB1228 will not change how we treat our associates and operate our business, we feel this legislation is counter to this core basic belief and sends the wrong message about Arkansas, as well as the diverse environment which exists in the state.”

On Monday (March 30), Acxiom CEO Scott Howe and Chief Legal Officer Jerry Jones issued a request for Gov. Hutchinson to veto HB 1228. The Little Rock-based company employs about 2,000 in Arkansas.

“We are not alone in the belief that the bill is a deliberate vehicle for enabling discrimination against the LGBT community and should not become law, as it effectively re-establishes that shameful period before Civil Right, when some used religious beliefs as a thinly-veiled justification for discrimination against our fellow citizens,” they wrote.

“Simply stated, this bill inflicts pain on some of our citizens and disgrace upon us all,” they added.

Howe and Jones said the legislation is “not wise” from a business perspective as they have already seen a “backlash in the business community of our country and is certain to bring ridicule and derision, if it becomes law.” They concluded, “This bill is at direct odds with your position that ‘Arkansas is open for business.'”

WEIGHING THE ‘STICKY ISSUE’
Alan Ellstrand, corporate expert and professor at the University of Arkansas, says he was surprised at the strong response from corporations like Wal-Mart, Apple and others.

"There are pros and cons for companies speaking out against the bill, I suspect there are more pros than cons in this sticky issue and companies like Wal-Mart no doubt weighed their options," he said.

He said the bill has been promoted as a religious freedom bill and companies for the most part don't like to come out on religious stances, but they are more likely to speak out against gay and lesbian discrimination.

Ellstrand said this new form of corporate activism is consistent with other policies that Wal-Mart adopted in prior years with respect to its inclusion policy. Unlike corporate threats to halt or reduce business in Indiana, Ellstrand does not see Wal-Mart altering its investments in Arkansas if the legislation becomes law. The issue will likely be in recruiting top talent to the home office in Bentonville.

"There have been comments from Eli Lilly about how this issue could impact future recruiting in Indiana and we know with the wide net that Wal-Mart casts for talent recruitment to its home office, this is perhaps a concern from the retailer as well," Ellstrand said.

He said the downside for companies speaking out is the alienation of some conservative customers, but they could also gain support from liberal groups that might not otherwise support the retailer.

Ellstrand doubts Wal-Mart and other businesses will pull future financial contributions to supporters of this proposed legislation, saying this is just one issue of many watched by business leaders. He expects corporate eyes to closely monitor this issue in Indiana with respect to business impact, noting that perhaps there will be a compromise.