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There are two currently successful challanges to bans on marriage equality working their way through federal courts. One is the case from MA which overturned the portion of DOMA which treats gay married couples differently on the federal level than straight married couples. It was won basicly on 10th amendendment grounds (state's rights) by causing states to violate their own equal protection clauses by discriminating against gays. He did also state that irrational prejustice can never be a legitimate government interest. It used the rational basis test to determine that DOMA unconstitutionally discriminated against gays.
Walker did state that prop 8 wouldn't have met rational bais but he decided that laws which discriminate against gays need to have strict scrutiny applied to them. This is a much different standard. Rational basis means that if a law can be at all related to a governmental interest, no matter who tenuously, then it is constitutional. It is rare for governments to lose under this test. In point of fact, we have won only one case at the SCOTUS level under this test (the Issue 2 case out of Colorado) where Kennedy redefined the test to exclude simple religous distaste for gays as being rational. To take an example, governments may, and do, discriminate against cigarette smokers. In my state, they now are forced onto the lowest benefit plan if they are state employees. That is because the action is related to saving money on insurance. They could never to this to say women, or hispanics even if they were shown to cost the state more money to insure. That is because actions discriminating on the basis of race and gender are given a different level of scrutiny than those discriminating on the basis of tobacco use or being overweight.
Strict scrutiny is a much tougher standard. Under strict scrutiny, government must have a compelling interest and the action must be the only way the government can accomplish that interest. In other words, rational basis says the government must have some reason and that the action must be related to that reason. Strict scrutiny says the government must have a really good reason and that the action must be absolutely necessary to accomplish that goal. This is a very difficult standard to meet. To return to the tobacco using workers. The state could pay for smoking cessation classes. The state could tax cigarette companies to pay for the health care of state employees who smoke. They could get rid of all health insurance for their employees. Under strict scrutiny the fact that those alternatives exist would be enough to make the action unconstitutional.
It is hard to see a state government refusing to hire gays surviving strict scrutiny on either side of the test. On the otherhand, it likely would survive a rational basis test. A state could simply say they refuse to hire gay employees because the citizens of their state don't wish to have gay employees and that might well be enough. Add in an insurance differential or some other possible higher cost and bye bye gay employee. Walkers opinion, if it stands, could well end the gay rights battle with complete or near complete victory for gays. It is that big a deal.
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