In the case of Idaho Department of Employment v. Smith (1977), the U.S. Supreme Court ruled in favor of two Native American Church members who were fired from their jobs for using peyote, a hallucinogenic drug, as part of their religious ceremonies. The men applied for unemployment compensation but were denied by the Idaho Department of Employment on grounds that they had been dismissed due to misconduct related to work. The Supreme Court held that this denial violated their First Amendment rights to freely exercise religion and reversed the decision made by state courts which upheld the department's denial. The court reasoned that while states have power to regulate health, safety and morals, such regulations should not infrally upon an individual's constitutional right unless there is a compelling interest involved - something which was absent in this case according to them.

The dissenting opinion in the case of Idaho Department of Employment v. Smith argued that the majority's decision was an overreach and misinterpretation of the First Amendment's Free Exercise Clause. The dissenters believed that denying unemployment benefits to individuals who used peyote as part of their religious rituals, even if it is illegal under state law, constituted a violation of their constitutional rights to freely practice religion. They contended that this ruling could potentially open up a Pandora’s box where any conduct can be justified on religious grounds and then protected from government regulation or sanction, which they saw as problematic for maintaining order within society. Furthermore, they expressed concern about how such rulings might affect minority religions whose practices are not widely understood or accepted by mainstream society.