HR, Employment, & Benefits
BENEFITS AFTER BOSTOCK
WHAT THE SUPREME COURT DECISION MEANS FOR YOUR BENEFIT PLANS
2021 is beginning to settle down as we hopefully begin to move out of the pandemic and put the drama surrounding the 2020 election in our rear-view mirror. Now is a good time to return to one of the seminal court cases of 2020, Bostock v. Clayton County, Georgia, and consider its implications for employee benefits going forward.
THE BOSTOCK DECISION
When it issued its decision in the Bostock case last June, the Supreme Court decided three separate cases in a single opinion. The cases, collectively, concerned discrimination on the basis of gender and sexual orientation that were brought under Title VII of the Civil Rights Act of 1964 (Title VII). Title VII generally prohibits employers from discriminating against employees based on race, color, religion, sex, and national origin. In two of the cases, the plaintiffs alleged they were fired for being gay. In the third case, the plaintiff alleged she was fired for being transgender.
Justice Neil Gorsuch drafted the majority opinion for the court. The court found that the case was a simple one: In any case where “changing the employee’s sex would have yielded a different choice by the employer,” the employer had committed discrimination prohibited under Title VII. As a result, the court found that discrimination based on sexual orientation or gender identity would have to also constitute discrimination based on sex. The court further found that this would be true even if the employee’s sex was only one of multiple factors the employer considered. In so finding, the court rejected a number of counter-arguments, including that Title VII failed to specifically address this issue in its text, that the public would have understood Title VII differently when it was passed, and that the court was giving an outsize reading to Title VII.
The court noted that sexual harassment is also not addressed in Title VII’s text, and conceptually different from sex, but has been found to be covered within Title VII’s scope. Also, Congress’ failure to adopt amendments adding protection for sexual orientation and transgender status to Title VII was found to be irrelevant for purposes of interpreting the statutory language. While some have argued that an employer who fires both gay men and lesbians due to their sexual orientation is not violating Title VII (because it is treating both men and women equally), the court found that would in fact be a violation in both instances.
Bostock necessitates consideration by sponsors of health plans, as its impacts could be wide-ranging.
One obvious consequence of Bostock is that it may serve as an impetus for plans to continue their movement toward providing equal benefits to individuals in same-sex relationships. There has been an ongoing trend towards offering equal benefits to same-sex and opposite-sex couples (both married couples and domestic partnerships). The Kaiser Family foundation noted that in 2016, only a little more than 40 percent of health plans offered equal benefits to same-sex couples. That percentage had risen to nearly three quarters of plans in 2020. We expect that trend to be accelerated by the Bostock decision. This expectation is bolstered by the fact that many states already have non-discrimination laws in place requiring equal treatment of same- and opposite-sex couples.
Because of this trend, and its anticipated acceleration after the Bostock decision, sponsors of health plans should review their offerings, consider whether there are areas in which benefits offered to same-sex and opposite-sex couples differ, and decide whether there would be value in adjusting those offerings accordingly.
MEDICAL PLAN DESIGN & OPERATIONS
Bostock will also likely have an impact on benefits for treatment of gender dysphoria and gender transition surgeries. Prior to Bostock, there had been a series of successful suits brought by plaintiffs challenging blanket exclusions of gender-transition treatments for gender dysphoria. These suits were based on allegations of disparate coverage for the same or similar treatment based on the “cause” of the treatment (for example, plans would cover breast reconstruction where a mastectomy was required due to cancer, but not as part of treatment for gender dysphoria). We expect that Bostock will give plaintiffs in these actions additional support, as they will likely now advance claims under Title VII. Further, plan exclusions or limits on treatment could run afoul of the Mental Health Parity and Addiction Equity Act if they result in the plan offering different treatment compared to medical/surgical benefits.
In the wake of Bostock, we recommend that plans conduct an analysis of the benefits offered for gender dysphoria. Given the successful track record of plaintiffs challenging across-the-board exclusions of treatment for gender dysphoria prior to Bostock, and Bostock’s obvious strengthening of plaintiffs’ position, we recommend that plans review all exclusions for compliance risk. Particular attention should be paid to specific treatment exclusions.
Similarly, because of its affirmation of Title VII’s reach to transgender individuals, Bostock could also impact disability plans (both short-term and long-term). This is because whether or not an overlying health plan covers gender-transition surgeries, the disability plan will have to wrestle with whether their disability periods cover periods due to these surgeries. Consequently, we suggest that disability plans review their coverage of treatment for gender-transition surgeries.
Given Bostock’s reach, general elements of employer policies and procedures should also be reconsidered. Non-discrimination policies should now be reviewed for possible updates to include language stating that discrimination both on sexual orientation and gender identity is prohibited, included with regard to benefit offerings.
Bostock is a very significant decision that will have a long-lasting impact on PEOs and other employers. Under the Biden administration, the Equal Employment Opportunity Commission (EEOC) may focus more on enforcement activities relating to discrimination based on sexual orientation or transgender status, and you should also keep state anti-discrimination statutes and regulations in mind as well (particularly as those relate to your insured health arrangements). The full consequences of this landmark decision will play out in the years to come.
This article is designed to give general and timely information about the subjects covered. It is not intended as legal advice or assistance with individual problems. Readers should consult competent counsel of their own choosing about how the matters relate to their own affairs.
MALCOLM SLEE, ESQ.
Groom Law Group
MATTHEW LANAHAN, ESQ.
Groom Law Group