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Two Recent Supreme Court Decisions Every Employer Should Know

In just under three weeks, the U.S. Supreme Court made two decisions with significant implications for employers. Both of these decisions will affect the hiring, termination, and benefits provided by public and private entities. The Court’s opinions are rooted in the Civil Rights Act of 1964 and the Affordable Care Act of 2010.

When Congress passed Title VII of the Civil Rights Act of 1964, it made it unlawful for employers to discriminate against any individual because of their race, religion, sex, or national origin. With the Supreme Court’s June ruling in Bostock v. Clayton County, Title VII now includes protections for gay, lesbian, and transgender employees. The Court analyzed three cases in crafting its opinion. In two instances, an employee was fired explicitly and solely because of their sexual orientation. In the third case, an employee of six years informed her employer of her intent to present as a female instead of a male, and the employer fired her shortly thereafter.

Although sexual orientation and gender identity are not specifically enumerated in the statute, the Court reasoned that “discrimination on the basis of homosexuality or transgender status requires an employer to intentionally treat individual employees differently because of their sex.” In other words, inherent in a decision based on an employee’s sexual orientation or gender identity is an evaluation of the employee’s sex.

With this ruling, a violation occurs under the Civil Rights Act if an employer “intentionally relies in part on an individual employee’s sex,” including gay and transgender employees, when deciding to discharge the employee. But the ruling is not absolute. Title VII only applies to employers with fifteen or more employees (establishing the fifteen-person threshold was the subject of an entirely different Supreme Court decision). Prior to the Court’s ruling in Bostock, Illinois was one of only 21 states in the country to prohibit workplace discrimination on the basis of sexual orientation and gender identity; however, Missouri had no such law. Now, this type of discrimination can be alleged as a violation of Federal Civil Rights, as opposed to relying on the individual states’ legislation.

It is unclear whether this opinion will apply to acts of discrimination that occurred before the Court’s opinion that also fall within the Statute of Limitations for claims under Title VII. However, appellate courts nationwide may begin remanding decisions made by trial courts that are not in concert with the Court’s decision. Either way, litigation and claims over this issue are far from settled.

In Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, et al., the Supreme Court addressed the issue known as the “contraceptive mandate” relating to the Patient Protection and Affordable Care Act of 2010 (ACA). The “contraceptive mandate” obligated certain employers to provide contraceptive coverage to their employees through their group health plans.

Shortly after Congress passed the mandate almost nine years ago, the Department of Health and Human Services, Labor, and Treasury (the “Departments”), utilizing their statutory authority, exempted certain employers who have religious and conscientious objections from this requirement. First, the Departments exempted religious employers but focused almost exclusively on churches. Then, they added another exemption for non-profit organizations whose plans did not cover contraceptive services for religious reasons. Eventually, the Departments created a four-part test that required organizations to self-certify that they meet the requirements for an exemption from the mandate as a religious organization.

By submitting the self-certification, institutions would exempt contraceptive coverage from the group health plan, and insurers would provide payments to beneficiaries for contraceptive services separate from the health plan. This design intended to avoid having religious organizations contract, arrange, pay, or refer for contraceptive coverage. Religious non-profit organizations and educational institutions across the country filed lawsuits, alleging that the self-certification process was a violation of their religious freedoms under the Religious Freedom Restoration Act of 1993. The religious institutions claimed that, by self-certifying, they were still facilitating the provision of contraceptive care in violation of their religious beliefs. In January 2017, the Department of Labor admitted that it was unable to reconcile the employers’ objections while still providing coverage to employees for contraceptive care without using the employers’ plans.

In October 2017, the Trump administration significantly broadened the definition of a religious employer to include an employer that objects to the provision of contraceptive services based on its sincerely held religious beliefs. This change became known as the “moral exemption.” Notably, this exemption to the provision of contraceptive services included for-profit and publicly traded entities. The Court considered the original “contraceptive mandate,” exemptions, objections, attempts at resolution, and revised terminology over nearly a decade in reaching its holding in this case. Ultimately, the Supreme Court found that the Secretary of the Department of Health and Human Services was authorized to make an exception to the “contraceptive mandate” and also agreed that forcing businesses to provide contraception via the alternate means violated the Religious Freedom Restoration Act. The crucial take-away for employers is that this decision exempts employers with religious or moral objections from providing contraceptive coverage to their employees.

Both of these cases underscore the importance of understanding employer rights and responsibilities with respect to their employees. With an ever-changing landscape of rules and regulations, having experienced, respected, and results-oriented counsel protecting your interests is invaluable. At Behr, McCarter & Potter, P.C., our attorneys have a depth of knowledge and a wealth of experience to ensure the highest level of legal advice and practice at your disposal. Contact us today to learn more.

Author: Joe Neely

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