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August 20, 2020

LGBTQ Issues for Employee Benefit Plans in Light of Bostock

Earlier this year, the U.S. Supreme Court ruled in Bostock v. Clayton County that Title VII of the Civil Rights Act of 1964 prohibits discrimination on the basis of sexual orientation or transgender status. Three separate cases were consolidated for consideration in Bostock involving employees who were fired from their jobs, but the decision also raises questions for employee benefit plans.
 
Title VII prohibits discrimination when providing fringe benefits, which regulations define broadly to include: medical, hospital, accident, life insurance and retirement plans; profit-sharing and bonus plans; leave; and other terms, conditions and privileges of employment. While the Bostock decision did not deal with employee benefits, a federal court in Arizona in late 2019 ruled that an employee could sue the University of Arizona under Title VII for not covering gender affirmation surgery. Bostock seems to validate the court’s decision in that case, and we anticipate that employees will rely on Bostock to argue that provisions in some employee benefit plans result in sex-based discrimination under Title VII. 

The following are examples of benefit program provisions that warrant review: 
 
  • Eligibility rules that provide benefits to opposite-sex spouses, but not same-sex spouses.
  • Eligibility rules that provide coverage to same-sex domestic partners, but not opposite-sex domestic partners.
  • Medical plan provisions that exclude gender dysphoria treatments, including gender affirmation surgery, even though the plan may cover many of the same treatments and procedures for other purposes.
  • Enrollment forms that require enrollees to identify their sex, and the role that such an identifier plays in the plan’s administration (for example, denying sex-based benefits that do not align with the gender in the record).
  • Benefit plans that do not cover family planning benefits for LGBTQ employees if such benefits are covered for opposite-sex employees.
  • Short-term or long-term disability plans that do not provide benefits in connection with leaves for gender dysphoria treatment or gender affirmation surgeries. 

The Bostock decision leaves a number of questions unanswered. For example, if one of the employers had asserted a sincerely-held religious conviction as the basis for the firing, would that have made a difference? Justice Gorsuch’s majority opinion certainly raises that possibility; but because none of the employers in Bostock argued a religious conviction before the Supreme Court, the Court did not reach that question. 

Courts have already begun applying the Bostock decision. In Adams v. School Board of St. Johns County, Florida, the 11th Circuit applied Bostock in finding that Title IX’s prohibition on sex discrimination in education programs receiving federal financial assistance prevented the school from enforcing a rule that required a transgender student to use the bathroom associated with the sex identified in the student’s original enrollment records. In Walker v. Azar, the Eastern District of New York relied upon Bostock when it issued a preliminary injunction invalidating new regulations under the Affordable Care Act that removed civil rights protections based on gender identity, gender expression and transgender status. 

Now is a good time to review your employee benefit programs to identify and possibly change provisions that may pose risks in light of the Bostock decision. Warner can help! If you need assistance, please contact Norbert Kugele, Stephanie Grant or any other member of Warner’s Employee Benefits/Executive Compensation Practice Group.

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