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Supreme Court Ruling on LGBTQ Bias Issue Impacts Health and Welfare Benefit Plans
07/08/2020

On June 15, 2020, the Supreme Court of the United States (SCOTUS) held in Bostock v. Clayton County, Georgia that Title VII of the Civil Rights Act of 1964 bars an employer from firing an individual merely for being gay or transgender. In its ruling, the Court noted that it is “impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”

Title VII makes it unlawful for an employer refuse to hire, discharge any individual, or otherwise discriminate against any individual, due to their race, color, religion, sex, or national origin.  (42 U.S.C. §2000e-2(a)(1)). In Bostock, the Court held that a straightforward reading of Title VII’s terms, along with the history of its application over the course of the last 56 years, led to the conclusion that discrimination against a person because they are gay or transgender is simultaneously discrimination at least in part because of that person’s sex. Effectively, “if changing the employee’s sex would have yielded a different choice by the employer” then a statutory violation of Title VII has indeed occurred, according to Bostock.

The Bostock decision will surely be cited in efforts to invalidate the Trump Administration’s recently announced Final Rule enforcing a drastic revision of Section 1557 of the Affordable Care Act (ACA). The Trump Administration, just mere days before the SCOTUS issued its Bostock ruling, sought to roll back Obama era regulations that protect transgender individuals from discrimination in health care treatment and insurance coverage by barring discrimination based on gender identity, gender expression, and transgender status. The Final Rule, as formally published on June 19, 2020 (with accompanying Fact Sheet), removed those legal protections for transgender individuals. These separate developments, which appear contradictory on their face, certainly signal mixed messages as it pertains to health and welfare benefit plans seeking to remain in compliance with non-discrimination standards, as Bostock has broad implications for employee benefits plans.

Although the Court’s decision in Bostock dealt a heavy blow to the Trump Administration’s Final Rule, it did not issue a knockout punch to the regulations. Legal challenges have already begun and will surely continue. While the immediate impact of the decision on employment practices will differ by state, as state courts begin to expand their existing non-discrimination laws, the full after effect of the decision may not become fully clear until months or years down the line. Employers should be aware of the Title VII implications broadly and continue to administer their group sponsored plans in accordance with those guidelines but should also remain vigilant regarding state-specific laws surrounding the LGBTQ community.

The Bostock decision makes it more likely that a plaintiff could sustain a Title VII claim against an employer for a health plan’s exclusion of coverage for same-sex spouses or even denial of benefits for gender dysphoria or gender affirmation surgery. As such, employers should review and update their Plan Documents and Employee Handbooks as necessary, along with their anti-harassment and other workplace policies, ensure that LGBTQ employees have adequate access to health and mental health care services, review group health plan coverage offerings for same-sex spouses, services related to gender dysphoria/gender affirmation surgeries, etc.  Employers are also able to incorporate more expansive internal policies than what federal and state laws currently call for, should they so choose.

The ultimate impact of Bostock beyond interpretation of Title VII remains to be seen of course. In the Bostock decision, Justice Gorsuch, in a rare appearance voting with the liberal wing of the Court, wrote on behalf of the majority:

“The employers worry that our decision will sweep beyond Title VII to other federal or state laws that prohibit sex discrimination. And, under Title VII itself, they say sex-segregated bathrooms, locker rooms, and dress codes will prove unsustainable after our decision today. But none of these other laws are before us; we have not had the benefit of adversarial testing about the meaning of their terms, and we do not prejudge any such questions today…The only question before us is whether an employer who fires someone simply for being homosexual or transgender has discharged or otherwise discriminated against that individual ‘because of such individual’s sex’… Whether other policies and practices might or might not qualify as unlawful discrimination or find justifications under other provisions of Title VII are questions for future cases, not these.”

Stay tuned.