By Carrie Cherveny, Esq. and Cory Jorbin, Esq.
Recently both the Supreme Court and the Department of Health and Human Services issued landmark rulings/changes that will impact an employer’s employee relations and health insurance programs.
As a threshold reminder, Title VII of the Civil Rights Act of 1964 (Title VII) prohibits discrimination by employers with 15 or more workers on the basis of race, color, religion, gender, pregnancy, or national origin and, since 2018, gender presentation.
On June 15, 2020 the Supreme Court issued its ruling on a case that addressed whether “sex” under Title VII includes sexual orientation and gender transition. The Court’s 6-to-3 decision responded to three consolidated cases involving individuals who lost their jobs – two after sharing their sexual orientation with their employer and one after informing her employer about her transgender status. The Court found “sex” under Title VII includes on sexual orientation and transgender status. Prior to the Court’s decision, the federal courts across the U.S. were divided with respect to the scope of Title VII as it applied sexual orientation and transgender status.
- Section 1557 of the ACA previously required health plans to provide significant notices in at least 15 languages related to non-discrimination by the plan. It also prevented health plans of covered entities from discriminating on the basis of gender identity or sexual stereotyping. Covered entities were those who receive financial assistance from HHS, including medical and home health providers, school districts and plans issued by fully insured carriers.
The new final rule, issued June 12, 2020, removes protections against discrimination based on sexual stereotyping and gender identity. Most definitions are removed in the final rule, but “covered entity” and “on the basis of sex” are defined. The notice requirement, including the requirement that the notices be posted in at least 15 languages, also are removed.
Employers are now faced with two seemingly contradicting rules. According to 1557, employers do not have to provide medical coverage for transgender services. However, Title VII protects employees on the basis of both sexual orientation and transgender status. How can an employer reconcile this seeming contradiction?
What employers shouldn’t do is apply the “answer” they like best. Regardless of Section 1557, Title VII speaks to the broad employee-employer relationship. The discrimination it prohibits ostensibly extends to both the eligibility for health insurance and the actual insurance coverages and plan design. Employers must be sure that they do not intentionally and unintentionally discriminate against their employees. This means employers must be sure that an otherwise objective or “facially neutral” program does not unintentionally discriminate against a particular class or classes of employees.
Employers may consider following next steps:
- Employers should review their employee handbooks most especially with respect to any policies that include protected classes, discrimination, harassment, and equal opportunity employment, to name just a few. Additionally, employers should consider updating and delivering training to the organization that includes information and explanations regarding the scope of Title VII with respect to sex discrimination, harassment, and retaliation.
- Health plans should review plan terms and address exclusions that might cross a line for discriminatory practices under current federal law. The goal should be parity among treatment for all classes of employees. As an example, of where plans can run into legal challenges, a lawsuit was recently filed against the State of Florida over its ban on transgender-related healthcare for state workers. The plan contained exclusions for “gender reassignment or modification services or supplies.” Thus, prescriptions for hormone replacement therapy or treatment for dysmorphia or other mental health issues would be covered for cisgender employees, but not for those transitioning.
- Work with legal counsel to identify risks involving Title VII exclusions that use Rule 1557 as justification. Exclusions may come with blowback from the public, amplified by the news and social media and also result in lawsuits, too.
HUB International’s Compliance Officers are prepared to help you navigate the regulatory environment that can impact your human resources and benefits management.