Compliance News | July 6, 2020

Supreme Court Rules Civil Rights Act Protects LGBTQ Workers

The U.S. Supreme Court recently ruled that federal protections against workplace sex discrimination under Title VII of the Civil Rights Act of 1964 extend to discrimination based on gender identity and sexual orientation. (The 6-3 decision in Bostock v. Clayton Cty, GA was handed down on June 15, 2020.) 

Title VII prohibits discrimination on the basis of race, color, religion, sex or national origin in hiring, firing, compensation, benefits and other terms and conditions of employment. The law generally applies to public and private employers with 15 or more employees.

In light of the Bostock decision, plan sponsors should review their plan documents and administration to determine whether there are terms and provisions that may discriminate based on sexual orientation or gender identity.

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The decision in brief

The decision was the result of a consolidation of cases from three workers who filed suit under Title VII on the grounds they were indisputably fired either because of their sexual orientation or because they were transgender.

Title VII mandates that an individual employee's sex is not relevant to the selection, evaluation or compensation of employees. The U.S. Supreme Court stated that Title VII also mandates that an individual's homosexuality or transgender status is not relevant to employment decisions. 

The Court held that it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.

Implications of the decision

When reviewing plan documents and administration to determine whether there are terms and provisions that may discriminate based on sexual orientation or gender identity, plan sponsors should consider conducting a compliance review to ensure that they are operating in a nondiscriminatory manner and are training benefits professionals and managers on sexual-orientation and gender-identity nondiscrimination principles.

Potential areas of concern include:

  • Coverage limitations or exclusions for gender dysphoria treatment, including hormone therapy and surgery
  • Benefit restrictions for same-sex spouses
  • Benefit eligibility based on gender assignment — either in plan documents or plan administrative operations
  • Reviewing voluntary benefits and disability benefits to assure that coverage is not limited based on gender identity
  • Working with legal counsel to ensure that employment policies and procedures do not discriminate on the basis of sexual orientation or gender identity

Plan sponsors should also review their health plans in light of the Mental Health Parity and Addiction Equity Act (MHPAEA) to make sure that any limitations on treatment for gender dysphoria are provided for and administered in parity with limitations on medical and surgical treatment in the same classification.

Related news

During the same week the U.S. Supreme Court ruled in the Bostock case, the Trump Administration published a final rule under Section 1557 of the Affordable Care Act which took the opposite position. It found that Section 1557’s prohibition against discrimination based on sex did not prohibit discrimination based on gender identity. We summarize that news in a separate July 6, 2020 web post.

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This page is for informational purposes only and does not constitute legal, tax or investment advice. You are encouraged to discuss the issues raised here with your legal, tax and other advisors before determining how the issues apply to your specific situations.

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