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The U.S. Supreme Court’s somewhat surprising ruling barring workplace discrimination based on sexual orientation or gender identity finally gives the country a uniform federal law, but employers should brace themselves for additional claims in areas of remaining ambiguity, including medical coverage and the ruling’s applicability to religious institutions, experts say.
In its 6-3 ruling last week, the Supreme Court held in Bostock v. Clayton County Georgia that under Title VII of the Civil Rights Act of 1964 an employer cannot fire someone “simply for being homosexual or transgender.”
“Those who adopted the Civil Rights Act might not have anticipated their work would lead to this particular result,” said the ruling by Associate Justice Neil Gorsuch. “But the limits of the drafters’ imagination supply no reason to ignore the law’s demands.”
Some observers had not expected the court to rule in the plaintiffs’ favor. Others had expected a favorable ruling but were surprised that two conservative judges, Justice Gorsuch and Chief Justice John Roberts, ruled in the plaintiffs’ favor.
“It’s a huge win for the LGBTQ community, especially for employees who were working in jurisdictions that had no state or local law that protects LGBTQ status in the workplace,” said Vincent M. Rizzo, an associate with Hinshaw & Culbertson LLP in Chicago, who focuses on labor and employment, constitutional violations and government.
“The Supreme Court is sending a message that employers need to recognize LGBTQ rights,” he said.
“The ruling is the beginning of a seismic shift” in the LGBT legal framework, said Moiré Morón, Atlanta-based assistant vice president and claims leader with QBE North America.
The ruling covered three cases:
Mr. Zarda and Ms. Stephens died before the high court reached its ruling.
Experts say that because of policies already voluntarily introduced by large employers, in particular, as well as federal and state court rulings and local ordinances, safeguards that protect most LGBTQ Americans are already in place.
“Major employers in the country, either on their own to attract talent or because of state or local laws, already are in compliance with this,” said Jay A. Zweig, a partner with Bryan Cave Leighton Paisner LLP in Phoenix, who represents employers.
Observers say that rather than breaking entirely new ground, in some respects the ruling is an expansion of previously issued Supreme Court rulings, including its 1998 decision in Oncale v. Sundowner Offshore Services Inc. et al., in which it held that sexual harassment discrimination charges can be made when the plaintiff and defendant are of the same sex.
Last week’s ruling establishes welcome uniformity in federal law, observers say. Many states and localities have anti-discrimination provisions, but “there was a question at least on the federal level that has now been resolved,” said attorney David L. Barron, a member of Cozen O’Connor P.C. in Houston.
“It’s not going to affect your everyday employee decisions,” but “adverse employment tactics that affect work conditions or work pay,” such as hiring decisions, terminations, promotions and job placements, Mr. Rizzo said.
“Now that we have this ruling, perhaps individuals who identify as LGBTQ will feel more empowered to file complaints and bring suits they were hesitant to do before” for harassment, retaliation and disability discrimination as it relates to transgender individuals, according to Ms. Morón, who said she is a member of the LGBTQ community. “We can see potentially a huge impact on some of the claims that employers face or will be facing.”
More claims can be expected, observers say.
“You’re going to see more claims based on either perceived, disparate treatment of LGBTQ, or implicit bias types of claims, where a person says, ‘Well, you didn’t put me in this position, or I didn’t get this promotion, or this adverse employment even happened because of my sexual orientation,” Mr. Zweig said.
“You’re going to see a lot of litigation of that under Title VII,” and there will be fact-intensive inquiries about the shifting burdens of proof under Title VII, he said.
“There will be some impact in those geographic areas of the country that were covered by circuits that previously interpreted the statute to not cover gender identity or sexual discrimination,” said Michael W. Johnston, a partner with King & Spalding LLP in Atlanta, who focuses on employment litigation and employment-related internal investigations.
“We’ll see filings for sexual orientation and gender identity claims with the EEOC, certainly, now that there is clearly protection,” although only about 2% of employment-related claims involve such characteristics, said D. Ryan Derry, a partner in Paul Hastings LLP’s employment law department in San Francisco.
“The ruling’s pertinence to religious organizations is “going to be a huge area of debate,” Mr. Barron said.
In its 2012 ruling in Hosanna-Tabor Evangelical Lutheran Church and School vs. Equal Employment Opportunity Commission et al., the Supreme Court held a religious school can claim a “ministerial exception” to a discrimination charge under the Americans with Disabilities Act for a teacher who also taught secular subjects, but the exception bars only employment discrimination lawsuits.
Experts point also to the U.S. Supreme Court’s 2014 ruling in Burwell vs. Hobby Lobby Stores Inc., in which it ruled that requiring closely held corporations to pay for insurance coverage for contraception under the Affordable Care Act violated the Religious Freedom Restoration Act.
“We likely will see some defendants trying to rely more on the Religious Freedom Restoration Act,” said J. Randall Coffey, a partner with Fisher & Phillips LLP in Kansas City, Missouri, who represents management in employment and labor matters. “I think there’s a fair amount of respect for people’s sincerely held religious beliefs.”
However, David Ritter, a partner with Barnes & Thornburg LLP in Chicago, who represents management in labor and employment issues, said he does not anticipate a flood of claims in this area. “Religious institutions have been litigating issues regarding Title VII since its inception,” he said.
Experts suggest employers check the language of their employment policies to be sure they conform with the ruling. Employers “should be looking at this decision and taking note of how broad it is, and then making sure that they update their policies and train all employees consistently with this, and then follow good practices and make sure when they do something adverse with an employee (they) still document a good business reason for their actions,” Mr. Zweig said.
Employers should also examine their bathroom policies, which could be affected by the ruling, Mr. Rizzo said.
The ruling did not specifically address employee benefit plans, but employers should look at their plans’ eligibility for same-sex spouses to see whether coverage is excluded, said Michael Garrett, a principal with Mercer Inc.’s total health management specialty practice in Seattle.
Mr. Garrett also suggested employers see if their benefit plans provide coverage for gender dysphoria and gender affirmation or treatment. There are also issues related to mental health parity, he said.
Another issue is whether medical plans provide family planning coverage for fertility, adoption and surrogacy for same-sex couples, Mr. Garrett said. Employers should check as well to see if there is disability coverage for gender affirmation surgeries.
Employee training is also important, experts say. “Think about how to put in place training to create a workplace that is inclusive, and make sure that all employees feel included within the workplace,” Mr. Derry said.
Observers say they do not expect the ruling to materially impact employment practices liability insurance rates. The ruling is consistent with the position the EEOC has been taking and is already viewed by employers, to an extent, as the “cost of doing business,” said Samuel Fenwick-Schwartz, a partner with Seyfarth Shaw LLP in Chicago, who defends complex class actions.
Higher EPLI rates are possible, but not in places such as New York State and New York City where these individuals were already protected, said Regina E. Faul, New York-based partner who chairs Philip Nizer LLP’s employment & labor practice.