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July 8, 2020

Supreme Court Rules on Sex

In a 6-3 ruling, the Supreme Court determined that sex is inextricably connected with gender identity and sexual orientation.  Therefore, the Title VII definition of sex is defined broadly to include all matters relating to sex. 

This ruling is in response to a consolidation of three different cases (Bostock v. Clayton Cty., Ga., No. 17-1618; Altitude Express Inc. v. Zarda, No. 17-1623 and R.G. & G.R. Harris Funeral Homes v. EEOC, No. 18-107), In the Bostock matter, the employer allegedly fired an employee based on his sexual preference and for conduct “unbecoming” a county employee after he began participating in a gay recreational softball league.  In the second case, the employer fired the employee after he mentioned being gay.  The third case involved an employer terminating an employee who was presented as a male at the point of hiring but later informed the employer that she planned to “live and work full-time as a woman.” Each employee sued, alleging sex discrimination under Title VII of the Civil Rights Act of 1964.

As a reminder, Title VII of the Civil Rights Act of 1964 prohibits discrimination in any terms, conditions or privileges of employment, including compensation and benefits. Title VII generally applies to employers who employ 15 or more employees.

As a result of this ruling, employers will want to review their employment policies and practices to ensure that they do not overtly or inadvertently discriminate on the basis of sex.  Included in this review are employee benefit plans, including health plans. Insured plans that are compliant with state insurance laws are generally deemed compliant.

A short few days before the Supreme Court opinion was rendered, the Centers for Medicare and Medicaid Services (CMS) issued final regulations modifying certain aspects of Section 1557 of the Affordable Care Act (ACA).  Section 1557 is the primary anti-discrimination provision of the ACA which prohibits certain types of discrimination in the delivery of health services based on race, color, national origin, sex, age, or disability. 

As background, Section 1557 implementation regulations issued on May 18, 2016 defined the meaning of “sex” broadly to include sexual orientation and gender identity.  In late 2016, this definition was challenged, resulting in a preliminary injunction by the U.S. District Court for the Northern District of Texas.  This injunction temporarily suspends the requirement for insurers, plans and health care providers to comply with the sexual orientation and gender identity component of the implementation regulations.

Then, on June 19, 2020, the CMS issued final regulations, which take effect on August 18, 2020, modifying certain aspects of Section 1557.  Among the modifications made by these regulations is the narrowing of the definition of sex to a biological definition; and as such, the nondiscriminatory protections afforded under Section 1557 do not extend to health services or coverage on the basis of sexual orientation or gender identity. 

In closing, it is important to remember that while the Section 1557 regulations do not directly impact employer-sponsored health plans, employers subject to Title VII and related nondiscrimination laws will want to ensure that their benefit plans are compliant with the Title VII and related laws.

 

The information contained in this Benefit Beat is not intended to be legal, accounting, or other professional advice, nor are these comments directed to specific situations. This information is provided as general guidance and may be affected by changes in law or regulation. This information is not intended to replace or substitute for accounting or other professional advice. You must consult your own attorney or tax advisor for assistance in specific situations. This information is provided as-is, with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.

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