Keenan Blog

Supreme Court’s Bostock Decision: Impact on California Employers and Benefit Plans

June 24, 2020

Earlier this month, the United States Supreme Court ruled that an employer cannot fire an individual merely for being gay or transgender. The Court’s majority found in the case of Bostock v. Clayton County, Georgia that under Title VII of the Civil Rights Act of 1964, sexual orientation and gender identity in part falls under the prohibition of discrimination on the basis of a person’s sex.

The Decision

Title VII makes it unlawful for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual because of such individual’s 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 in the last 56 years led to the conclusion that discrimination against a person because they are gay or transgender is discrimination at least in part because of that person’s sex.

Impact

The practical impact of this decision upon employers will vary by state. According to data from the Human Rights Campaign, twenty-two states and the District of Columbia prohibit employment discrimination based on sexual orientation and gender identity, one state prohibits employment discrimination based on sexual orientation only, six states prohibit employment discrimination against public employees based on sexual orientation and gender identity, and four states prohibit employment discrimination against public employees based on sexual orientation only.

In California, employment discrimination against an employee based on genetic information, marital status, sex, gender, gender identity, gender expression or sexual orientation is unlawful under the California Fair Employment and Housing Act (Government Code §§ 12940).

Bostock has broad implications for employee benefits plans. Section 703(a) of Title VII prohibits an employer to “discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race, color, religion, sex, or national origin.” Title VII considers health insurance and other fringe benefits “compensation, terms, conditions, or privileges of employment.” This decision makes it more likely that a plaintiff could sustain a Title VII claim against an employer for a health plan’s excluding coverage for same-sex spouses, or denying benefits for gender dysphoria or gender affirmation surgery.

The Bostock decision could also figure into efforts to invalidate the Trump Administration’s recently announced Final Rule enforcing Section 1557 of the Affordable Care Act (ACA), which bars discrimination on the basis of sex, race, age, disability, color and national origin in health programs and activities receiving federal funds. While the original regulations barred discrimination based on gender identity, gender expression and transgender status in health care, the Final Rule as published on June 19, 2020 removed those protections for transgender individuals.

The Supreme Court’s decision at this point only applies to employment practices under Title VII. The ultimate impact of Bostock beyond interpretation of Title VII remains to be seen. In the decision, Justice Gorsuch wrote:

“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…. 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.”

For more information, please contact your Keenan representative.


About Amy Donovan
Amy is Keenan's Vice President of Legislative and Regulatory Affairs, authoring the firm's Briefings and position papers on legislation, regulation and litigation that have an impact on the firm and its clients.