Thought Leadership in Action

On June 15th, 2020, the Supreme Court decided on the case of Bostock v. Clayton County, GA, ruling that Title VII employee protections from discrimination on the basis of sex extend to sexual orientation and transgender status. In light of this decision, discrimination against employees on the basis of sexual orientation or transgender status is federally prohibited, effective immediately. This decision has implications for compliance across the employee experience and lifecycle.

“Even though the Bostock case was based on hiring and firing, Title VII also protects compensation and benefits offered to employees,” points out Nancy Campbell, partner at Snell and Wilmer. Under the revised Title VII definition, your employee benefit offerings could be a source of potential discrimination and litigation. “Employers have to sit down now and make plan changes to avoid discrimination based on sexual orientation or transgender status,” Campbell continues.

Here’s how to modify your employee benefit plans to comply with the recent Title VII ruling.

Eliminate Discrimination from Existing Benefits

Discrimination can be inadvertent, which makes it harder to pin down. As a general rule, employers should comb through existing plans looking for instances of potential discrimination. Modifying your plan requires stepping back to see all the possible ways discrimination could be creeping in. Your fertility benefits, for example, might only be triggered by a diagnosis of infertility. “But with same-sex couples there isn’t an infertility diagnosis,” Garrett points out. Modifying the plan now can help you avoid a discrimination lawsuit down the road.

Review your benefits for domestic partners and ensure they are consistent for all employees. Offering domestic partner benefits only to same-sex couples could also result in a discrimination lawsuit from an employee in a heterosexual domestic partnership. Modify your benefit plans to ensure equal access to all your employees — regardless of sexual orientation or transgender status.

You should also review benefits such as short-term disability plans to find areas of potential discrimination. For example, if you offer disability plan coverage for employees undergoing cancer treatment, then you should also offer those same disability benefits for employees recovering from gender reassignment surgery.

Add Gender Affirmation Coverage

The Title VII ruling specifically protects the rights of transgender employees. This may require adding specific benefits for gender affirmation procedures and services. “There’s no list of benefits that you have to cover,” Campbell points out. “It’s up to employers to decide what is reasonable.” At a minimum, Campbell suggests, offer mental health counseling for dysphoria, hormone therapy and gender reassignment surgery.

Excluding gender affirmation services violates both the recent Bostock ruling and the existing mental health parity act, points out Michael Garrett, a principal at Mercer. “The basis for coverage of gender affirmation services starts with a diagnosis of gender dysphoria from a medical health professional,” he says.

Generally speaking, you don’t have to offer procedures such as larynx shaving, breast augmentation or facial hair removal unless they are deemed medically necessary. But costs aren’t likely to increase significantly when covering gender affirmation services, Garrett points out. “The incidence of transgender individuals in an employee population is going to be low,” he says, “and not every individual is going to go through procedures.”

Talk to your third party administrator (TPA) about what you already cover and what you should add in order to comply with the Bostock ruling. Be sure that your selected carrier is willing to offer coverage for gender affirmation services. If they won’t, Campbell says, then it’s time to look for a new carrier that offers comprehensive, inclusive coverage.

When deciding which benefits to add, consult outside legal counsel (when possible), LGBTQ+ employee resource groups and benchmarks from external associations, like the Human Rights Campaign or the World Professional Association for Transgender Health.

Communicate Changes in Benefit Plans

Be sure to communicate both existing benefits and any changes to your plan to your employee base. “Sponsors of an ERISA plan are under a fiduciary obligation to communicate benefits to employees,” Campbell says. “Now is a good time to communicate to employees what your plan has always covered and the coverage that you’re adding.”

Invite feedback from LGBTQ+ employee resource groups. “There’s an opportunity here for employers to demonstrate their commitment to diversity and inclusion through this process,” Garrett says. Consult employee resource groups about which benefits to offer, for example, or set up a focused open enrollment session for LGBTQ+ employees to ask questions before selecting coverage. Go the extra mile to include a list of in-network providers who are LGBTQ+ competent. Your actions now signal to employees that you’ve really considered their needs and experiences.