Court Allows Claims Against Religious Employer for Denial of Same-Sex Spousal Health Benefits

An employee sued his employer under Title VII and other federal and state laws after the employer dropped health plan coverage for the employee’s same-sex spouse. The employer—an organization affiliated with the Catholic Church—had assured the employee during the recruitment process that “all dependents” were covered under the plan, and the spouse was initially covered without comment. A few months into the employment relationship, however, the employer informed the employee that it had mistakenly provided spousal coverage and that—due to the church’s definition of marriage—it could not offer benefits to unmarried domestic partners or same-sex spouses. After nearly a year of discussions with the employer, the employee was advised that his employment would likely be terminated if he pursued legal action, and the spouse’s health coverage was terminated.

In a preliminary ruling, the court allowed the employee’s federal law claims to proceed, with both sides conceding that the U.S. Supreme Court’s Bostock decision established that discrimination against gay employees is prohibited discrimination on the basis of sex (see our Checkpoint article). The court also allowed claims under state employment discrimination laws, rejecting the employer’s argument that it was protected from litigation by state-law exemptions for religious employers. The court noted that the federal claims implicated a question that was left open by Bostock as to whether the federal Religious Freedom Restoration Act protected the employer’s decision to revoke the spouse’s benefits on the basis of sex, but it declined to decide that question this early in the proceedings.

EBIA Comment: The full implications of the Bostock decision continue to be tested in the courts. Religious exemptions have been an ongoing source of litigation under the Affordable Care Act’s contraceptive coverage mandate, and it seems likely that similar actions will test the limits of Title VII. In the meantime, employers should exercise extreme caution when considering eligibility and benefit provisions that could be construed to discriminate on the basis of sex. For more information, see EBIA’s Group Health Plan Mandates manual at Sections XXI.C (“EEOC’s Position on Title VII and Health Coverage”) and XXI.D (“Court Decisions Applying Title VII to Health Coverage”); EBIA’s Employee Benefits for Domestic Partners at Section IV.G (“Impact of Title VII on Plan Design”); and EBIA’s Self-Insured Health Plans manual at Section XIV.E (“Beneficiary Eligibility”). See also EBIA’s Health Care Reform manual at Section XII.C.7 (“Contraceptive Coverage: Exemptions and Accommodations Based on Religious Beliefs and Moral Convictions”).

Contributing Editors: EBIA Staff.