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The nation’s highest Court has announced it will step in and rule whether the Biden administration’s aggressive workplace vaccine strategy – including a mandate-or-test rule for larger employers and a strict mandate for certain healthcare organizations – should be temporarily blocked or are permitted to move forward as planned. In a pair of brief orders issued on Dec 22nd, the Supreme Court accepted review of the challenges to both OSHA’s ETS and CMS’s healthcare mandate and announced that oral argument will be held for both cases on January 7th. So what should you be doing in the meantime? Here is a review of what has happened, along with a five-step survival guides for employers subject to either the OSHA ETS or the CMS mandate.
Brief Overview and Recap
There are two rules at play here: a general ETS issued by OSHA that covers employers with over 100 workers and the CMS’s Healthcare Mandate which is specific to the healthcare industry. Whereas OSHA’s general ETS provides an option for employers to test employees for COVID-19 at least weekly in lieu of mandating the vaccine, the CMS mandate does not allow for a testing option and requires a vaccination policy.
General OSHA ETS
After workplace safety officials at the Occupational Safety and Health Administration (OSHA) unveiled the mandate-or-test ETS on November 4, many groups opposing the rule filed actions in several federal courts to block the rule. The conservative Fifth Circuit Court of Appeals was the first to act by issuing a temporary “stay” that preliminarily blocked the ETS. This was followed by a November 12 extension of that stay which ordered OSHA to take no steps to implement or enforce the ETS.
But the Judicial Panel of Multidistrict Litigation announced on November 16 that it would consolidate all of the legal challenges and send them to the conservative Sixth Circuit Court of Appeals to decide the outcome of the rule. Then, on December 17, a surprise decision from a three-judge panel of the Sixth Circuit once again jolted employers back into scramble mode, as the court dissolved the stay and cleared OSHA to enforce the ETS across the country.
CMS Healthcare Mandate
The history and procedural status of the healthcare vaccine mandate are a bit messier. In early November, the Centers for Medicare & Medicaid Services (CMS) published a vaccine mandate, requiring all employees of healthcare facilities participating in Medicare and Medicaid – more than 17 million workers – to be fully vaccinated by January 4. Then, a pair of federal court decisions issued in late November blocked the mandate. First, on November 29, a federal judge in Missouri temporarily blocked the agency from enforcing the mandate in 10 states. And then, on November 30, a Louisiana federal court took one giant step further and blocked the rule from taking effect in any healthcare facility across the country that was not already covered by the Missouri decision.
Serving up yet another curveball for healthcare employers, the Fifth Circuit Court of Appeals effectively reactivated the CMS vaccination mandate with a surprise decision on December 15 – but only for employers operating in nearly half of the country. And that’s where things stand now. You can review this most recent Insight for a list of states where the CMS mandate has been kept alive and a list of states where the CMS mandate is currently blocked.
What Happened Yesterday?
While the orders from SCOTUS were brief and to the point, three significant takeaways can be gleaned from the announcements:
What Should You Do? 5-Step Survival Guides
To demonstrate reasonable good faith efforts to comply between now and January 10, 2022, employers subject to the OSHA ETS should follow this five-step game plan:
If you are subject to the CMS healthcare mandate, the following five steps, described in further detail here, are critical parts of a successful plan:
We will continue to monitor this litigation and provide updates as warranted.
The U.S. Supreme Court recently ruled that employers can’t terminate workers based on their lesbian, gay, bisexual, transgender or queer (LGBTQ) status, and employers should understand that the ruling provides employment protections beyond being fired.
The court ruling is significant as the decision makes clear that “sex” discrimination under Title VII of the Civil Rights Act of 1964 includes sexual orientation and gender identity.
Title VII prohibits an employer from discriminating against workers based on protected characteristics with respect to terms and conditions of employment, including hiring, firing, laying off, training or disciplining.
An employer may not discriminate with respect to benefits provided to any group of similarly situated workers that includes members of a protected class, and that would be particularly true with respect to health care coverage, parental leave and similar emoluments.
Employers should thoroughly review their application, hiring and ongoing work processes to look for issues that may relate to these areas, said Randy Coffey, an attorney with Fisher Phillips. The review should include health plan coverage and procedures, leave and insurance benefits, and any other areas in which LGBTQ employees conceivably might be affected or treated differently from other employees, he said.
Under Title VII, employers are prohibited from discriminating against workers because of their color, national origin, race, religion or sex. The act makes it unlawful for an employer to “fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment.”
The Supreme Court held in its landmark ruling, Bostock v. Clayton County, Ga., that an employee’s “homosexuality or transgender status is not relevant to employment decisions.” Federal appeals courts had disagreed on whether Title VII’s ban on discrimination based on sex included LGBTQ status, but the high court found that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”
The decision focused on unlawful terminations, which were the subject of the cases before the court, but the ruling extends to all employment actions that are protected under Title VII.
“The Supreme Court’s decision not only prohibits an employer from refusing to hire or discharging an employee based on LGBTQ status, but also prohibits treating employees differently in the spectrum of compensation, terms or conditions of employment because of the individual’s LGBTQ status,” explained Amy Blaisdell, an attorney with Greensfelder, Hemker & Gale in Chicago and St. Louis.
Of course, employers will still be able to defend such discrimination claims in the same ways they have defended against other Title VII discrimination charges. In the event that an employee can make a viable, initial claim of discrimination—or prima-facie case—the employer will then have the opportunity to show nondiscriminatory reasons for the employment action.
As is the case generally with respect to Title VII, it is a best practice not only to be fair but to document employee-related decisions, furnish accurate evaluations, and maintain and publicize anti-discrimination policies.
Employers should note that Title VII applies to employers with at least 15 employees, though many state and local anti-discrimination laws that protect LGBTQ workers apply to smaller employers.
Scope of the Ruling
“There are definite health and benefit considerations for employers stemming from the court’s ruling,” Blaisdell said. For example, LGBTQ employees may rely on the case to argue that employers are required to offer medical plans providing transgender medical benefits to them.
“Yet, many faith-based employers decline coverage for such services on the basis that covering transgender benefits would conflict with moral and religious teachings,” she said. “This push and pull between individual rights and religious liberties was left unresolved by the court’s decision.”
Jay Dade, an attorney with Polsinelli in Kansas City, Mo., said he would caution anyone from drawing legal conclusions past the issues addressed by Bostock—that is, those of employment. However, he noted, employers are always free to offer protections beyond those provided by applicable laws and many provide employment protections to LGBTQ employees through workplace policies.
“The court also made it a point to note that these cases did not require the court to address concerns about religious conviction,” added Jason Plowman, also an attorney with Polsinelli in Kansas City, Mo. On that point, the court specifically noted that “how these doctrines protecting religious liberty interact with Title VII are questions for future cases” because “none of the employers before us today represent in this court that compliance with Title VII will infringe their own religious liberties in any way.”
The intersection of these two sets of protections will almost certainly be a focus of future litigation related to sexual orientation and gender identity, along with how the Bostock ruling applies or does not apply in other contexts, Plowman said.
For instance, the U.S. Department of Health and Human Services (HHS) announced a final rule on June 12, three days before the Bostock decision, that eliminated anti-discrimination protections based on gender identity in health care and health insurance that the agency said were unenforceable and exceeded the prior administration’s authority.
“The Supreme Court ruling does not directly impact the recent HHS rule,” noted Jeffrey Smith, an attorney with Fisher Phillips. That’s because the HHS interpretation is based on Section 1557 of the Affordable Care Act, while the Supreme Court was interpreting provisions of Title VII.
“That said, it does demonstrate a shift in the legal landscape, and it may be harder for HHS to continue to enforce the interpretation it has just released,” Smith added.
Coffey said employers should expect a wave of litigation over the “outer reaches” of the Bostock decision. “There is no question that there will be many new filings alleging discriminatory failures to hire, harassment and hostile work environment claims, and discriminatory termination, all based on the sexual orientation, transgender status or gender identity of applicants and employees.”
For many employers, the Bostock decision will reinforce their policies prohibiting discrimination in employment on the basis of sexual orientation and gender identity, said Lori Armstrong Halber, an attorney with Reed Smith in Philadelphia and Princeton, N.J. Other employers will need to amend their policies immediately to include sexual orientation and gender identity within the classes protected from discrimination in their workplace.
“All employers would be best served by taking the opportunity to educate and train their employees on their anti-discrimination and anti-harassment policies and to focus some of that training on LGBTQ bias,” she said.
Businesses With 100 Or More Workers Would Be Subject To Proposed New Law Aimed At Combating Gender Discrimination
The federal government announced at the end of January 2016 its intent to gather additional pay information from larger employers, forcing all businesses with over 100 workers to provide detailed information about their pay practices in an effort to address gender discrimination. If the President’s plan moves forward as expected, employers will be subject to a heightened pay transparency standard by the end of this calendar year.
In other words, once this new law takes hold, the EEOC will have greater ease in identifying disparities and areas of potential pay discrimination to determine where it will take enforcement action.
By conducting your own gender-specific audit of pay practices, you will be able to determine whether any pay gaps exist that might catch the eye of the federal government when you turn over this information next year. You will have time to determine whether any disparities that may exist can be justified by legitimate and non-discriminatory explanations, or whether you will need to take corrective action to address troublesome pay gaps.
The Supreme Court left one of its most high-profile decisions for the end of its term, holding today by a 5-4 vote that the Constitution requires states to recognize same-sex marriage. As a result, state bans against same-sex marriage are no longer permissible and all states are required to recognize same-sex marriages that take place in other states. Employers should update their FMLA policies and benefit plans to provide the same coverage for same-sex married couples as for other married couples. Obergefell v. Hodges.
In 2013, the U.S. Supreme Court ruled that Section 3 of the Federal Defense of Marriage Act (DOMA), which essentially barred same-sex married couples from being recognized as “spouses” for purposes of federal laws, violated the Fifth Amendment (United States v. Windsor). On the heels of that case, same-sex couples sued their relevant state agencies in Ohio, Michigan, Kentucky, and Tennessee to challenge the constitutionality of those states’ same-sex marriage bans, as well as their refusal to recognize legal same-sex marriages that occurred in other jurisdictions.
For instance, the named plaintiff, James Obergefell, married a man named John Arthur in Maryland. Arthur died a few months later in Ohio where the couple lived, but Obergefell did not appear on his death certificate as his “spouse” because Ohio does not recognize same-sex marriage. Similarly, Army Reserve Sergeant First Class Ijpe DeKoe married Thomas Kostura in New York, which permits same-sex marriage. When Sgt. DeKoe returned from Afghanistan, the couple moved to Tennessee, but that state refused to recognize their marriage.
The plaintiffs in each case argued that the states’ refusal to recognize their same-sex marriages violated the Equal Protection Clause and Due Process Clause of the Fourteenth Amendment. In all the cases, the trial court found in favor of the plaintiffs. The U.S. Court of Appeals for the Sixth Circuit reversed and held that states’ bans on same-sex marriage and refusal to recognize marriages performed in other states did not violate Fourteenth Amendment rights to equal protection and due process.
The Supreme Court accepted review of the controversy, focusing its analysis on whether the Constitution requires all states to recognize same-sex marriage, and whether it requires a state which refuses to recognize same-sex marriage to nevertheless recognize same-sex marriages entered into in other states where such unions are permitted.
Marriage Is Guaranteed By The Constitution
In its ruling today, the Supreme Court sided with the plaintiffs and held that marriage is a fundamental right; as such, same-sex couples cannot be deprived of that right pursuant to the Due Process and Equal Protection Clauses of the Fourteenth Amendment.
Impact On Employers: FMLA Policies and Benefit Documents Must Be Updated
Following Windsor, the Department of Labor issued a Final Rule revising FMLA’s definition of “spouse” to ensure that same-sex married couples receive FMLA rights and protections without regard to where they reside. Specifically, the DOL’s Final Rule adopts a “place of celebration” rule, meaning that when defining a spouse under the FMLA, it refers “to the other person with whom an individual entered into marriage as defined or recognized under state law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State.” In other words, this broad interpretation was intended to ensure that FMLA coverage existed for same-sex couples even in states where same-sex marriage was banned.
The Final Rule had been temporarily enjoined in Texas, Arkansas, Louisiana, and Nebraska by a federal judge who ruled that the DOL did not have the authority to change the definition of “spouse,” and that the change “improperly preempts state law forbidding the recognition of same-sex marriages for the purpose of state-given benefits.” That litigation was on hold pending the outcome of this case. The Supreme Court’s decision in Obergefell paves the way for the Final Rule to go into effect, which means that employers should update their FMLA policies accordingly.
Additionally, employers should review their benefit offerings and consider the impact this decision has on employees who are in same-sex marriages.
Ironically, the Obergefell decision does not change the fact that sexual orientation is still not a protected class under federal law for employment law purposes. Although many states and municipalities protect against discrimination on the basis of sexual orientation, the proposed amendment to Title VII of the Civil Rights Act of 1964 remains in limbo.
On November 7th, 2014, the U.S. Supreme Court agreed to hear King v. Burwell. The case will argue whether or not subsidies in the marketplace should be limited to states with state-run Exchanges. According to the New York Times, “If the challengers are right, millions of people receiving subsidies (through the federal Exchange) would become ineligible for them, destabilizing and perhaps dooming the law.” Arguments are due to begin in December, and a ruling will be issue by next June.
The key question in the case deals with the conflicting IRS ruling stating that “subsidies are allowed whether the exchange is run by a state or by the federal government.” Those challenging the law in this case say that this rule conflicts with the statutory language set forth in the Affordable Care Act (ACA).
Two lower courts, the U.S. Court of Appeals for the District of Columbia in Halbig v. Burwell and the U.S. Court of Appeals for the Fourth Circuit in King v. Burwell, have already issued conflicting opinions regarding the IRS’ authority to administer subsidies in federally facilitated Exchanges. In addition, two other cases are being litigated in the lower courts on the same issue. In Pruitt v. Burwell, a district court in Oklahoma ruled against the IRS in September, and a decision in a fourth court case, Indiana v. IRS, is expected shortly. Of course, the Supreme Court ruling could render the lower court decisions moot.
Following the recent Supreme Court ruling regarding contraceptives in the Hobby Lobby Stores case, a new circuit decision now sets the stage for another possible Supreme Court decision on the ACA. On Tuesday (July 22, 2014), the U.S. Court of Appeals for the District of Columbia (in Halbig v. Burwell) and the U.S. Court of Appeals for the Fourth Circuit (in King v. Burwell) issued conflicting opinions regarding the IRS’ authority to administer subsidies in federally facilitated exchanges.
In general, the employer mandate requires that “applicable large employers” offer their full-time employees minimum essential coverage or potentially pay a tax penalty in 2015. However, according to the statutory text of the ACA, the penalties under the employer mandate are triggered only if an employee receives a subsidy to purchase coverage “through an Exchange established by the State under section 1311…” of the ACA. If a state elected not to establish an exchange or was unable to establish an operational exchange by January 1, 2014, the Secretary of HHS was required to establish a federal-run exchange under section 1321 of the ACA.
The appellants in each of these cases are residents of states that did not establish state run exchanges. Consequently, the appellants argue that the IRS does not have the authority to administer subsidies in their states because the exchanges were set up by HHS under section 1321 of the ACA and not under section 1311 as is the clear prerequisite for IRS authority to administer the subsidies.
In regulations implementing the subsidies, the IRS recognized this discrepancy and noted that “[c]ommentators disagreed on whether the language [of the ACA] limits the availability of the premium tax credit only to taxpayers who enroll in qualified health plans [QHPs] on State Exchanges."
The IRS, however, rejected these comments and stated that, “[t]he statutory language of section 36B and other provisions of the Affordable Care Act support the interpretation that credits are available to taxpayers who obtain coverage through a State Exchange, regional Exchange, subsidiary Exchange, and the Federally-facilitated Exchange. Moreover, the relevant legislative history does not demonstrate that Congress intended to limit the premium tax credit to State Exchanges. Accordingly, the final regulations maintain the rule in the proposed regulations because it is consistent with the language, purpose, and structure of section 36B and the Affordable Care Act as a whole.”
In Halbig v. Burwell, the D.C. Circuit disagreed with the IRS’ interpretation and, in a 2-1 decision, held that the IRS regulation authorizing tax credits in federal exchanges was invalid. The court focused heavily on the text itself and concluded, “that the ACA unambiguously restricts the …subsidy to insurance purchased on Exchanges established by the state.”
In an opinion issued only hours following the D.C. Circuit decision, the 4th Circuit, in King v. Burwell, agreed with the IRS’ interpretation and upheld the subsidies by permitting the IRS to decide whether the premium tax credits should be available over the federal exchange. The justices argued that the text did not intend to create two unequal exchanges. Additionally, they argue that the ambiguous text of the act intended that the exchanges be operated as appendages of the Bureaucracy, and so under the directives of the IRS.
Currently, 36 states are using federally facilitated exchanges, including Florida. Further, roughly 85% of enrollees who signed up for health insurance receive subsidies allowing them to purchase coverage that would be otherwise unaffordable. If the subsidies allocated over the federal exchange were declared invalid, those individuals’ ability to receive subsidies to purchase coverage could be jeopardized. As a result, the average price of a health plan is projected to rise from $82 per month to $346 per month, making it more difficult to afford for approximately 5.4 M enrollees.
While the Halbig decision is a major setback to the ACA, it is almost certainly not the final word on this issue. Given the fact that two courts have reached different outcomes, the Supreme Court is more likely to weigh in on the decision. However, the Halbig decision is likely to be reviewed by the entire D.C. Circuit prior to any potential review by the Supreme Court.
In the recent U.S. Supreme Court’s ruling in Burwell vs. Hobby Lobby, it was ruled that closely held for-profit companies have the right to refuse to offer insurance coverage for specific birth control methods if they conflict with the owner’s religious beliefs. Many benefits attorneys expect the impact of this ruling to limited for employers—despite what some political reps might suggest.
The June 30, 2014 ruling pertains to the Affordable Care Act (ACA) mandate that employers who provide medical coverage to employees must provide contraceptive coverage to female full-time employees with no cost-sharing. The U.S. Department of Health and Human Services (HHS) regulations had set forth an expansive interpretation of contraceptive coverage, including so-called “morning-after pills” and intrauterine devices (IUDs).
The ruling was limited to closely held companies (those with a limited number of shareholders) whose owners hold sincere religious beliefs, such as the firms that sued HHS in this case: Hobby Lobby, an arts and crafts chain that says it is run on biblical principles, and Conestoga Wood Specialties, a Pennsylvania cabinet-making company owned by a Mennonite family.
Few Employers Affected
“The Hobby Lobby ruling has a direct impact on a relatively small number of employers—as a percentage of total employers across the country there are very few that can be considered faith-based employers,” advised a recent alert from a law firm.
“Employers who do not have objections to the mandate are most likely able to continue with their plans without any changes merely because of this decision,” concurred another benefits attorney. “Employers who wish to take advantage of the ruling may want to amend their plans in order to make them clear about what is and is not covered.”
Why have there been apparently overwrought reactions to the ruling? Supreme Court decisions implicating any of the Affordable Care Act’s provisions are routinely used both by proponents and opponents of the act as evidence of the correctness of their position. Their positions are then picked up by and amplified in media coverage, often resulting in confusion on the part of the public.
The opinion “seemed to limit itself to the contraceptive mandate only, likely quelling the concerns of many who argued a broader decision may put in jeopardy other items typically covered under group plans, such as vaccinations and blood transfusions,” according to a post by attorneys at Fisher & Phillips. In addition, the court warned that its decision should not be interpreted to provide a shield to employers to cover up illegal discrimination under the appearance of claimed religious beliefs (for example, companies claiming to object, on religious grounds, to same-sex marriage).
This decision on contraceptives likely will not seem to extend to larger corporations with diverse ownership interests. The court noted the difficulty of determining the religious beliefs of, for example, a large publicly traded corporation, and pointed out that the corporations in this case were all closely held corporations, each owned and controlled by a single family, with undisputed sincere religious beliefs.
Attorneys expect that “there may be relatively few employers that fit the exemption created by the court’s decision,” and that “HHS will likely draft new regulations to comply with [the] decision, and it remains to be seen whether new plaintiffs will challenge the contraception requirements or other requirements under the ACA on similar grounds.”
The Administration’s Options
The Supreme Court decision cited the federal Religious Freedom Restoration Act (RFRA) requirement that any laws that substantially burden a person’s exercise of religion must be justified by a compelling governmental interest and be the least restrictive approach to furthering the governmental interest. The majority opinion, written by Justice Samuel Alito and signed by three other justices, suggested that one “least restrictive” approach would be for the government to directly pay for contraceptives when an employer has religious objections to providing them.
A concurring opinion by Justice Anthony Kennedy suggested that the administration extend an accommodation already made available to religiously affiliated nonprofit organizations more broadly to private employers who claim that purchasing insurance that covers contraception, or certain types of contraception, would violate their religious beliefs.
The Hobby Lobby decision should stand as a reminder that while there may be differences of opinion about specific rules and requirements under the ACA, and some of those differences may be decided against the government, the law itself is not going away. Employers need to continue to monitor new developments and implement strategies for complying with the ACA.
On June 26, 2013, the US Supreme Court declared the Defense of Marriage Act (DOMA) as unconstitutional. DOMA had previously established the federal definition of marriage as a legal union only between one man and one woman. The extinction of DOMA already has HR departments thinking how this will impact the future of the Family and Medical Leave Act (FMLA) as well as other benefits.
How FMLA is Impacted
As we know, the FMLA allows otherwise eligible employees to take leave to care for a family member with a serious health condition. “Family member” includes the employee’s spouse, which, under the FMLA regulations, is defined as:
a husband or wife as defined or recognized under State law for purposes of marriage in the State where the employee resides, including common law marriage in States where it is recognized. 29 C.F.R. 825.102
Initially, this seems to suggest that the DOL would look to state law to define “spouse”…but not so fast. According to a 1998 Department of Labor opinion letter, the DOL acknowledged that the FMLA was bound by DOMA’s definition that “spouse” could only be a person of the opposite sex who is a husband or wife. Thus, the DOL has taken the position that only DOMA’s definitions could be recognized for FMLA leave purposes. As a result, FMLA leave has not been made available to same-sex spouses.
That changes yesterday, at least in part.
What’s Clear about FMLA After the Ruling
In striking down a significant part of DOMA, the Supreme Court cleared the way for each state to decide its own definition of “spouse”. Thus, if an employee is married to a same-sex partner and lives in a state that recognizes same-sex marriage, the employee will be entitled to take FMLA leave to care for his/her spouse who is suffering from a serious health condition, for military caregiver leave, or to take leave for a qualifying exigency when a same-sex spouse is called to active duty in a foreign country while in the military.
What’s Unclear about FMLA After the Ruling
But what about employees who live in a state that does not recognize same-sex marriage? Are they entitled to FMLA leave to care for their spouses?
As an initial matter, the regulations look to the employee’s “place of domicile” (aka state of primary residence) to determine whether a person is a spouse for purposes of FMLA. Therefore, even if the employee formerly lived or was married in a state that recognized the same-sex marriage, he/she is unlikely to be considered a spouse in the “new” state for purposes of FMLA if the state does not recognize the marriage. This is no small issue, since 30+ states currently do not recognize same-sex marriage and some don’t go all the way (e.g. Illinois, which recognizes same-sex unions, not marriages).
Surely, some might argue that the U.S. Constitution requires other states to recognize the marriage; however, this issue is far from settled. Clearly employers need some help from the DOL. It is speculated that the DOL may draft regulations on how employers can administer FMLA in situations where the employee’s spouse is not recognized under state law. This would give life to concepts such as a “State of Celebration” rule, in which a spousal status is determined based on the law of the State where the employee was married and not where they reside. However, without more guidance, it is still too early to tell how the DOL will handle this.
Other Key Benefits Affected by the DOMA Decision
FMLA is not the only federal law impacted by the fall of DOMA. If federal regulations follow through, some of the notable federal laws and benefits impacted may include: