Expansions in LGBTQ Employees’ Rights and Benefits

March 3, 2016
Shirley Lin

Major shifts in gender equality jurisprudence in recent years have led to expanded rights and benefits for LGBTQ employees.  The Section devoted two panels at the Section Conference to the rapidly developing areas of anti-discrimination law, employee benefits, and sexual orientation and gender identity in the workplace.

The scope of civil rights protections for LGBTQ employees under Title VII generated the most discussion in the wake of the Supreme Court’s decision in Obergefell v. Hodges (2015) and the EEOC’s decision in Baldwin v. forx (EEOC 2015).  In Obergefell, the Court held that the 14th Amendment guarantees all couples, straight or gay, the fundamental right to marry under a due process analysis, although Justice Kennedy noted that the ruling derived in part from the Equal Protection clause.

According to panelist Lisa J. Banks of Katz, Marshall & Banks, LLP, Obergefell‘s discussion of the long history of discrimination against gay and lesbian individuals omitted any rational basis or heightened scrutiny analysis, but could set up a later case to determine the applicable level of equal protection analysis.  “If that came to pass, certainly any ruling that an LGBT person should be treated as a suspect class would greatly increase the strength of public employees’ claims,” said Banks.

But the Supreme Court has yet to decide whether discrimination based upon sexual orientation or gender identity is prohibited discrimination “because of sex” under Title VII.  According to panelist Randall Coffey of Fisher & Philips LLP, the majority of circuits have taken the position that sexual orientation does not fall within the statute’s language as the statute does not expressly prohibit against LGBTQ individuals.  Although the case law remains mixed, a majority of circuit courts now also recognize that it is possible for LGBTQ employees to raise a viable claim of sex stereotyping under the Supreme Court’s decision in Price Waterhouse v. Hopkins (1989) if they do not conform to preconceived notions of gender.

The EEOC adopted this broader reading of sex-based discrimination, building upon its landmark decision in Macy v. Holder (EEOC 2012), in which it upheld the Title VII sex discrimination claims of a transgender employee, with its recent decision in Baldwin, which adopted a similarly expansive reading of Title VII as to sexual orientation discrimination.  In Baldwin, the Commission held that besides a sex-stereotyping theory, a gay employee could also be discriminated against “because of” his sex when his employer takes adverse action because he is not in a relationship with someone of the opposite sex.  Alternatively, the EEOC found that a theory of associational discrimination because the employee is “associated with” someone of the same sex fell within the purview of Title VII’s prohibition against sex discrimination.  Since Baldwin, lower courts have continued to reach inconsistent conclusions as to whether discrimination based upon sexual orientation is cognizable as sex discrimination.  Panelist Jeanne Goldberg, EEOC Senior Attorney Advisor, noted that the Seventh Circuit en banc revised a panel opinion in Muhammad v. Caterpillar (2014) to remove a statement that Title VII categorically does not protect against sexual-orientation discrimination or related retaliation, and predicted that other circuits may likely revisit their holdings in the near future.

Labor unions’ collective bargaining agreements often provide an other source of protection, as panelist Manuel Quintos-Pozos of Deats Durst Owen & Levy, PLLC pointed out, because health and leave benefits may be made available to same-sex partners or adopted children pursuant to bargained provisions on behalf of LGBTQ members.  In addition, approximately 200,000 federal contractors and their employees – comprising about 25% of the U.S. workforce – are now subject to Obama Executive Order 13672, which amended two earlier executive orders to expressly prohibit sexual orientation and gender identity discrimination by those employers.

Momentum from the Supreme Court’s decision in United States v. Windsor (2013), which struck down as unconstitutional Section 3 of the Defense of Marriage Act, continued through this term’s Obergefell decision, which established a nationwide right to marriage equality and eliminated discrepancies between federal and state tax requirements for married same-sex couples.  Both decisions yielded major changes in employee benefits law at the federal level, including ERISA and taxation.

Beginning September 16, 2013, the IRS determined that it would recognize marriages under the “ceremony rule,” in which marriages that were lawful when performed would be recognized.  The DOL followed suit on March 27, 2015 by adapting that rule to Family and Medical Leave Act eligibility for spouses in same-sex marriages.

In the employee benefits context, a court recently held in Cozen O’Connor P.C. v. Tobits (E.D. Pa. 2013) that a widow of a same-sex spouse who passed away before Windsor could still retroactively benefit from its holding even though the pension plan in question referenced the law of a state that did not recognize same-sex marriages.  Panelist Teresa Renaker of Renaker Hasselman LLP, who litigated Tobits, observed that retroactivity issues are rarely litigated and often directly resolved.

The Affordable Care Act of 2010 broke new ground for transgender employees by prohibiting, for the first time in federal law, sex discrimination in health care, including the health insurance marketplace.  Under a proposed rule implementing Section 1557, all health programs or activities that receive federal funding cannot discriminate on the basis of sex, inter alia.  Thus, coverage for medically appropriate services must be provided on the same terms regardless of the individual’s “sex assigned at birth, gender identity, or recorded gender.”  Panelist AJ Pearlman of the Department of Health and Human Services Office for Civil Rights emphasized that categorical exclusions of services related to gender transition would be “considered facially discriminatory.”

This article was originally published by the American Bar Association, Section of Labor & Employment Law, Labor & Employment newsletter Winter 2016, Volume 4, Number 2.

(*Prior results do not guarantee a similar outcome.)