By Joshua Zugish
In 2020, the United States Supreme Court issued a variety of impactful decisions effecting employers. These decision provided employers with lasting guidance related to sex, race, and age discrimination claims, and bolstered the religious interests of employers in the selection of employees and scope of coverage in group health plans.
In particular, five decisions with a significant impact on employment law stood out, most notably Bostock v. Clayton County, which ruled that workplace discrimination because of an individual’s sexual orientation or gender identity, including transgender status, is unlawful sex based discrimination in violation of Title VII of the Civil Rights Act of 1964 (Title VII). Supreme Court Justice Gorsuch succinctly concluded in the majority opinion that “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.”
Additionally, the Court issued decisions in Comcast Corp. v. NAAAOM and Babb v. Wilkie that influenced § 1981 claims and the Age Discrimination in Employment Act (ADEA). In Comcast, the Court held plaintiffs seeking relief under § 1981(a) must first plead and subsequently prove that race is a but-for cause of their injury, and that this burden remains constant throughout the life of the lawsuit. This causation standard under § 1981differs from the more lenient “motivating factor” standard applicable in Title VII cases. Conversely, in Babb, the Court made it easier for federal employees and applicants to prove age discrimination by ruling that courts should not apply that heightened “but for” causation standard in ADEA cases. Babb only impacts the federal government and not private employers, who still benefit from the heightened “but for” standard when defending ADEA cases in the private sector.
For religious employers, the Court sought balance between religion and workplace laws in two important decisions. The Our Lady of Guadalupe School v. Morrisey-Berru decision held that the ministerial exception allowing religious employers to invoke the First Amendment’s protections against government interference in the selection of employees should be evaluated using a variety of factors, including whether an employee carries out important religious functions. In doing so, the Court rejected a rigid formula when determining whether the ministerial exception applies.
The Court also upheld two rules expanding religious and moral exemptions to the Affordable Care Act’s (ACA) contraceptive mandate. The decision in Little Sisters of the Poor v. Pennsylvania entrenched broad exemptions from the contraceptive mandate for both for-profit and nonprofit employers with sincerely held religious beliefs or moral objections to offering contraception coverage in their group health plans.
Looking Forward in 2021
While employers adjust to these decisions from 2020, at least three pending cases merit watching for their potential impacts on employment law this year.
California v. Texas: In the consolidated case of California v. Texas, the Court will address important issues under the Affordable Care Act (ACA). Specifically, the stated issues are: (1) whether individual and state plaintiffs have standing to challenge the minimum-coverage provision in section 5000A(a) of the ACA; (2) whether reducing the penalty amount specified in ACA section 5000A(a) to zero rendered the minimum-coverage provision unconstitutional; and (3) whether the minimum-coverage provision is severable from the rest of the ACA.
The impacts of this case may be substantial and have real consequences for employers and employees, alike. Many existing ACA provisions could be impacted if the minimum-coverage provision is deemed unconstitutional and not severable from the rest of the ACA. These ultimately include ACA protections surrounding pre-existing conditions, subsidies to make individual health insurance more affordable, expanded eligibility for Medicaid, coverage of young adults up to age 26 under parent or guardian insurance policies, coverage of preventive care with no patient cost-sharing, Medicare’s drug benefit, and a series of tax increases to fund these initiatives.
Under the ACA, most large employers must tread carefully when configuring health insurance plans to avoid potential penalties associated with ACA’s mandates. Pricing, eligibility, and plan design were all restricted by ACA’s rules and potential penalties increased risks associated with creative plan designs. Depending on the outcome of this case, employers may have more flexibility with group health options. Additionally, any easing of restrictions under the ACA may impact costs and plan options for employer sponsored group health plans.
Fulton v. City of Philadelphia: In Fulton, the Court will review a Third Circuit decision upholding the City of Philadelphia’s choice to exclude a religious agency from the City’s foster care system unless the agency agreed to act and speak in a manner inconsistent with its sincere religious beliefs about marriage. At its core, this case tests the boundaries of the Free Exercise Clause of the First Amendment in a way that may be important to religious employers and organizations. More specifically, Fulton will address (1) whether claims under the Free Exercise Clause can only succeed by proving the government would allow the same conduct by someone who held different religious views, or whether courts must consider other evidence that a law is not neutral and generally applicable; (2) whether the Supreme Court should revisit Employment Division v. Smith, a case holding that the Free Exercise Clause does not require accommodation of a religious practice as long as the challenged government policy is generally and neutrally applicable; and (3) whether a government violates the First Amendment by conditioning a religious agency’s ability to participate in the foster care system on taking actions and making statements that directly contradict the agency’s religious beliefs.
The Court’s decision will likely influence how employers with religious interests can advance or defend their rights under the Free Exercise Clause when dealing with otherwise neutral employment laws of general applicability. Depending on the outcome of Fulton, employers may be afforded greater latitude when it comes to compliance with nondiscrimination and other employment laws by asserting the Constitution exempts them from complying with laws that run counter to their sincerely held religious beliefs. The decision in this case is highly anticipated and merits monitoring.
Van Buren v. United States: Another pending case with potential employment ramifications, Van Buren will addresses an important question about computers in the workplace and protection of confidential information or trade secrets. The case involves Section 1030(a)(2) of the Computer Fraud and Abuse Act (CFAA), a federal statute that imposes civil and criminal liability for unauthorized access of computers. The case raises a critical question about application of the CFAA when an individual is authorized to obtain information from a computer for some purposes but not others.
The case involves a police officer in Georgia who was authorized to search computer records about license plates for law enforcement purposes. He also searched those records and obtained information for improper private purposes as well. The officer was targeted in an FBI sting operation and, through an informant, was offered thousands of dollars for license-plate related information. The officer subsequently accessed the information for non-law enforcement purposes, was arrested, and charged with two counts of fraud, including one count of computer fraud under the CFAA.
Van Buren argues the CFAA only applies only if the defendant obtains information that he was under no circumstances entitled to obtain. Conversely, the government argues that Van Buren’s reading of the CFAA is too restrictive and the statute should apply if information that a person is authorized to access for legitimate business purposes is actually used for improper personal purposes. The case may resolve conflicting interpretations of the CFAA and strengthen the ability of employers to sue employees who access electronic files in a manner that exceeds the authorized use of an employer’s computers.
Broadly speaking, the Act allows employers to sue employees who trespass into computer file folders and servers in order to copy or transfer confidential information and trade secrets. This decision may resolve that a split in the circuit courts that tend to be either pro-employer or pro-employee. Van Buren should help answer an important question for employers about the strength of the CFAA’s protections for workplace computers.
This calendar year promises to add to the complexity of various legal issues impacting employers and the workplace. These three cases merit monitoring for implications on your organization and any potential changes to policies and practices that may be necessary in response to these important legal decisions.
Ogletree Deakins Birmingham
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www.ogletreedeakins.com