Why employers should make sure health care plans are inclusive to transgender employees

Whether you run a small business, a large company, or a nonprofit organization, you may want to reevaluate the health care plan(s) you provide to your employees if you have not done so since 2020.

No, we are not talking about COVID-19, but the United States Supreme Court’s 2020 ruling in Bostock v. Clayton County, 140 S. Ct. 1731 (2020).

In 2020, the Supreme Court left little doubt that the protections in Title VII of the Civil Rights Act of 1964 extend to transgender individuals.

Justice Neil Gorsuch, the author of the Court’s opinion, explained employers violate Title VII, which makes it unlawful to discriminate against an individual “because of” their sex, when employers take an adverse action against a person for being transgender.  Id. at 1753.  In other words, where an employer intentionally treats a transgender individual worse than a cisgender one, the employer has unlawfully discriminated against that individual because of their sex.

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This is an example of when a small business might be violation a trans employee's civil rights

The Court’s holding is particularly profound in the context of employer-provided health care, given approximately 2 million people identify as transgender, according to "How Many Adults and Youth Identify as Transgender in the United States?" study by the Williams Institute (June 2022).  And, in the United States, employer-provided health insurance is the single largest source of health care coverage for individuals, according to Corporate Quality Index, 2022, The Human Rights Campaign.

Consider the situation involving employer-offered state health care plans in the context of Bostock’s holding: It is 2023, and a small business, which employs 15 individuals, has offered its state’s health care plan for the last 25 years. It does so merely because it’s cost-efficient.

The plan, however, contains an exclusion for all surgery or treatment for, or related to, gender-affirming care other than psychological treatment or counseling.

An employee who follows all the necessary steps and for whom gender-affirming surgery is medically necessary is informed by the insurance administrator that their claim for surgery has been denied due to the above exclusion.

Has the small business violated Title VII? The answer is likely yes.

Review health care plans for any blanket exclusions for transgender people

In our example, the transgender employee pays the same premiums as their cisgender counterparts but is receiving unequal coverage under the state’s plan and is now required to pay those health care expenses out of pocket.  Courts across the country have agreed that this type of blanket exclusion violates Title VII.

What may be surprising to some employers is that the fact that they did not create the plan or decide its coverage is of little importance when it comes to liability.  Because employers are ultimately responsible for determining the terms and conditions of employment provided to their employees, if an employer chooses a health care plan which is discriminatory because of a blanket exclusion on transgender health care, the employer is responsible for the unlawful discrimination.  Arizona Governing Committee v. Norris, 463 U.S. 1073 (1983).

So, what should employers do? The simplest answer is to review the health care plans offered and determine if any contain a blanket exclusion on transgender health care.

If they do, take steps to research and implement other health insurance plans that do not contain such exclusions.  Today, most major insurance companies provide transgender-related health care coverage, according to TLDEF, Health Insurance Medical Policies.

The cost of transgender-inclusive health care coverage is minimal, especially in contrast with the potential liability of an unlawful plan (not to mention the legal fees of defending a lawsuit).  The benefits of providing inclusive coverage are also significant.  Applicants typically seek employers that value fairness and access to inclusive health care can reduce employee stress.  In short, if you are an employer, take the time to review your health care plans!

Joycelyn Stevenson, office managing shareholder of Littler’s Nashville office, counsels companies of all sizes on a range of personnel issues, conducts strategic risk analyses of business decisions as they relate to HR management, manages employment-related litigation, and provides workplace training.

Sarah Belchic, an associate in Littler’s Nashville office, focuses her practice on labor and employment law matters.

This article originally appeared on Nashville Tennessean: Transgender rights: Employers should ensure health plans are inclusive