Group health plans for same-sex spouses: Equal treatment required or not?

published in McAfee & Taft EmployerLINC | November 4, 2014

By Paul A. Ross

In our recent webinar, McAfee & Taft attorneys shared with you a number of ramifications from the recent U.S. Supreme Court decision that effectively legalized same-sex marriage in Oklahoma. One of the key questions we discussed was this: Does the decision mean that private employers are now required to offer group health insurance coverage to same-sex spouses?

The answer, as always, was somewhat complicated. First, from a benefits law perspective, we told you that neither ERISA nor the IRS tax code nor the Affordable Care Act requires that private employers offer group health insurance benefits to spouses of any kind. Nor do those laws impact the way employers define the word “spouse” if they choose to offer group health benefits to spouses. And, importantly, nothing in the SCOTUS opinion changed those particular laws.

same-sex-coupleHowever, we also told you that offering group health benefits to traditional “spouses” while denying those same benefits to same-sex couples would likely result in litigation under Title VII and possibly even state discrimination laws. We specifically mentioned one case, Hall v. BNSF Railway Co., in which a plaintiff employee had already successfully made such a claim. The purpose of today’s post is to spend a bit more time discussing the details of the Hall case.

Michael Hall, an employee of BNSF Railway Co., legally married his same-sex partner in Washington state in 2013. Thereafter, he immediately sought group health insurance coverage for his spouse pursuant to the company’s group health plan. The request was denied by the company because the plan defined “marriage” as between one man and one woman, therefore allowing coverage for opposite-sex spouses only. Mr. Hall brought suit in federal district court alleging, among other things, that this denial of benefits constituted unlawful sex discrimination under Title VII. Essentially, Hall argued that he, as a male, was denied a benefit of employment that was provided to similarly situated female employees. Specifically, female employees married to men were provided spousal group health insurance benefits, while Hall, who was also married to a man, was denied those same benefits.

BNSF immediately moved to dismiss the case, arguing that Hall’s case was more accurately described as a claim for sexual orientation discrimination, a claim that is not permitted by Title VII. While recognizing that “sexual orientation” is not a protected characteristic identified in Title VII, the court pointed out a very important distinction that employers must understand. According to the court, there is a difference between claims based upon alleged sexual orientation and other claims (such as sex discrimination claims) made by people that that identify as homosexual. The court also recognized a trend in federal courts to distinguish between sexual orientation discrimination, which is not actionable under Title VII, and sex discrimination that may have been motivated by gender stereotypes. Ultimately, the court denied the company’s motion to dismiss, allowing the claim to proceed to the next stage of litigation.

Hall may or may not ultimately prevail on his claim of sex discrimination.  But the court’s decision to allow the claim is the decision that matters most to the Oklahoma employers that are considering the impact of the new state of the law at home. While the Hall case is certainly not precedent here, and a federal judge in Oklahoma could decide the matter differently, that case will serve as persuasive authority when the issue is determined here. Employers that offer group health insurance coverage to opposite-sex spouses would be well-advised to seriously consider expanding that right to all legally married employees, or face the risk of a claim under Title VII.