Not yet a Member?
HR Magazine is highlighting the next generation of HR leaders.
Is your employee handbook ready for the New Year? With SHRM’s Employee Handbook Builder get peace of mind that your handbook is up-to-date.
30+ HR education programs, including 4 NEW programs on hot topics, are available for registration.
Join us in Chicago for the latest trends and technology in talent management, and what to expect in the future.
Despite political posturing, decision's effect on employers said to be minimal
In the aftermath of the U.S. Supreme Court’s 5-to-4 ruling in
Burwell vs. Hobby Lobby, finding that closely held for-profit companies may refuse to offer insurance coverage of specific birth control methods if they conflict with the owner’s religious beliefs, benefits attorneys expect the impact on employers to be limited—despite political grandstanding that might suggest otherwise.
The June 30, 2014, ruling (see the
SHRM Online article “HHS Loses Contraceptive Coverage Case”) pertains to the Affordable Care Act (ACA) mandate that employers with nongrandfathered plans subject to the act 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 certain intrauterine devices (IUDs) that
some view as "abortifacients" that induce miscarriages.
The ruling was restricted to
closely held companies (those with a small 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.
Below is a sampling of views from benefits attorneys who addressed the ruling's scope and likely consequences for employers.
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
attorneys at Proskauer Rose LLP on the firm's ERISA Practice Center blog.
“This case, which has garnered significant media attention, will not directly affect most employers subject to the ACA, such as employers that are publicly traded companies or closely held corporations without religious objections to providing contraceptive coverage services,”
an alert by Buck Consultants noted.
“...at a minimum, an employer that wishes to follow the decision would have to demonstrate as a factual matter that the employer fits within the framework established by the case (i.e., that the owners have sincerely held religious beliefs and that the requirement was not being imposed in the least restrictive means),”
concurred law firm Dorsey & Whitney LLP.
“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,” wrote benefits attorney Jay Kirschbaum of Willis National Legal and Research Group,
in a blog commentary. “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.”
Kirschbaum also commented that “many employers’ plans have yet to be amended to comply with the general mandates of ACA. Now might be a good time to review plan documents and [summary plan descriptions] and determine if they are up-to-date and if not, take steps to properly amend them.”
Why have there been apparently overwrought reactions to the ruling? “Supreme Court decisions implicating any of the Affordable Care Act’s provisions are routinely seized on 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 or by employers,”
commented Alden J. Bianchi, benefits practice leader at law firm Mintz Levin, in a blog post. “From the perspective of Constitutional scholars, this decision may have important significance, but to employers implementing the requirements of the act, it means little,” Bianchi added. “The challenge for HHS is to ensure access to contraceptive coverage while not unnecessarily offending religious beliefs—something it appears to have already accomplished under the religious accommodation rule” for religiously affiliated nonprofit organizations, discussed below.
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 cloak illegal discrimination under the guise of claimed religious beliefs (for example, companies claiming to object, on religious grounds, to same-sex marriage).”
“The majority explained that the federal government has a compelling interest in permitting equal opportunity in the workplace and that prohibitions on discrimination are precisely tailored to achieve that goal. Thus, the decision signals that these arguments should not be accepted ,” legal analysts at
Dorsey & Whitney LLP agreed.
The Fisher & Phillips attorneys added, “Even as to the ACA’s contraception requirements, this decision 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.”
The 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 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. “This accommodation allows nonprofit employers to self-certify their opposition to providing coverage for particular contraceptive services,” explained Buck Consultants. “If a nonprofit employer does so, the organization’s insurance insurer (insured plan) or third-party administrator (self-funded plan) must provide separate payments—at its own and not the employer’s cost—for contraceptive services.”
Within this context, the ruling could be significant for those religiously affiliated nonprofits. Some of these organizations are
suing HHS, claiming that the available accommodation insufficiently shields them from paying for contraceptive coverage indirectly. According to the Proskauer alert, “By identifying the accommodation as a less restrictive alternative, the court may be signaling it believes that the exception … suffices to meet any concerns they may have. The court, however, noted it was not deciding this issue, and the ‘government-pay’ approach tendered by four justices may provide a possible opening for relief for the religious-affiliated nonprofit employers.”
Moreover, the alert continues, “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.”
Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter
You have successfully saved this page as a bookmark.
Please confirm that you want to proceed with deleting bookmark.
You have successfully removed bookmark.
Please log in as a SHRM member before saving bookmarks.
Your session has expired. Please log in again before saving bookmarks.
Please purchase a SHRM membership before saving bookmarks.
An error has occurred
Recommended for you
HR Education in a City Near You
SHRM’s HR Vendor Directory contains over 3,200 companies