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Rulings raise important considerations for religious employers

The just-concluded U.S. Supreme Court term was an eventful one for parochial schools and other religious employers.

On June 15, the court held in Bostock v. Clayton County, 590 U.S. ____ (2020), that Title VII of the Civil Rights Act of 1964 prohibits employers from discriminating against employees because of sexual orientation or transgender status.

sherwoodReligious employers have been left to ponder their obligations under a range of federal, state and local employment laws.

Particularly for organizations affiliated with more traditional religious denominations, the Bostock decision raises issues as to the extent to which religious employers may be required to alter their hiring practices.

However, just under a month later, on July 8, the court issued its decision in Our Lady of Guadalupe School v. Morrissey-Berru (consolidated with St. James School v. Biel), 591 U.S. ___ (2020). In that decision, the court held that two schoolteachers could not sue their religious schools under the Age Discrimination in Employment Act (ADEA) or the Americans With Disabilities Act (ADA) due to the “ministerial exception” to the federal employment discrimination laws.

On July 8, the court also issued its decision in Little Sisters of the Poor v. Pennsylvania, 591 U.S. ____ (2020), upholding regulations that exclude religious employers from the obligation, under the Affordable Care Act (ACA), to provide employees with health insurance including coverage for contraceptives.

In light of these decisions, religious employers have been left to ponder their obligations under a range of federal, state and local employment laws.

‘Bostock’ decision

In Bostock, the court held an employer “necessarily” discriminates “because of sex” if it intentionally discharges, fails or refuses to hire, or otherwise discriminates against an employee due to that employee’s sexual orientation or transgender status.

In the court’s view, even if an employer takes into consideration other factors besides an employee’s sex — such as the sex to which the employee is attracted, or the sex the employee presents as — it is, nonetheless, “impossible” for the employer to discriminate based on an employee’s sexual orientation or transgender status without also discriminating “because of” the employee’s sex.

The Bostock majority rejected the argument that an employer does not discriminate based on sex if it discriminates equally against gay male and gay female employees, or against both male transgender and female transgender employees.

Justice Samuel A. Alito Jr. (joined by Justice Clarence Thomas) and Justice Brett M. Kavanaugh filed dissenting opinions, accusing the majority of legislating from the bench and criticizing its reasoning as an overly literal interpretation of Title VII that conflicts with legislative intent and threatens religious freedom.

Alito’s dissent also expressed significant concerns about the effect of the decision on the definition of “sex” in other federal, state and local statutes and ordinances, and even college rules.

In addition, Alito raised the possibility that a religious school might teach students that homosexuality or gender reassignment surgery is immoral, but at the same time be forced to hire or continue to employ a homosexual or transgender teacher, thereby undercutting the school’s religious teachings.

‘Morrissey-Berru’ decision

The Supreme Court’s decision in Morrissey-Berru shed light on important questions left open by the court in a holding eight years earlier. In Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC, 565 U.S. 171 (2012), the court held that a teacher could not sue her religious school under the ADA, due to the “ministerial exception” to employment discrimination laws.

The ministerial exception arises out of the free exercise clause of the First Amendment, which ensures the right of all religious institutions “to decide for themselves, free from state interference, matters of church government as well as those of faith and doctrine.” Kedroff v. Saint Nicholas Cathedral of Russian Orthodox Church in North America, 344 U.S. 94, 116 (1952). This principle has been interpreted to prohibit governmental interference in the relationship between a religious institution and its ministers.

In Hosanna-Tabor, the court noted the teacher was a commissioned minister of religion, had received significant religious educational training, and regularly taught religion classes. Based on those factors, the court concluded that the teacher qualified as a “minister” for purposes of the exception.

However, the court left open the question of whether all religious schoolteachers, as well as other employees whose duties include religious functions, would qualify for the ministerial exception.

The Morrissey-Berru decision has now provided some clarification on that question. In Morrissey-Berru, the Supreme Court held that two Catholic schoolteachers asserting claims under the ADEA and the ADA qualified for the ministerial exception because they “provided vital religious duties” such as praying with their students, preparing them to participate in religious ceremonies, and otherwise instructing students in the Catholic faith.

In the court’s view, the ministerial exception applied even though the teachers also instructed students in “secular” course subjects.

As in Hosanna-Tabor, the court declined to adopt any rigid test for determining which employees fall within the ministerial exception. However, it made clear that it is not necessary for all of the specific factors cited in Hosanna-Tabor to apply.

Indeed, Morrissey-Berru seems to suggest that an employee can fall within the exception even if his or her religious functions are only a small portion of the employee’s overall job responsibilities.

‘Little Sisters of the Poor’ decision

Finally, in Little Sisters of the Poor, the Supreme Court upheld federal regulations providing that religious employers need not provide employees with access to contraceptives under their health insurance plans.

The court held that the ACA grants administrative agencies broad authority to issue regulations governing preventive care, and that that authority extends to exempting religious employers from this general requirement.

In support of its decision, the court cited Burwell v. Hobby Lobby, 573 U.S. 682 (2014), which held that the exemption to the ACA’s contraceptive mandate should be extended to for-profit, closely held corporations whose owners have sincerely held religious beliefs in opposition to contraception.

Further, the court found that the federal agencies releasing the regulations at issue had appropriately considered the Religious Freedom Restoration Act (RFRA), which provides that a law restricting the free exercise of religion must be shown to further an important governmental interest and to be the least restrictive means of doing so.

In a concurring opinion, Justices Alito and Neil M. Gorsuch indicated that they would have gone further than the majority by holding that the RFRA mandated the exemptions.

Takeaways for religious employers

The Supreme Court’s Bostock decision raised the prospect that religious employers might be broadly required to avoid discriminating on the basis of sexual orientation and gender identity, and to adopt benefit plans providing coverage for gender reassignment surgery and related conditions.

Given the holdings of Morrissey-Berru and Little Sisters of the Poor, however, it appears that religious employers may be entitled to broader exemptions from these requirements than Bostock appeared to suggest.

Indeed, religious employers can argue that teachers and other employees who engage in duties of a religious nature should be exempted from a broad swath of other employment laws, given that the ministerial exception emanates from the First Amendment.

For instance, while the Supreme Court’s Hosanna-Tabor and Morrissey-Berru decisions arose from claims under the ADA and the ADEA, respectively, their underlying rationale appears just as applicable to claims under Title VII and the Family and Medical Leave Act.

However, Morrissey-Berru also suggests that the ministerial exception does not apply to every employee of a religious employer. For example, school nurses, receptionists and janitorial staff may not have a significant enough role in teaching or promoting an employer’s religious beliefs to qualify for the exception.

Therefore, as the law stands now, it is possible that a religious school could lawfully terminate a homosexual teacher, but not a homosexual receptionist. Similarly, a religious school may be obligated by state or local law to use a transgender receptionist’s preferred pronouns and to defer to the receptionist’s preferred usage of the facility’s bathrooms, while having no such obligations toward its teachers.

The court’s Little Sisters of the Poor decision suggests that religious employers may have significant latitude under the RFRA to resist employee benefit plan requirements they find immoral. For instance, religious employers whose beliefs are at odds with transgenderism may not be required to provide health insurance coverage for gender reassignment surgery.

Ultimately, however, even with the best guidance that can be provided by lawyers and court watchers, these are fluid and developing areas of the law. In deciding upon their next steps, religious employers should carefully consider their spiritual convictions and continue to monitor future Supreme Court and lower federal court decisions on these issues.

Elizabeth L. Sherwood is an attorney at Schwartz Hannum in Andover, Massachusetts, which represents management and educational institutions in labor and employment law matters.

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