News Law and Policy

Supreme Court Blocks Class-Action Lawsuit Against Walmart

Jodi Jacobson

The Supreme Court ruled for Wal-Mart on Monday in its fight to block a massive sex discrimination lawsuit on behalf of women who work there, according to the Associated Press.

The Supreme Court ruled for Wal-Mart on Monday in its fight to block a massive sex discrimination lawsuit on behalf of women who work there, according to the Associated Press.

The court ruled unanimously that the lawsuit against Wal-Mart Stores Inc. cannot proceed as a class action, reversing a decision by the 9th U.S. Circuit Court of Appeals in San Francisco. The lawsuit could have involved up to 1.6 million women, with Wal-Mart facing potentially billions of dollars in damages.

Now, the handful of women who brought the lawsuit may pursue their claims on their own, with much less money at stake and less pressure on Wal-Mart to settle.

In an initial response to the decision, the National Women’s Law Center Co-President Marcia Greenberger stated:

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“Today, in a 5-4 ruling, the Supreme Court issued a devastating decision undoing the rights of millions of women across the country to come together and hold their employers accountable for their discriminatory practices. The Court has told employers that they can rest easy, knowing that the bigger and more powerful they are, the less likely their employees will be able to join together to secure their rights. The women of Wal-Mart—together with women everywhere—will now face a far steeper road to challenge and correct pay and other forms of discrimination in the workplace.”

News Law and Policy

Texas Court Greenlights Discrimination Against Transgender Students

Jessica Mason Pieklo

The ruling was not a decision on the merits of the Obama administration’s policy, but rather whether it followed the correct procedure in crafting it, U.S. District Judge Reed O’Connor wrote.

A federal judge in Texas on Sunday issued a preliminary injunction barring the Obama administration from enforcing guidelines designed to protect transgender students from discrimination in schools.

The ruling came in the multi-state lawsuitTexas v. United States, challenging the Obama administration’s guidance to schools that receive federal funding that transgender students must be given access to bathrooms that align with their gender identity rather than their biological sex.

Schools that defy the White House’s guidance would face potential loss of funding or federal lawsuits.

The lawsuit brought by Texas and states including Alabama, Georgia, Oklahoma, and Tennessee, targets various federal memos and statements that served as the foundation for the administration’s position that the Title IX of the U.S. Education Amendments of 1972 federal ban on sex discrimination encompasses gender identity discrimination. The administration charges that transgender people should be allowed to use restrooms consistent with their gender identity.

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The administration overstepped its authority in issuing the statement in violation of both the Administrative Procedure Act and the Constitution, according to the states challenging the guidance.

A nearly identical lawsuit challenging the White House’s policy was filed recently by the state of Nebraska. That lawsuit was joined by Arkansas, Kansas, Michigan, Montana, North Dakota, Ohio, South Carolina, South Dakota, and Wyoming.

U.S. District Judge Reed O’Connor wrote that the administration failed to engage in the proper administrative rule making process when directing schools to not discriminate against transgender students in access to restrooms and facilities. The ruling, O’Connor wrote, was not a decision on the merits of the administration’s policy, but rather whether it followed the correct procedure in crafting it.

“This case presents the difficult issue of balancing the protection of students’ rights and that of personal privacy when using school bathrooms, locker rooms, showers, and other intimate facilities, while ensuring that no student is unnecessarily marginalized while attending school,” O’Connor said in his ruling. “The resolution of this difficult policy issue is not, however, the subject of this order.”

Sunday’s ruling comes shortly after the Supreme Court put on hold a federal appeals court ruling ordering a Virginia county school board to allow a transgender student access to the restroom that aligned with his gender identity.

Analysis Law and Policy

The Supreme Court Could Give Religiously Affiliated Employers Even More Room to Discriminate

Jessica Mason Pieklo

A series of cases working their way through the courts could expand which businesses get a pass for offering employees discriminatory health and retirement benefits.

You may remember the Little Sisters of the Poor—that group of earnest nuns who challenged the process for accommodating religious objections to the birth control benefit in the Affordable Care Act. The Little Sisters, along with dozens of other religiously affiliated nonprofits, have continuously argued that the act of completing a form to be legally excused from complying with the law substantially burdens their religious rights.

Well, the Little Sisters remain tied up in litigation with the Obama administration over birth control, nondiscriminatory insurance coverage, and their religious objections to providing for both. But there’s more at stake here. To be clear, the Sisters are intent on doing everything they can to block comprehensive insurance coverage for their employees, and block third parties from providing it to them as well. But buried in litigation footnotes is a provision of employee benefits law that, if the Sisters and other religiously affiliated organizations get their way, will solidify another pass for discriminatory corporate practices beyond contraception coverage alone.

The Employee Retirement Income Security Act, or ERISA, is the federal law governing employee benefit plans, including retirement accounts and health insurance. Both the Department of Labor (DOL) and the Internal Revenue Service (IRS) are charged with ensuring ERISA compliance, which, as you can imagine, makes ERISA a prime target for conservatives who already hate “big government.”

Employer plans governed by ERISA have a few requirements that particularly draw conservative ire. One mandates that employer-sponsored retirement plans meet certain minimum funding levels by the employer. This is to help those plans be meaningful ways for employees to save for retirement, without putting the entire burden on those workers. Another provision forbids those plans from discriminating in benefits, such as matching a higher percentage of a male employee’s retirement contributions than a female one’s, or providing comprehensive health insurance coverage for men but not women. The ACA’s birth control benefit draws upon this theory.

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However, not all employers are required to follow ERISA. In particular, the statute exempts “church plans” from its requirements. ERISA defines church plans as those “established and maintained … for its employees … by a church or by a convention or association of churches which is exempt from tax under section 501 of the Internal Revenue Code.” Church plans also include those plans maintained by an organization “controlled by or associated with a church or by a convention or association of churches.” The rationale behind the church plan exemption is similar to the rationale behind most religious or ministerial exemptions to other nondiscrimination laws: Religious orders and institutions like churches and synagogues will generally employ people who follow the same religious tenets as they do because those organizations are engaged in spiritual outreach as part of their “business.”

That prohibition on ERISA governing “church plans” is also incorporated into the ACA.

Historically, organizations like the Little Sisters have had a regulatory pass when it came to maintaining retirement plans and insurance coverage that are either underfunded, discriminatory, or both. That’s because both the DOL and the IRS have been generous in their determination of how they interpret “controlled by or associated with a church or by a convention or association of churches.” And if those agencies determine that an organization has a “church plan,” that, in turn, means it won’t be subjected to a tax penalty for not complying with the ACA’s birth control benefit.

Given the explosion of religiously affiliated employers like hospitals and nursing homes, however, the scope of what does and does not qualify as a church plan has become an increasingly important issue. As religiously affiliated employers began to grow well beyond employing people of similar tenets, away from their ministerial core and into marketplace competition with secular, for-profit businesses, it has made less and less sense to allow those employers a pass to discriminate under ERISA.

At least that’s the argument advanced in a flurry of lawsuits challenging the scope of the church plan exemption under ERISA. Those lawsuits include one against Dignity Health Care, the Catholic-affiliated hospital system facing separate lawsuits related to failing to offer comprehensive reproductive health care at its hospitals. According to the allegations in the complaint, Dignity repeatedly underfunded its retirement plan in violation of ERISA. Dignity responded by arguing its plans were church plans and not subject to ERISA oversight.

Neither the district court nor the Ninth Circuit Court of Appeals bought Dignity’s argument, holding there was no way that when Congress created the church plan exception, it intended the exemption to stretch as far as to shield the country’s fifth-largest health-care employer from regulatory oversight.

That question presented in the Dignity case—of just how broadly that exemption extends—could end up before the U.S. Supreme Court next term. The Roberts Court is considering a pair of cases with this exact issue at their center. Both involve religiously affiliated hospitals, and both have appellate court decisions ruling that organizations like Dignity, which are not actually churches nor actually maintained by religious orders, may not qualify for the church plan exemption.

Which brings us back to the Little Sisters, on whose cases these organizations will undoubtedly base some of their own arguments. The Little Sisters do have a church plan. And it should mean that they will never have to comply with the birth control benefit anyway—which would give them no standing to challenge the ACA’s accommodation. But this is not the argument the Little Sisters and their attorneys want the courts or the public to hear. Instead, the litigation has focused on whether or not completing the form for the birth control accommodation would be a substantial burden for the nuns, despite the fact that at this point under ERISA, there is no question that the federal government could penalize the Little Sisters for refusing to comply with the contraception benefit.

However, the Little Sisters are more than just a group of nuns. They own and operate facilities that employ and serve others. The DOL and IRS have, to date, agreed that the Little Sisters benefits plan is in fact a church plan. But that is in part because without switching plan administrators, the question of whether or not their employee benefits package still qualifies for the exemption has not arisen again. If and when the Little Sisters do switch plans or administrators, the status of their benefits exemption will come up.

At some point during oral arguments in March in Zubik v. Burwell, the conglomerate of cases challenging the accommodation process to the birth control benefit, the fact that the Little Sisters had a church plan and would never be subject to having to comply with the benefit did come up. Paul Clement, who represented the nuns, skillfully dodged the question of whether there was a church plan issue for the Little Sisters. Instead of acknowledging that fact—one even established in the record as an assumption the Tenth Circuit Court of Appeals was making earlier in the litigation to move the case along—Clement assured the justices the church plan wasn’t really something the Court needed to concern itself with at the moment.

Maybe that’s because Clement and the nuns were hoping that if nobody noticed the pass given Little Sisters in their challenge to the birth control benefit, nobody would notice when hospitals and nursing homes also argue for the right to provide discriminatory retirement benefits and cite Zubik for their authority to do so. Maybe they didn’t know about the fight brewing in the appellate courts over which enormous corporate entities are shielded from regulatory nondiscrimination laws like provisions in ERISA and the ACA.

That seems unlikely, though, doesn’t it?

While it may be dry as toast, the church plan exemption under ERISA is critically important. As we’ve seen throughout the nonprofit challenges to the birth control benefit, when employers are allowed to opt out, the effect disproportionately falls on poor women and women of color. And the wages offered to hospital and nursing home workers? They hardly are the kind to lift a person up to more stable financial footing. Which is all another way to say that conservatives’ assertions that institutions like Dignity Health fulfill some spiritual mission and should therefore be treated like a church are all smoke and bluster. Instead, these institutions want cover for ongoing attempts to nickel-and-dime their own workers and to discriminate, based on religious beliefs, when it comes to how and whom these institutions serve. And they’re hoping the Roberts Court will give it to them this next term.

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