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► Impact Of Supreme Court's Two Rulings For Religious Employers

Last month, the U.S. Supreme Court decided two cases, both by 7-2 votes, involving religion’s impact on employment. First, the Court clarified the applicability of the ministerial exemption for religious schools and organizations from the federal antidiscrimination laws.

Second, the Court upheld two Trump administration interim rules stating employers with sincerely held religious beliefs or moral objections to providing insurance coverage or payments for contraceptive services can’t be required to offer the coverage or payments.

Ministerial Exception

Facts. For the first ruling, the Court consolidated two cases, each involving educators at Catholic elementary schools. As part of their employment, both teachers signed agreements stating their role was to promote the school’s religious mission, and they received employee handbooks declaring the same.

After their agreements weren’t renewed, both filed discrimination charges with the Equal Employment Opportunity Commission (EEOC)—one under the Age Discrimination in Employment Act (ADEA) and the other under the Americans with Disabilities Act (ADA).

The district court granted summary judgment (dismissal without a trial) to the schools by applying the ministerial exception, a doctrine related to the First Amendment that prevents government interference in religious organizations’ ability to hire and fire employees.

The U.S. 9th Circuit Court of Appeals reversed, holding the ministerial exception didn’t apply because the schools hadn’t satisfied the four factors previously recognized (in 2012) by the Supreme Court in in Hosanna-Tabor Evangelical Lutheran Church and School v. EEOC. The four factors were whether:

•  The individual was given the title of “minister, with a role distinct from that of most of its members”;

•  The job “reflected a significant degree of religious training followed by a formal process of commissioning”;

•  The person held herself out as a minister of the church by accepting the formal call to religious services and claiming certain tax benefits; and

•  The “job duties reflected a role in conveying the Church’s message and carrying out its mission.”

In Hosanna-Tabor, the Court declined “to adopt a rigid formula for deciding when an employee qualifies as a minister.” It identified the four relevant circumstances but was silent on the manner in which they should be analyzed or given any particular weight.

Court’s decision. The Supreme Court determined the four factors examined in Hosanna-Tabor weren’t a rigid test. In addition, there was enough evidence in the record to conclude both teachers performed vital religious duties that triggered the 2012 case’s limitation on judicial interference in employment decisions of a religious nature.

The Court noted the underpinning for the ministerial exception rests on “the general principle of church autonomy to which we have already referred: independence in matters of faith and doctrine and in closely linked matters of internal government.”

The Court then boiled down the four factors to a critical underlying question: What is the individual’s role in conveying the church’s message and carrying out its mission? The other factors simply help “shed light on that connection.”

In a nutshell, the inquiry must focus on what the employee in question actually does and whether the functions are in the furtherance of conveying the church’s message and carrying out its mission. Our Lady of Guadalupe School v. Morrissey-Berru.

Ruling’s impact. It’s too early to know the decision’s full practical impact. Nevertheless, it will likely allow religious organizations to assert the ministerial exception as a defense and seek dismissal early in litigation.

Going forward, determining whether the ministerial exception applies will be a fact-specific inquiry examining whether the particular individual’s role was conveying the church’s message and carrying out its mission.

Religious organizations may want to reevaluate their personnel documents to ensure they adequately memorialize the employee’s role is to further the church’s mission and include specific expectations about how the individual will do so.

Religious Beliefs Exemption from Contraceptive Coverage Mandate

Facts. The second case dealt with employers that have sincerely held beliefs against providing insurance coverage or payments for contraceptive measures to covered females under the Patient Protection and Affordable Care Act of 2010 (ACA). It focused on two interim rules issued by the U.S. Departments of Health and Human Services (DHS), Labor, and Treasury:

•  One Trump administration rule expanded the church exemption to the ACA’s contraceptive mandate to include an employer that “objects . . . based on its sincerely held religious beliefs” against providing the insurance coverage or payments for the services.

•  The second rule created an exemption for employers with sincerely held moral objections to providing certain forms or any contraceptive coverage.

The two interim rules followed the Supreme Court’s 2014 decision in Burwell v. Hobby Lobby, which found the ACA’s requirement to cover contraceptive services substantially burdened the free exercise of certain businesses with sincerely held religious objections to providing employees with the services.

Court’s decision. In a 7-2 decision written by Judge Clarence Thomas (four judges wrote or joined in concurrences), the Court upheld the two interim rules. It found the departments had the authority to establish the rules and that they don’t have any procedural defects.

According to the Court, the ACA’s plain language gave the departments the authority to establish the exemptions based on its provisions allowing a DHS agency to set comprehensive guidelines for preventative care and screenings for women.

The Court found the language gave the departments the authority to decide (1) the care applicable health plans must cover and (2) exemptions from the guidelines. The majority rejected the argument the rules were contrary to Congress’ intent, finding such concerns couldn’t contradict the statute’s plain meaning.

The Court declined to determine if the Religious Freedom Restoration Act of 1993 (RFRA) required the exemptions in the two rules. The Court ruled, however, the departments could and should have considered the RFRA in developing the rules and that the failure to do so could lead to claims the rules were “arbitrary and capricious for failing to consider an important aspect of the problem.”

The majority also found the procedure for adopting the rules satisfied any notice requirements, all rulemaking requirements were satisfied, and any error in the notice wasn’t prejudicial (or harmful). Little Sisters of the Poor Saints Peter and Paul Home v. Pennsylvania, et al. and Trump v. Pennsylvania, et al.

Ruling’s impact. As the four concurring judges noted, the Court’s ruling doesn’t end the litigation, and the matter will now go back to the individual states that challenged the rules, where they predicted further challenges will arise. Two concurring judges stated they would have decided one additional question—that the RFRA mandates the two rules—and thus ended the litigation.

The other two concurring judges agreed with the majority ruling, although on different grounds, and openly questioned whether the rules would “survive administrative law’s demand for reasoned decisionmaking.”

Bottom Line

The impact likely will be felt for years as lower courts address the two rulings’ parameters. For now, religious institutions have some additional guidance and flexibility in asserting the ministerial exemption.

In addition, employers with religious or moral objections to providing some or all contraceptive services have valid rules to assert for refusing to provide the coverage until an objection or challenge supports an injunction preventing the enforcement of the rules.
 

By Wesley C. Redmond and Jeffrey G. Douglas, attorneys with FordHarrison LLP.

[8/2020]

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