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By Edward Zelinsky

Few recent decisions of the US Supreme Court have engendered as much controversy as Burwell v. Hobby Lobby Stores, Inc. In that case, the Court decided that a closely-held corporation’s employer-sponsored medical plan need not provide contraception if the shareholders of such corporation object to contraception on religious grounds.

Responding to the resulting controversy, Senator Patty Murray, along with many of her Democratic colleagues, has proposed legislation to overturn Hobby Lobby. Senators Kelly Ayotte and Deb Fischer, along with many of their Republican colleagues, have introduced legislation confirming Hobby Lobby. In the current political environment, there is little chance of either bill becoming law any time soon.

However, there is a response to Hobby Lobby which would address the concerns of both contraception advocates and of religious objectors to contraception. In particular, any employer which objects to providing birth control should instead be required to fund for its employees independently-administered health savings accounts (HSAs) or health reimbursement arrangements (HRAs). An HSA or HRA permits the covered employee to spend employer-provided, pre-tax health care dollars on any medical service the employee chooses, from birth control to an MRI, without implicating the employer in the employee’s spending decision.

The HSA/HRA alternative respects the religious rights of sponsoring employers. With conventional insurance or self-insured health plans, the sponsoring employer’s plan provides a menu of choices which frames the employees’ decisions. In contrast, the HSA/HRA approach permits employees to spend health care dollars on whatever medical services employees select including services to which the employer objects – without the employer’s plan framing the employees’ choices. HSAs and HRAs are thus like cash wages which, when spent by the employee, do not entail participation by the employer.

Justice Alito’s Hobby Lobby opinion identifies two other possible ways to provide contraception services without violating the rights of objecting employers. First, HHS might extend to closely-held for-profit firms the regulatory accommodation now limited to religious nonprofit entities other than churches. Under this accommodation, insurers or third-party administrators provide employees with contraception at no cost to the religious employer. Alternatively, the federal government might itself make birth control available to women who lack contraception coverage from their employer-sponsored health plans.

Commentators have expressed reservations about both these approaches. Some women’s health groups argue that a federal program will stigmatize the women who receive their contraception from such a program. Moreover, the problems of the Department of Veterans Affairs suggest the need for skepticism about the federal government as a provider of medical services. A number of religious groups contend that the current regulatory accommodation for religious employers does not go far enough and still makes employers participate in the provision of birth control to which they object.

In light of these concerns, HSAs and HRAs are compelling alternatives. HSAs and HRAs are analogous to cash wages which the employee spends as he chooses. Such accounts can assure women of the ability to obtain contraception which they seek with employer-provided, pre-tax health care dollars without burdening the religious beliefs of employers who object to involvement with contraception.

Suppose, for example, that Hobby Lobby is required to establish for each of its employees an HSA or HRA administered by the company’s bank. A Hobby Lobby employee could submit receipts to the bank for any type of medical care the employee selects. The employee would subsequently receive from the bank a reimbursement check for this care from his or her HSA/HRA account. Alternatively, HSA/HRA debit cards have become popular devices. These cards allow a covered employee to swipe when receiving health care services with the card.

These accounts could be used by each employee to defray any medical expense the employee elects including, but not limited to, the kinds of contraception to which the employer objects. However, the employer would not be complicit in the employee’s medical choices just as the employee does not participate in an employee’s decision to spend her wages on something with which the employer disagrees.

The HSA/HRA approach potentially has political legs. HHS (along with the Departments of the Treasury and Labor) could adopt regulations implementing this approach. Conservatives like HSAs and HRAs since these accounts implement a consumer-driven approach to health care. Liberals want to assure employees of contraception even if employers object to contraception. The HSA/HRA response to Hobby Lobby thus has bi-partisan appeal and is a compelling compromise as a matter of law and public policy.

Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America. His monthly column appears on the OUPblog.

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The post The HSA/HRA response to Hobby Lobby appeared first on OUPblog.

        

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By Lana Goldsmith, Intern

Scott Shane is the A. Malachi Mixon III Professor of Entrepreneurial Studies at Case Western Reserve University.  In this post, Shane deliberates the pros and cons of genetic testing in the workplace.  This is an adaptation from his new book Born Entrepreneurs, Born Leaders: How Your Genes Affect Your Work Life which shows how a heightened awareness of your own – and your colleagues’ – genetic predispositions can make you a better employee or employer.

Our genes impact numerous aspects of our work lives, from our tendency to start businesses to our job satisfaction to our leadership abilities to our decision-making styles. While we aren’t yet at the point where companies can use genetic information diagnostically, we might be in the near future.

Some observers have pointed out that as knowledge of how our genes affect our behavior in the workplace grows, companies might benefit from using this information. That raises the question: Should companies be allowed to use genetic information in the workplace?

Many, it seems, have come down against this prospect. In the United Kingdom, the Nuffield Council on Bioethics concluded in a 2002 report entitled Genetics and Human Behavior, “Employees should be selected and promoted on the basis of their ability to meet the requirements of the job. . . . Employers should not demand that an individual take a genetic test for a behavioral trait as a condition of employment.” (p. 183.) And, according to an April 24, 2004 article in the Wall Street Journal, Jane Zhang and Shirley Wang report that, in the recent genetic nondiscrimination bill, Congress made it illegal to use genetic information “to make hiring, firing, and other job placement decisions.” (p. A11).

Like many things dealt with definitively, there is another part of the story, which makes the issue less simple than it appears at first glance. Congress in the United States and the Nuffield Council in the United Kingdom clearly addressed one side of the issue: companies should not be allowed to hire people on the basis of something that they have no control over and can’t really change, because doing so would be inherently unfair.

On the other hand, how “fair” are other selection criteria relative to genetic testing? Numerous studies have shown the bias that people involved in the employment process have for physically attractive job candidates of the opposite sex. But appearance is, in large part, outside of one’s control, and is hard to change. So how is it fair to allow managers to make employment decisions on the basis of physical appearance, but bar them from using selection tools that incorporate genetic information?

What about the issue of fairness that comes up if we do not allow companies to use genetic data to assign people to jobs or training? If employers aren’t permitted to use hereditary information in this way, and they subsequently punish people for poor performance on the job, then we are implicitly allowing the companies to engage in genetic discrimination.

To see what I mean, take the example of a company which provides its employees with financial rewards if they take courses to develop their leadership skills, as Stephen Robbins and Tim Judge’s best selling textbook, Organizational Behavior (13th edition, Prentice Hall, 2009) reports a number of companies do. A sizeable portion of the difference between people in the ability to direct others comes from their DNA. This means that some people are genetically inclined to do better than others in leadership develop

Last year was my first year as a freelancer. I spent a good portion of that year wondering if I'd always be hoping the next phone call would be from a client that had more than $50 and wildly inventing ways in which I could try to sell my art work. Many days were spent preparing for and being at local events where I sold merchandise I had created that ranged from woodburnt art earrings to prints and cards. The hardest part of that year was not the worry that I had made the wrong decision but rather was in making the decision to quit my full time job in the first place. I knew in my heart for years that each day I went into work I was in the wrong place and I struggled to understand why my dream job wasn't turning out like I had always hoped it would be.

Perhaps the expectations and dreams of fresh eyed students entering the work force should be given a more realistic perspective? Most likely though, I think the beautiful passion and hope that I was granted via my parents and the instructors I studied under at school are to blame for me not throwing in the towel when I felt illustration was a ridiculous industry. Students entering the work force this year will need a healthy dose of optimism in the face of our global economic downward slope so that no matter how long they are forced to sit in the moonlight working and gathering overtime hours under employers who give care only about their bottom line will still make it through and not trade in their diplomas for something that seems more promising.

But here I am, not even two years later, swamped in work that I feel so blessed to be a part of that I could cry with happiness and managing to make money in the process. Sure, I've traded in a few benefits - maternity leave (in Canada, this is a full year), a steady pay check and co-workers but my list of newly acquired benefits would make that list seem quite silly now... anyone else feel the same way?

As this is my 199 post my next post will be a "giveaway" post - so stay tuned!

Edward A. Zelinsky is the Morris and Annie Trachman Professor of Law at the Benjamin N. Cardozo School of Law of Yeshiva University. He is the author of The Origins of the Ownership Society: How The Defined Contribution Paradigm Changed America. In this article, Zelinsky discusses the U.S. Supreme Court’s recent decision in MetLife v. Glenn. That decision, he concludes, unintentionally reinforces the trend from defined benefit to defined contribution plans. Under MetLife v. Glenn, employers which sponsor and administer defined benefit pensions operate under a conflict of interest which subjects their administrative decisions to greater legal scrutiny.

Wanda Glenn was an employee of Sears, Roebuck & Company (“Sears”) and, as such, was covered by the Sears long-term disability insurance plan. Metropolitan Life Insurance Company (“MetLife”) both administered and insured the Sears plan. Ms. Glenn applied for continuing disability benefits. MetLife, as plan administrator, denied Ms. Glenn’s application for benefits which, if granted, MetLife, as the plan’s insurer, would itself have paid.

Ms. Glenn sued. Her lawsuit made its way to the U.S. Supreme Court which held in MetLife v. Glenn that, in light of the discretion confided to MetLife by the Sears plan, MetLife’s denial of Ms. Glenn’s disability benefit was to be reviewed judicially under a deferential “abuse of discretion” standard. However, the Court further stated, MetLife, as plan administrator, operated under a conflict of interest since any benefits MetLife granted as such administrator MetLife itself also paid as the plan’s insurer. Hence, in assessing whether MetLife, as plan administrator, abused its discretion, the courts must, among other factors, “take account of the conflict” MetLife faced as a plan administrator which was also the plan insurer. Such conflict of interest might “act as a tie-breaker when the other factors are closely balanced.”

MetLife v. Glenn has engendered extensive discussion. However, so far, one aspect of this decision has gone unremarked: MetLife v. Glenn is one more unintended push from our legal system, nudging employers away from traditional defined benefit plans towards 401(k) plans and other similar defined contribution retirement arrangements. After MetLife v. Glenn, the administrative decisions of employers sponsoring and administering defined benefit pensions will typically be subject to greater legal scrutiny than will be the administrative decisions of employers sponsoring and administering most 401(k) and similar individual account arrangements. This greater scrutiny incents employers to shift from their defined benefit pensions to defined contribution plans.

Embedded in the traditional defined benefit pension administered by the sponsoring employer is the conflict of interest stemming from the employer’s obligation, as plan sponsor, to pay the costs of the plan — just as MetLife, as insurer, paid from its premium revenues the costs of the Sears disability plan. In the defined benefit setting, greater plan distributions to participants and beneficiaries require greater employer contributions to the plan. Consequently, any distribution denial by the employer sponsoring a traditional defined benefit pension implicates the conflict of interest in which MetLife found itself: If the employer as plan administrator denies plan benefits, it thereby reduces its costs as plan sponsor.

In contrast, an employer sponsoring and administering a typical defined contribution plan usually has no such conflict of interest since the individual accounts of such a plan belong to the participants. If, for example, an employer, as administrator of a 401(k) plan, denies a participant a hardship distribution from the plan, that denial does not decrease the employer’s costs; it merely delays the distribution to the participant of his 401(k) account until later. Since there is no conflict of interest in that setting, under MetLife v. Glenn, the employer’s decision will receive greater deference if challenged in the courts.

An important factor causing the decline of traditional defined benefit pensions and the concomitant rise of individual account arrangements like 401(k) plans has been the heavy regulatory cost imposed on defined benefit plans. MetLife v. Glenn represents the latest such cost, an unintentional cost, perhaps a small cost, but a cost nonetheless. Employers who sponsor and administer defined benefit plans are now on notice that, because of their conflicts of interest, their administrative decisions will generally receive less deference from the courts than will the comparable decisions of their competitors sponsoring and administering 401(k) plans who do not operate under such conflicts of interest. By itself, this will rarely cause an employer to terminate its defined benefit pension and shift to an individual account arrangement. But, to paraphrase the Supreme Court, this is the kind of cost which can act as a tie-breaker when the decision is close.

Consequently, Metlife v. Glenn, by reducing the deference ultimately granted to employers which sponsor and maintain defined benefit pensions, represents one more small, but unintended, push away from such pensions.

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