The Legal Business Implications of the Fall of Roe v. Wade

Jun 9, 2022 | Blog
Partner

Updated June 27, 2022

Businesses have a lot to consider in the wake of the Supreme Court’s ruling overturning Roe v. Wade, the 1973 landmark case protecting federal abortion rights. As Americans prepare for the realities of a post-Roe era, businesses need to be thinking about how they will adjust and respond to the changes in federal and state laws, especially how these changes will affect their employees.

The federal overturn of Roe v. Wade is likely to result in abortion bans in at least 20 states, according to an estimate by the Guttmacher Institute and the Washington Post. This means that companies located in or operating in these states will be affected:

In previous weeks, following the Supreme Court draft leak indicating that Roe was going to be overturned, several of the largest companies in the U.S. preemptively announced plans to adjust their employee benefit packages to reimburse employees for expenses incurred while travelling out-of-state to receive abortion care in states where it is legal. These companies included Yelp, Citigroup, Amazon, Starbucks, Apple, Tesla, Levi Strauss, and Hewlett Packard. Other companies pledged to take similar actions, such as setting up funds for employees seeking abortion care (Bumble, Match); helping employees relocate to other states where abortion is legal (Salesforce); and agreeing to pay any legal fees for drivers transporting people who are accessing abortion care (Lyft, Uber).

A company’s decision to cover such costs is likely to raise novel legal and business implications. For example, shareholders may object to the use of company funds for a medical procedure that is illegal in certain states, resulting in shareholder derivative suits. The company could also find itself in a position like the Walt Disney Company. Disney, which is Florida’s largest employer, lost its tax exempt status after it voiced opposition to legislation barring classroom instruction on sexual orientation and gender identity.

On the other hand, a company that elects not to allow time off or cover costs for abortion travel, or that wants to transfer an unwilling employee to a state that bans abortion, may face employee rights and constitutional law lawsuits. None of these scenarios have any direct legal precedent. Therefore, taking into account any changes in state law to protect a company’s interests is critical.

Regardless of a company’s official stance on the issue, all companies must be cognizant of employees’ rights in a post-Roe era and conduct a review of their policies and employee handbooks in light of the change to law that has existed for almost 40 years. There are also a host of significant legal concerns that companies engaged in interstate commerce or which operate in states that choose to criminalize abortion should begin planning for now to avoid costly legal battles.

Below are several hypothetical scenarios that companies could be facing in the near future in a post-Roe world.

Scenario 1

Company X is located in a state that has banned or severely restricted abortion rights. Company X subsequently amends its employee benefits plan to reimburse employees for out-of-state travel to obtain abortions in non-restricted states. However, Shareholder Smith (who owns stock in Company X) objects to corporate funds being used to cover abortion expenses. Can Shareholder Smith bring suit against Company X?

In the scenario described above, a shareholder could take one of two actions, either introducing a shareholder proposal or—on the more aggressive end—bringing a derivative suit against the company. If the shareholder(s) fit the Securities and Exchange Commission’s (SEC) criteria to be eligible to submit a proposal, they may do so to make a “recommendation or requirement that the company and/or its board of directors take action.” Other eligible shareholders will then be able to vote to approve or disapprove the proposal.

A shareholder wanting to be more assertive could theoretically bring a derivative shareholder lawsuit for breach of fiduciary duty if they feel that a company’s reimbursement of employees for abortion travel is an unnecessary financial burden to the company or constitutes aiding and abetting criminal activity. However, the company’s board of directors (or other shareholders for that matter) could just as easily make the opposite argument—that abortion access is a business consideration and that restricted access to abortion can pose unnecessary financial risk to the company in the form of employee turnover, extended leave, difficulty recruiting employees in abortion-restricted states, and even reputational damage.

Scenario 2

Jane Doe, an employee at Company X, requests payment from Company X for travel expenses to travel to another state to receive abortion care pursuant to Company X’s new policy stating that it will cover eligible travel expenses for employees who do not have access to abortion care or gender-affirming procedures within 100 miles of their home. In order to receive reimbursement for these expenses, does Jane Doe have to disclose to Company X that she is traveling to receive an abortion?

An employee making the personal decision to have an abortion may not wish to disclose this private health information to their employer. In situations where this disclosure is unavoidable (e.g., where companies reimburse employees for abortion-related travel expenses directly and not through a health insurance plan), companies must be cognizant of employees’ privacy rights as well as applicable HIPAA requirements.

Companies should specify in their employee handbooks that any health information regarding an employee (or employee’s family member) that is disclosed to the employer will be treated confidentially (preferably to a single designated individual within the company’s human resources department) and that requesting such payments will not result in any retaliation against the employee. It would also be advisable to have the employee indicate in writing that they have consented to disclosure of the information to the designated individual and that the individual may disclose the information as necessary to professionals such as accountants or lawyers advising the company. Companies will also have to consider how to avoid flagrant abuses of these programs.

Alternatively, companies may arrange to handle abortion-related travel expenses in the way Yelp has decided to. As reported by the New York Times, Yelp has structured its new policy so that “…employees will be able to submit receipts for travel expenses directly to their health insurance company…So no one else at Yelp is ever going to know who is accessing this, or how or when, and it will be a reimbursement that comes through the insurance provider directly.” This method could eliminate the need for employees to disclose an abortion to their employer, as well as eliminating the company’s burden to ensure the protection of this information.

Scenario 3

The state that Company X is located in prohibits entities from “aiding and abetting” an abortion. If Company X reimburses Jane Doe for expenses related to a legal out-of-state abortion, can Company X still be held civilly or criminally liable for aiding and abetting an abortion, even though the activity occurred in another state?

Companies in states that have laws against aiding and abetting an abortion (e.g., Texas and Oklahoma) will very likely face this issue. If the state’s laws do not specifically address whether the regulations extend to out-of-state services, it may be up to the courts to decide the scope of the law. But even in states that don’t specifically prohibit the aiding and abetting of an abortion, if abortion is criminalized, companies could face charges for generally aiding and abetting a crime.

But once again, there are many questions that will have to be answered: Is abortion still considered a crime if it’s performed in a state in which abortion is legal? Who would have standing to bring these suits based upon out-of-state services? Does reimbursement for travel expenses sufficiently amount to “aiding and abetting”?

Additionally, for employers with self-funded insurance coverage plans governed by the Employee Retirement Income Security Act (ERISA), these plans pre-empt state laws regarding medical benefit plans. This could ostensibly help to shield a company from liability in the event that it is charged with aiding and abetting an abortion through the reimbursement of travel expenses.

Scenario 4

Company Y produces pharmaceuticals and medical supplies, some of which are often used for abortion care. In states that prohibit aiding and abetting abortions, could Company Y be held legally liable if their products are shipped to a state that criminalizes abortion and are used to help perform an abortion?

Once again, this would likely depend on the scope of any aiding and abetting laws enacted by the state, as well as geographical considerations. For example, if a medical supply company based in California provides supplies to a clinic also in California, and a Texas resident drives across states lines to receive an abortion at that clinic, the company’s lack of nexus with Texas may make it harder for the state to bring claims against it.

Whereas if the medical supply company is located in Texas—or if the supply company is located in California but provides supplies for a clinic in Texas that is performing abortions illegally—this would put the company in closer proximity to Texas’ jurisdiction and could increase the likelihood of a successful lawsuit.

The specificity of the products or medications being used could also be taken into consideration. Since many pieces of medical equipment, supplies, and medications can be (and are) used for various medical procedures, it may be difficult to prove that a company “knowingly” aided and abetted an abortion specifically.

Scenario 5

Company X wants employee Jane Doe to relocate to a state that has banned or severely restricted abortion rights. Jane Doe refuses to relocate and is subsequently passed over for a promotion or even fired. Does Jane Doe have standing to bring a discrimination suit against Company X?

Employee relocation rights are typically outlined in an employment contract (which may take the form of a formal “mobility clause”) and can generally be enforced if the employer acts on these terms in a reasonable manner. However, it is feasible that a female employee being asked to move to a state without access to abortion could argue that such a requirement is “unreasonable” in that it would severely restrict her access to what she deems vital healthcare.

The female employee may also have standing to make a discrimination claim based on the fact that a move to such a state could adversely affect her as a woman in a way that it would not affect a man. Title VII of the Civil Rights Act protects against pregnancy discrimination that takes the form of “disparate impact,” i.e., “…a neutral policy or practice [that] has a significant negative impact on women affected by pregnancy, childbirth, or a related medical condition, and either the policy or practice is not job related and consistent with business necessity or there is a less discriminatory alternative and the employer has refused to adopt it.”

While the scenario we have described above would not necessarily fall cleanly under the “disparate impact” definition and an employer could indeed make the case that a relocation is a business necessity, it’s not out of the realm of possibility that an employer could be challenged on this point. For companies in states with restrictive abortion laws, considering remote work policies as an alternative to relocation may help avoid this issue.

If you have any questions regarding your company’s preparation and execution of policies in the wake of the overturn of Roe v. Wade or are in need of legal advice on other general counsel matters, please contact Laura-Michelle Horgan.