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Can States Ban Employer Abortion Aid? Post-Roe Limits Explained

June 28, 2022, 2:17 PM

Employers could find themselves in the crosshairs of state efforts to crack down on abortion in the wake of the landmark US Supreme Court ruling eliminating federal guarantees for abortion rights.

Many large companies, including Amazon.com Inc., Apple Inc., and Uber Technologies Inc., have pledged to pay travel costs for workers seeking abortions in states where they remain legal.

But state laws in Oklahoma and Texas that prohibit assisting somebody to get an abortion, as well as the potential for copycat or other versions of anti-abortion legislation in red states, threaten legal risks for employers and their executives who actively support abortion access for their employees.

1. Can states ban companies from paying for travel?

States could face legal limits to their authority in this area, particularly federal preemption under the Employee Retirement Income Security Act.

ERISA prevents states from regulating employers’ group health plans—where medical-related travel assistance often resides—but that preemption applies only to self-funded plans, which are mostly used by large employers. The fully insured plans that smaller employers often use are generally subject to state regulation.

But as for employers’ abortion assistance benefits, “this is all very new. Nothing like this has been tested yet in the context of ERISA preemption,” said Jennifer B. Rubin, an employment lawyer with Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.

The travel assistance benefits generally apply to employees as well as their dependents because most companies are offering them as part of their health insurance plans, said Katy Johnson, senior counsel for health policy at the American Benefits Council.

Justice Brett Kavanaugh threw cold water on the idea of states limiting out-of-state travel in his concurring opinion to the June 24 Dobbs v. Jackson Women’s Health Organization ruling because of the constitutional right to interstate travel. But one Texas state legislator, Rep. Briscoe Cain (R), countered in a tweet that the Constitution doesn’t include a right to pay for someone’s interstate travel.

Cain is leading a group of Texas lawmakers proposing ways to make it easier for the state to prosecute companies that help people get out-of-state abortions—ideas that the group outlined in a May 6 letter to Lyft Inc. CEO Logan Green.

2. How else might states go after companies backing abortion access?

The Texas legislators’ letter outlined a handful of strategies that could heighten the legal risk for companies and their executives.

These included proposals to bar companies from doing business in Texas if they pay for abortion-related expenses, empowering companies’ shareholders to sue the executives and directors for breach of fiduciary duty, and imposing felony criminal liability on executives who opt to use company money to pay for abortion-related expenses without first getting approval from all company shareholders.

Other conservative states haven’t been so specific about whether or how they might take on employers actively supporting abortion rights.

Florida Gov. Ron DeSantis (R), for example, said on June 24 that his state will seek to advance anti-abortion policies, but those efforts will have to overcome Florida’s own state-court precedents protecting abortion rights within the state constitution. DeSantis publicly butted heads this year with Walt Disney Co. after the company opposed limiting LGBTQ-related lessons in schools, and the governor supported taking away Disney World’s unusual status as its own local governing district.

South Dakota’s Gov. Kristi Noem (R), while defending her state’s abortion ban with no exception for rape or incest in a weekend interview with CBS News, indicated she doesn’t intend for her state to prosecute people who travel out of state for abortions or companies that assist them.

3. Can employers face liability under existing laws?

While many states have laws that prohibit abortion, the bounty measures in Texas and Oklahoma most clearly target employers. They allow citizens to sue anyone who “aids and abets” an abortion as early as six weeks into a pregnancy, which includes “paying for or reimbursing the costs of an abortion through insurance or otherwise.”

Courts will have to decide whether that applies to an employer funding an out-of-state abortion, although state authority typically ends at its borders. Some Texas Republicans seem to think the law does apply to such funding, lashing out at Citigroup Inc. after the bank announced in March that it will pay travel expenses and other costs for workers forced to leave a state for an abortion.

The Texas law has proved difficult to challenge in court. The US Supreme Court ruled in December that the only valid defendants to a legal challenge were state licensing officials. The Texas Supreme Court, which has the last word on interpreting state law, held in March that those officials can’t be sued because they don’t enforce the law.

4. What about paying for abortion medicine?

The brewing conflict over mifepristone, a medication that’s used for the majority of US abortions, will have ramifications for employers.

If states criminalize the use of medication to end pregnancies, then employers with health plans that cover the cost of those drugs could face prosecution as an accessory when workers use them.

The Biden administration has said states can’t ban the drug because it’s been deemed safe and effective by the Food and Drug Administration, though states may seek other paths to block its use.

READ MORE:

Big Employers to Cover Abortion Travel After Roe Decision (1)

Insurers Pressed on Contraceptive Coverage After Roe’s Demise

Garland Says DOJ Will Protect Right to Get Abortion Out-of-State

Clinics in Abortion Haven States Might Not Meet Post-Roe Demand

To contact the reporters on this story: Chris Marr in Atlanta at cmarr@bloomberglaw.com; Robert Iafolla in Washington at riafolla@bloomberglaw.com

To contact the editor responsible for this story: Martha Mueller Neff at mmuellerneff@bloomberglaw.com