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In late June, the Supreme Court issued two opinions that should be on your radar for “human capital” (and disclosure) risks. In Groff v. DeJoy, the Court held that when it comes to accommodating employees’ religious practices, “an employer must show that the burden of granting an accommodation would result in substantial increased costs in relation to the conduct of its particular business.” In a panel I moderated for the American College of Governance Counsel right after this opinion was issued, Stanford Law’s Joe Grundfest said that this decision could open the floodgates to religious accommodation requests and will heighten risks & complexities for companies.

I’m not going to pretend to be an employment lawyer here – so consider this blog a reminder to consult with the experts. But this Goodwin memo summarizes potential implications so that you – and your board and management team – can issue-spot. Here’s an excerpt:

The Groff Court emphasized that context matters in assessing whether a religious accommodation imposes an “undue hardship” on employers. Before denying requests for religious accommodation, employers must be able to show that the cost to their business of accommodating a religious request would be excessive or unjustifiable. If relying on the burden placed on other employees as the basis of the undue hardship, employers must be able to demonstrate how the accommodation’s impact on other employees would substantially affect the conduct of the business itself. This may be an easy burden to meet when the accommodation would impose health and safety risks to co-workers. It also continues to be satisfied in the Hardison context, that is, where scheduling adjustments cannot be accommodated with collectively bargained seniority rights. However, for scheduling requests to accommodate Sabbath observance or prayer breaks, it will be harder to distinguish when burdens on other employees are sufficient create a “substantial cost” to the conduct of the business.

Many employers that implemented COVID-19 vaccine mandates received requests for exceptions from the mandates based on religious objections to vaccinations, often seeking to work remotely as an alternative to vaccination. In some cases, employers relied on the “more than a de minimis cost” language to justify the denial of such requests. Under the standard set forth in Groff, however, such an employer would be required to grant an option such as remote work, unless it could show that granting the accommodation would result in substantial increased costs in relation to the conduct of its business.

Employers should ensure that those employees who are responsible for considering religious accommodations understand that the commonly relied upon “more than a de minimis cost” language is not the legal standard for assessing undue hardship, and that instead an employer may not deny a religious accommodation based on undue hardship unless the employer faces “substantial increased costs in relation to the conduct of its particular business.” Furthermore, the decision emphasizes the need for employers to demonstrate respect for individuals’ religious beliefs, since employee or customer hostility based on religion cannot be a consideration in assessing proposed accommodations for religious beliefs or practices.

– Liz Dunshee