Testing Your LGBTQ I.Q. in the Workplace

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Testing Your LGBTQ I.Q. in the Workplace

By Donna L. Roberts and Stephen H. Price*

 

If there were a website devoted exclusively to controversial topics facing in-house counsel, its drop-down menu would be overwhelming.  It would be crowded with everything from gun rights and marijuana usage to social media threats and public access issues. LGBTQ rights would also make that list.

 

The social polarization on these topics fuels activist groups (on both sides of every debate) who are mobilizing through legislation, impact litigation, and sometimes, very effectively, through the court of social (media) opinion.  As a result, we are challenged to stay abreast of what seems like daily breaking legal news.  We advise our companies or clients, who have the weighty task of establishing a corporate “position” on such topics, through an issues management program or within the context of a corporate social responsibility platform (phrases that were not common vernacular in 1964).  We are often called upon to answer questions such as:

    • “Do we need to reprint thousands of employee handbooks to include sexual orientation in our anti-discrimination policy?”
    • “Do we really have to remodel our bathrooms so they are unisex?”
    • “Does the law prohibit us from asking our employees and customers to adhere to our women/men bathroom designations?”
    • “How do we support or respond to an employee who is transitioning or to another employee or customer who feels uncomfortable about that?”

Before diving into the evolution of Title VII, we should begin with an appreciation of the following related terminology as it has evolved: ”LGBTQ" is an acronym for lesbian, gay, bisexual, transgender and queer or questioning.  Sometimes an “I” for intersex or an “A” for ally or asexual are added to this acronym.  According to HRC.org, these terms are defined as follows:

 


The U.S. Supreme Court recognized over 25 years ago that discrimination against employees based on “sex stereotypes” is unlawful.  Almost 10 years later, the Court made it clear that “same sex” harassment is a form of sex discrimination in employment.  Two years ago, the Court ruled that states must recognize same-sex marriages.  But the Supreme Court very recently side-stepped the issue of whether schools must allow transgender students to use bathrooms consistent with their gender identity.  The U.S. Court of Appeals for the Seventh Circuit very recently became the first appellate court to prohibit sexual orientation discrimination in employment.  So, what does this changing legal landscape mean for employers now?  To figure out where we're heading, we first need to consider where we've been.

 

How did we get here?

 

Congress first outlawed sexual, racial, and other protected forms of discrimination by most employers as part of its passage of Title VII of the Civil Rights Act of 1964, which was a watershed moment in American legal history.  But this prohibition against discrimination based on sex was a last-minute amendment from the floor of the House of Representatives.  So, there is little to no record of what Congress truly meant by the phrase "because of sex" as used in Title VII.  This lack of legislative history has made it more challenging for courts to determine what types of sexual discrimination are unlawful.

 

Over 20 years after the enactment of Title VII, the Supreme Court first declared sexual harassment in the workplace to be unlawful. More than a decade later, the Court found same-sex harassment to be covered, too.

 

The Supreme Court opened the door to expanded protection in its 1989 landmark decision in Price Waterhouse v. Hopkins.  That case involved a female accountant's challenge to her denial of a promotion.  In particular, some partners said she could improve her chances for partnership if she walked, talked, and dressed "more femininely."  The court found this evidence of "sex stereotyping" to be an unlawful form of discrimination based on gender under Title VII.

 

Since 1994, Congress has repeatedly considered, but never passed, the proposed Employment Non-Discrimination Act (ENDA).  If it were ever enacted, ENDA would amend Title VII to prohibit discrimination by larger employers on the basis of sexual orientation or gender identity.

 

Where are we now?

 

In light of the Supreme Court’s Price Waterhouse decision, federal courts have found Title VII to protect transgender individuals from employment discrimination based on sex stereotyping.  As stated in a recent decision by the U.S. Court of Appeals for the Eleventh Circuit, a person is considered transgender (or otherwise acting contrary to traditional male or female norms) "precisely because of the perception that his or her behavior transgresses gender stereotypes."  For example, the Sixth Circuit found a valid Title VII claim to be stated by a demoted police officer, who "was living as a male while on duty but often lived as a woman off duty," and who had a reputation as a "homosexual, bisexual, or cross-dresser."

 

Some federal trial courts also have extended the protection of Title VII to employees or applicants based on their sexual orientation.  For example, in November 2016, the U.S. District Court of the Western District of Pennsylvania declared in EEOC v. Scott Medical Center that sexual orientation discrimination is a type of employment discrimination "because of sex" that is barred by Title VII.  The court explained, "There is no more obvious form of sex stereotyping than making a determination that a person should conform to heterosexuality."

 

But almost all federal appellate courts to date, including three-judge panel decisions issued earlier this year by both the Second and Eleventh Circuits, have found no Title VII coverage for employment discrimination based solely on sexual orientation.  These courts have generally emphasized that it is really up to Congress (or perhaps the Supreme Court) to decide whether to create a new protected class for employees based on their sexual orientation.

 

This interpretation of Title VII by the vast majority of federal courts to protect transgender and other employees based on sex stereotyping, but not based on their sexual orientation, creates an odd legal dilemma.  It essentially means that a gay man who is viewed as being "flamboyant" because he acts or dresses effeminately is more likely to be protected against employment discrimination under Title VII, but not one who acts and dresses like a "straight" man.

 

This dilemma was most recently addressed in April 2017 by the U.S. Court of Appeals for the Seventh Circuit in Hively v. Ivy Tech Community College.  The Hively case involved an openly gay college professor who claimed her employment contract was not renewed because of her sexual orientation.  The trial court dismissed her lawsuit.  But that ruling was overturned on reconsideration by the full Seventh Circuit, which became the first federal appellate court to recognize that employment "discrimination on the basis of sexual orientation is a form of sex discrimination" prohibited by Title VII.

 

The majority of eight Seventh Circuit judges in Hively emphasized that it "would require considerable calisthenics to remove the 'sex' from 'sexual orientation.'"  "Any discomfort, disapproval, or job decision based on the fact" that an employee or applicant "dresses differently, speaks differently, or dates or marries a same-sex partner, is a reaction purely and simply based on sex," according to the majority opinion.

 

By contrast, the three dissenting judges in Hively accused the majority of "circumvention of the legislative process" and creating a "statutory amendment" of Title VII "courtesy of unelected judges."  The dissenting opinion observed:  "Is it even remotely plausible that in 1964, when Title VII was adopted, a reasonable person competent in the English language would have understood that a law banning employment discrimination 'because of sex' also banned discrimination because of sexual orientation?  The answer is no, of course not."

 

In any event, the majority opinion in Hively and its conclusion that Title VII bars sexual orientation discrimination is now binding on the federal courts governed by the Seventh Circuit -- namely, those in Illinois, Indiana and Wisconsin.

 

Some state legislatures also have addressed this dilemma.  More than 20 states now expressly prohibit private employers from discriminating against their employees or applicants based on their sexual orientation, as well as their gender identity or expression, as summarized in the following chart:

  

State/District

Bars Sexual Orientation Discrimination

Bars Gender Identity or Expression Discrimination

California

Yes

Yes

Colorado

Yes

Yes

Connecticut

Yes

Yes

Delaware

Yes

Yes

District of Columbia

Yes

Yes

Hawaii

Yes

Yes

Illinois

Yes

Yes

Iowa

Yes

Yes

Maine

Yes

Yes

Maryland

Yes

Yes

Massachusetts

Yes

Yes

Minnesota

Yes

Yes

Nevada

Yes

Yes

New Hampshire

Yes

No, but transgender persons diagnosed with a gender identity disorder are protected under the state's disability discrimination law.

New Jersey

Yes

Yes

New Mexico

Yes

Yes

New York

Yes

Yes, and gender dysphoria and similar gender-related conditions also are protected disabilities under state law.

Oregon

Yes

Yes

Rhode Island

Yes

Yes

Utah

Yes

Yes

Vermont

Yes

Yes

Washington

Yes

Yes

Wisconsin

Yes

No

 

Additional states (Louisiana and Pennsylvania) prohibit discrimination by state agencies and contractors against their employees based on their sexual orientation, gender identity or gender expression, but those state laws don't apply to private employers other than those that contract with the state.  Although the federal Americans with Disabilities Act expressly excludes "gender identity disorders not resulting from physical impairments" from its definition of "disability," some state laws also extend coverage to certain gender-related disabilities as noted in the chart above.

 

Discrimination because of sexual orientation or gender identity is now expressly prohibited by various federal agencies and contractors.  For example, in July 2014, President Obama issued an executive order barring most federal contractors from discriminating against LGBTQ employees and applicants.  In late January 2017, the White House issued a statement indicating that President Trump will not rescind that executive order and further declaring that the new President "continues to be respectful and supportive of L.G.B.T.Q. rights, just as he was through the election," when he pledged in his nomination acceptance speech "to protect the [L.G.B.T.Q.] community from violence and oppression."

 

Shortly after the Supreme Court declared in 2015 that same-sex couples have the constitutional right to marry, the U.S. Equal Opportunity Commission (EEOC) in turn declared that it will enforce Title VII against both public and private employers to protect LGBTQ individuals against discrimination based on their sexual orientation or gender identity.  In short, it is the EEOC’s position that discrimination based on sexual orientation necessarily involves treating workers less favorably because of their sex under Title VII.  True to its word, the EEOC announced in 2016 its filing of two separate lawsuits for sexual orientation discrimination against private employers, including the Scott Medical Health Center case noted above.

 

The EEOC also reiterated that discrimination based on an employee's gender identity is a form of sex discrimination under Title VII in a brief it filed in February 2017 in the R.G. & G.R. Harris Funeral Homes case.  In that case currently pending before the Sixth Circuit, the EEOC has challenged the firing of a funeral home director transitioning from male to female.  In light of the fact that this lawsuit was originally filed by the EEOC (as opposed to the transgender employee who was fired), the trial court ruled that the federal Religious Freedom Restoration Act (RFRA), which prohibits governmental actions that "substantially burden" a person's sincerely held religious beliefs, bars any possible Title VII claim brought by the EEOC, because the funeral home owner had genuine religious objections to this biological male employee's dressing like a woman at work in violation of its dress code.  Taking issue with that decision on appeal, the EEOC says RFRA cannot override an employee's "Title VII right to be free of workplace discrimination," and nothing in Title VII creates an exception for "sex discrimination because of her employer's religious beliefs," particularly by a for-profit employer like the funeral home at issue that employs and provides services to people with varying religious beliefs.

 

These gender identity issues have now entered the bathrooms of workplaces and schools.  For example, the EEOC issued an administrative ruling that the Army’s denial of an employee’s equal access to a common bathroom corresponding to the employee’s gender identity is sex discrimination under Title VII.  The EEOC made it clear that an employer cannot condition this right on medical proof of gender reassignment surgery.  The EEOC further declared that an employer cannot avoid this equal-access requirement by restricting a transgender employee to use of a single-occupancy unisex bathroom, regardless of whether others may complain about the transgender employee’s use of a common restroom.  The EEOC also found that a supervisor’s repeated refusal to use the transgender employee’s new female name and gender identity created a sexually hostile work environment. 

 

Substantially similar guidelines for equal bathroom access by transgender workers and students have been issued by other federal agencies, including the Occupational Safety and Health Administration (OSHA), the Office of Federal Contract Compliance Programs (OFCCP), and the Department of Education (DOE).  In particular, the Obama administration issued in May 2016 a DOE opinion letter and guidance interpreting Title IX of the Education Amendments Act of 1972 and requiring public schools to "treat transgender students consistent with their gender identity” with respect to bathrooms and locker rooms.  This DOE guidance then conflicted with a controversial North Carolina state law (passed in March 2016 but repealed one year later) restricting bathroom access of state employees and public school students to the gender listed on their birth certificate.  Deferring to the DOE's guidance under federal Title IX, the Fourth Circuit ruled in Grimm v. Gloucester City School Board that students must be allowed to use the bathroom aligned with their gender identity.  The Supreme Court decided in October 2016 to review the Grimm case.  But the Trump administration withdrew in February 2017 the underlying DOE guidance at issue in Grimm.  "This is an issue best solved at the state and local level," as new DOE Secretary Betsy DeVos explained.  As a result, the Supreme Court decided in March 2017 not to review the Grimm case after all, vacated the Fourth Circuit's prior decision, and sent the case back to the Fourth Circuit for a further determination under Title IX in light of the DOE guidance withdrawal. 

 

Where are we going?

 

The Grimm v. Gloucester City School Board case, which was just remanded by the Supreme Court back to the Fourth Circuit, obviously is not an employment discrimination case under Title VII.  Rather, it is an education discrimination case under Title IX.  But the federal courts frequently construe Title VII and Title IX alike, because they are similar in language and purpose.  So, if the Fourth Circuit were to conclude again, without the benefit of supporting DOE guidance, that students must be allowed to use the bathroom aligned with their gender identity under Title IX, then the decision in Grimm will create persuasive authority on which a transgender employee may rely to seek equal bathroom access in the workplace under Title VII.  Regardless of how the Fourth Circuit rules on remand in Grimm, the losing side will undoubtedly seek further review and give the Supreme Court another opportunity to weigh into this dispute if the Court then wants to do so.

 

A television show about lawyers called Ally McBeal, which aired from 1997 to 2002, first introduced the novelty of unisex bathrooms in the workplace to much of America.  More recently, Target announced that it is going to spend $20 million to install gender-neutral bathrooms throughout all of its 1,800 retail stores.  The conversion of separate gender-specific bathrooms into unisex ones is expected to become a growing trend in the workplace, as employers attempt to avoid conflicts among employees created by the bathroom access guidelines recently issued by the EEOC and OSHA.

 

 

 

There is no case currently pending before the U.S. Supreme Court in which the EEOC or an employee seeks expansion of Title VII to cover discrimination based on sexual orientation.  The defendant employer in Hively v. Ivy Tech Community College also has indicated that it will not ask the Supreme Court review the Seventh Circuit's extension of Title VII to cover sexual orientation discrimination.  But that recent decision creates a conflict with the related decisions of all of the other federal appellate courts to date, including three-judge panel opinions issued in March 2017 by the Second and Eleventh Circuits, both of which concluded that Title VII covers gender stereotyping but not sexual preference.  The employees at issue in both of those cases have requested reconsideration by all of the respective judges in the Second and Eleventh Circuits.  And it would not be a surprise if either of those cases were eventually appealed to the Supreme Court in order to resolve this "circuit split."  If so, it is difficult to predict how the Supreme Court may ultimately rule on that issue.  Having said that, most commentators believe the recent confirmation of Neil Gorsuch to the Supreme Court, as well as the anticipated addition in the near future of other "conservative" justices who favor judicial restraint, is not likely to bode well for any such appeals by these employees to the Court.

 

It also seems unlikely in this current political environment that Congress will soon enact ENDA or similar federal legislation in order to amend Title VII to cover discrimination based on sexual orientation and gender identity explicitly.  Nevertheless, a new bill to this effect co-sponsored by 46 Democratic Senators, was introduced for consideration in early May 2017.

 

There is much speculation that the EEOC may eventually change its position that Title VII, as originally drafted, bars sexual orientation discrimination on the job, particularly after President Trump nominates two new commissioners plus a new general counsel for the EEOC later this year.  When the EEOC issued its 2015 administrative decision concluding that Title VII forbids sexual orientation discrimination, it notably did so in a split 3-2 vote.  Victoria Lipnic, who is now the acting chair of the EEOC, was in the minority on that significant vote.  The EEOC is expected to have a Republican majority after the term of Democrat commissioner Jenny Yang expires in July 2017.  So, it is easy to see how these upcoming changes in the composition of the EEOC could alter its prior rulings and positions.

 

There also is much speculation that, even though President Trump has said he will not rescind President Obama's 2014 executive order barring discrimination based on sexual orientation and gender identity by federal contractors, that the Trump administration may create a broader exception akin to RFRA for those contractors with sincerely held religious objections.  In the meanwhile, the EEOC has taken a very strong stance against gender identity discrimination in the workplace, regardless of the private employer's contrary religious beliefs, in a brief recently filed in the R.G. & G.R. Harris Funeral Homes case pending before the Sixth Circuit.

 

In any event, almost half of the states already prohibit private employers from discrimination based on sexual orientation.  As a result, many employers, particularly larger ones with sites in multiple states, have already adopted internal policies against discrimination based on sexual orientation, gender identity and gender expression, and have incorporated these into their anti-harassment training.  This growing trend also is expected to continue.

 

There are still more questions than answers for employers in light of all of these ongoing changes and challenges.  But one thing is clear — as the legal landscape continues to evolve and to provide more protections for LGBTQ employees and applicants, their employers (and their in-house and outside attorneys) will need to continue to adapt and modify their own policies and procedures.


*Donna L. Roberts is the associate general counsel of Cracker Barrel Old Country Store, Inc.  She advises the company on all aspects of labor and employment, including litigation, EEOC case management, policy drafting and review and general employment advice.  In addition, she is responsible for complex business litigation and selective project management for business operations. donna.roberts@crackerbarrel.com.

 

Stephen H. Price is the managing partner of Burr & Forman LLP’s Nashville office.  He is a member of the Labor and Employment practice group and counsels employers in all aspects of employee relations, including planning reductions in force, advising on employee terminations, preparing employee policies, drafting employment, non-compete and confidentiality agreements, litigating non-compete and trade secret disputes, and defending against employment discrimination, wage and hour, and class or collective claims. sprice@burr.com.

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Wednesday, May 10, 2017
Labor & Employment