Title VII of the Civil Rights Act of 1964

On March 23, 2016, the North Carolina Legislature passed House Bill 2, the “Public Facilities Privacy and Security Act” (“HB2”), that overturned a Charlotte ordinance extending anti-discrimination protections to lesbian, gay, bisexual, and transgender (“LGBT”) individuals and allowing transgender persons to use the bathroom of their choice. Instead, HB2 requires individuals to use public bathrooms that match the gender listed on their birth certificates. A swift public outcry followed, with many celebrities denouncing the law and canceling appearances in North Carolina, companies threatening to boycott, and the American Civil Liberties Union filing a lawsuit challenging HB2 as unconstitutional and for violating federal law. North Carolina officials have refused to disavow HB2 and, on May 9, filed a lawsuit against the federal government seeking a ruling that HB2 is not discriminatory. The Justice Department has countersued, alleging that HB2 violates Title VII of the Civil Rights Act of 1964 (“Title VII”). Regardless of the ultimate outcome of these lawsuits, it is clear that discriminating against LGBT individuals has real consequences, from both a business and legal perspective. What should retailers know and, more importantly, do to survive in this current environment?

At a minimum, retailers should familiarize themselves with their state’s employment nondiscrimination laws (if any) that apply to private employers. Twenty states (including California, Illinois, New Jersey, and New York) and the District of Columbia have passed employment non-discrimination laws that prohibit discrimination by private employers based on both sexual orientation and gender identity. Two states (New Hampshire and Wisconsin) have such laws covering sexual orientation only. These laws protect LGBT persons from discrimination in hiring and in the workplace.

Retailers also are encouraged to review their municipality’s nondiscrimination laws and regulations, if any. For example, New York City law prohibits gender identity discrimination, and the New York City Commission on Human Rights recently announced guidance (“NYC Guidance”) that makes clear what constitutes gender identity and gender expression discrimination under the NYC Human Rights Law. The NYC Guidance warns employers and business owners that they may violate New York City law if they intentionally fail to use a transgender employee’s preferred name, pronoun, or title, or refuse to allow a transgender employee to use single-sex facilities, such as bathrooms or locker rooms, and participate in single-sex programs consistent with their gender identity.

Retailers also should know that the EEOC has aggressively pursued transgender discrimination claims on theories of sex stereotyping and gender nonconformity under Title VII, which bars employers from discriminating against employees on the basis of their sex.[1] In cases involving government employees, the EEOC has held that: (i) an employer’s restriction on a transgender woman’s use of a common female restroom facility constituted illegal sex discrimination under Title VII,[2] (ii) an employer’s intentional references to a transgender female as “he” may constitute sex-based discrimination and/or harassment,[3] and (iii) a transgender employee stated a valid Title VII sex discrimination claim based on his allegation that his employer took over a year to correct his name in the company’s computer system.[4]

The EEOC has taken further action against private companies. For example, it recently entered into a consent decree with a Minnesota financial services company for allegedly refusing to let a transgender employee use the women’s restroom and subjecting her to a hostile work environment.[5] In another action, a Florida eye clinic paid $150,000 to settle an EEOC lawsuit that sought relief for an employee who was allegedly discriminated against when transitioning from male to female.[6]

In light of this climate, retailers are encouraged to accommodate the needs of transgender workers proactively rather than reactively responding to potential claims of discrimination. Retailers, particularly those operating in states with anti-discrimination laws that cover sexual orientation and/or gender identity, should implement a policy designed to foster workplace inclusion. Retailers can avoid significant business and legal risk if they follow these two directives:

  • Call transgender employees by their preferred names, pronouns, and titles, and promptly update internal databases (pay accounts, training records, benefits documents, etc.) with this information upon an employee’s request. The NYC Guidance, for example, advises employers to use the employee’s preferred name regardless of whether the employee has legally changed his or her name “except in very limited circumstances where certain federal, state, or local laws require otherwise (e.g., for purposes of employment eligibility verification with the federal government).” This is a sound policy that retailers beyond New York City should consider following. In addition, employers may choose to offer new business cards and email aliases for their employees.
  • Provide transgender employees access to bathrooms that correspond to their gender identity. On May 3, the EEOC issued a “Fact Sheet” stating that the denial of equal access to a bathroom corresponding to an employee’s gender identity qualifies as sex discrimination prohibited under Title VII and that contrary state law is no defense. The Fact Sheet encourages employers to refer to the more comprehensive “Guide to Restroom Access for Transgender Workers,” which was issued by the Occupational Safety and Health Administration (“OSHA”) and offers model practices for restroom access for transgender employees. Like the EEOC, OSHA advises that “all employees should be permitted to use the facilities that correspond with their gender identity.” Where possible, employers should provide employees with additional options, including single-occupancy gender-neutral (unisex) facilities and use of multiple-occupant, gender-neutral restroom facilities with lockable single occupant stalls.

While the North Carolina Legislature has rolled back protections for the LGBT community, the media attention surrounding HB2 has been largely negative and has affected the businesses of companies operating in the state. Given the number of other states that have enacted laws expressly prohibiting sexual orientation and/or gender identity discrimination, the federal government’s enforcement position, and changing public opinion on the issue, retailers are on notice that such discrimination may have negative business or legal ramifications.

A version of this article originally appeared in the Take 5 newsletter Five New Challenges Facing Retail Employers.”

[1] See “Five EEOC Initiatives to Monitor on the Agency’s Golden Anniversary” (June 22, 2015) (noting EEOC’s increased emphasis on transgender protections), available at http://www.ebglaw.com/news/five-eeoc-initiatives-to-monitor-on-the-agencys-golden-anniversary/.

[2] Lusardi v. Dep’t of the Army, EEOC Appeal No. 0120133395, 2015 WL 1607756 (Mar. 27, 2015).

[3] Jameson v. U.S. Postal Service, EEOC Appeal No. 0120130992, 2013 WL 2368729 (May 21, 2013)

[4] Complainant v. Dep’t of Veterans Affairs, EEOC Appeal No. 0120133123, 2014 WL 1653484 (Apr. 16, 2014).

[5] EEOC, Press Release, “Deluxe Financial to Settle Sex Discrimination Suit on Behalf of Transgender Employee” (Jan. 21, 2016), available at https://www.eeoc.gov/eeoc/newsroom/release/1-21-16.cfm.

[6] EEOC, Press Release, “Lakeland Eye Clinic will Pay $150,000 to Resolve Transgender / Sex Discrimination Lawsuit” (April 13, 2015), available at https://www.eeoc.gov/eeoc/newsroom/release/4-13-15.cfm.

Laura C. Monaco
Laura C. Monaco

This week, the EEOC filed its first two federal lawsuits that frame allegations of sexual orientation-based harassment and discrimination as claims of unlawful “sex discrimination” under Title VII of the Civil Rights Act of 1964.

In EEOC v. Pallet Companies the EEOC alleges that an employee’s night-shift manager harassed her because of her sexual orientation by making repeated offensive comments (sometimes accompanied by sexually suggestive gestures), such as “I want to turn you back into a woman” and “I want you to like men again.”  According to the Complaint, the employee was discharged after she complained about her manager’s comments to another supervisor and the Human Resources department.  The EEOC makes similar allegations in EEOC v. Scott Medical Health Center.  There, a supervisor allegedly harassed an employee by making repeated anti-gay comments and vulgar statements about the employee’s sexual orientation.  The employee claims that he was constructively discharged after the company refused to take any corrective action in response to his complaints.

In both lawsuits, the EEOC articulates three legal theories in support of its claim that the alleged sexual orientation harassment constitutes unlawful sex discrimination under Title VII.  First, sexual orientation discrimination “necessarily entails” treating an employee less favorably due to his or her sex and, therefore, the employee’s gender unlawfully motivated the alleged harassment.  Second, the alleged harassment stemmed from the employee’s failure to conform to the harasser’s “sex stereotypes and norms.”  Third, the harasser displayed both general objections to the idea of individuals having romantic associations with others of the same sex, as well as a specific objection to the employee’s close, loving association with a same-sex partner.

Although these are the first lawsuits the EEOC has filed on the grounds of sexual orientation discrimination as “sex discrimination” under Title VII, the agency has actually raised these same three legal theories before.  In July 2015, the EEOC issued Baldwin v. Department of Transportation, an agency determination concluding that allegations of sexual orientation discrimination necessarily state a claim of unlawful sex discrimination because (1) the alleged discrimination would not have occurred but for the employee’s sex, (2) the challenged treatment was based on the sex of the people the employee associates with, and/or (3) the alleged conduct was premised on the fundamental “sex stereotype, norm, or expectation that individuals should be attracted only to those of the opposite sex.”

The EEOC’s new lawsuits attacking sexual orientation discrimination represent just one facet of the agency’s recent efforts to address emerging and developing issues – one of the six national priorities identified in its Strategic Enforcement Plan for fiscal years 2013 to 2016.  In addition to focusing on sexual orientation discrimination, the EEOC also recently filed federal lawsuits alleging unlawful sex discrimination against transgender individuals.  As the EEOC intensifies this focus, employers should review their antidiscrimination policies to determine whether LGBT employees have the same protections as employees in other protected categories, and should consider expanding their training programs to ensure they encompass issues relating to sexual orientation, gender identity, and transgender discrimination.  Employers should also remain mindful of state and local legislation that has increasingly expanded to prohibit sexual orientation or gender identity discrimination in employment.

Since we last reported on the 2012 Equal Employment Opportunity Commission (“EEOC”) decision in Macy v. Holder,[1] the federal government has continued to extend protection under Title VII of the Civil Rights Act of 1964 (“Title VII”) to transgender employees.  In July 2014, President Obama issued Executive Order 13672, prohibiting federal contractors from discriminating against workers based on their sexual orientation or gender identity.  Two months later, in September 2014, the EEOC filed its first-ever lawsuits alleging sex discrimination against transgender employees under Title VII.  Shortly thereafter, in December 2014, outgoing U.S. Attorney General Eric Holder released a memo announcing that the Department of Justice considers Title VII’s prohibition against sex discrimination to include discrimination based on gender identity, including transgender status.  Finally, earlier this year, on March 30, 2015, the Department of Justice filed its first lawsuit alleging an employer engaged in discrimination and retaliation against a transgender employee in violation of Title VII.

As a result, private employers may increasingly face lawsuits asserting gender identity discrimination claims and should revisit their policies– including employment, non-discrimination, and even dress code policies – to avoid the litigation of such claims.  Just last month, on April 1, 2015, Alexia (formerly “Anthony”) Daskalakis, a former employee of clothing retailer Forever 21, filed a complaint in the Eastern District of New York alleging discrimination, harassment, and retaliation on the basis of her gender, gender identity, gender expression and/or failure to conform to gender stereotypes.  Daskalakis, who was assigned male gender at birth, worked as a visual merchandiser at a Forever 21 store located in Brooklyn.  Daskalakis’s allegations arise from her manager’s conduct after she began transitioning to a woman.  The claims in Daskalakis v. Forever 21, Inc. are currently based on New York State and City non-discrimination laws, but the complaint indicates that plaintiff will file and/or seek leave to amend the complaint to include Title VII claims after receiving a Notice of Right to Sue from the EEOC.

In another recent EEOC decision, Lusardi v. McHugh, Appeal No. 0120133395, Agency No. ARREDSTON11SEP05574 (EEOC Apr. 1, 2015), the EEOC found that the Department of the Army subjected the complainant-employee to disparate treatment and a hostile work environment.  In holding that denying the employee equal access to the common women’s restroom constituted disparate treatment, the EEOC wrote: “The decision to restrict Complainant to a ‘single shot’ restroom isolated and segregated her from other persons of her gender” . . . and “perpetuated the sense that she was not worthy of equal treatment and respect.”  Appeal No. 0120133395 at 13.  Notably, the EEOC stated that co-workers’ confusion or anxiety regarding sharing a restroom with a transgender individual would not justify discriminatory terms and conditions of employment.   Appeal No. 0120133395 at 10-11.  The EEOC found that the Department of the Army had subjected the employee to a hostile work environment because a team leader referred to the employee by male names and pronouns and made hostile remarks after being aware that the employee identified as female.  Appeal No. 0120133395 at 17.

While the Lusardi decision has no precedential effect for private employers, it is predictive of a potential enforcement position in the event of a transgendered employee’s charge of discrimination against a private employer.  Notably, the EEOC did not declare that in all situations an employer should designate the gender-corresponding common restroom for the transgender employee’s use, but rather that the employer should develop individualized transition plans appropriate for the employee’s circumstances.  Appeal No. 0120133395 at 10.  Such a transition might even “include a limited period of time where the employee opts to use a private facility instead of a common one.”  Id.

To reduce the risk of litigating claims of gender identity discrimination and retaliation, it is important for employers to confer with counsel to ensure that all policies comply with the employer’s obligations to transgender employees under Title VII.

[1] Macy v. Holder, Appeal No. 0120120821, Agency No. ATF-2011-00751 (EEOC, Apr. 20, 2012).