Salesforce.com CEO David Benioff has drawn lots of media attention, a good deal of praise from civil rights proponents, and plenty of ire from conservative politicians and pro-business groups … all by threatening to reduce the company’s investment from states that pass laws allowing businesses to discriminate against LGBT people and relocate his employees from those states to operations elsewhere. His rallying of other CEOs last year and subsequent national backlash against such laws persuaded conservative governor, and likely Republican vice-presidential nominee, Mike Pence to amend Indiana’s Religious Freedom Restoration Act, as reported by the Wall Street Journal, and has led to a broader public—and corporate—outcry this year against similar laws passed in North Carolina and nearly passed in Georgia.
To be sure, the mixing of business policies with political interests has traditionally had a polarizing effect and posed potential risks for companies and their senior executives. But compelling evidence that many more companies are worried about facing more discrimination claims from LGBT workers in the year ahead may convince some corporate leaders to borrow a page or two from Benioff’s playbook.
Although neither sexual orientation nor gender identity is expressly covered under Title VII of the Civil Rights Act of 1964, the Equal Employment Opportunity Commission (EEOC) has expanded its definition of sexual discrimination, starting in 2012 when it adopted its current Strategic Enforcement Plan. In extending the definition to cover LGBT individuals, the EEOC says on its website that these cases are “a top Commission enforcement priority.” Moreover, the EEOC’s general counsel formed an LGBT working group that provides advice and input to the agency’s litigators on developing litigation-related vehicles.
“It looks like they’ve gone back to the drawing board and have been broadly expanding the definition of what constitutes sex discrimination,” says Barry Hartstein, co-chair of Littler Mendelson’s equal employment opportunity and diversity practice. “From their vantage point, sexual orientation, by its very nature, involves treating workers less favorably because of their sex. And the same thing when dealing with gender identity, the whole issue of sexual stereotyping, and just as importantly with an issue such as sexual orientation.”
Littler Mendelson’s 2016 Executive Employment Survey Report, released last week, finds that 74 percent of the 884 respondents expect to see more discrimination claims related to the rights of LGBT workers over the next year, more than double the 31 percent of respondents who said so in last year’s survey. That is by far the largest year-over-year increase across the 10 discrimination categories for which respondents said they expected EEOC enforcement actions to rise, with enforcement of equal pay discrimination suits ranked second with a 79 percent increase from the 2015 survey.
“It looks like they’ve gone back to the drawing board and have been broadly expanding the definition of what constitutes sex discrimination.”
Barry Hartstein, Co-Chair, Equal Employment Opportunity & Diversity Practice, Littler Mendelson
In its survey report, Littler Mendelson cites related lawsuits initiated by the EEOC and statements by EEOC Chair Jenny Yang about the Commission’s enforcement priorities, as well as greater public attention and media coverage of these issues as reasons for the dramatic spike in discrimination claim expectations. “Federal and state government officials have increased their focus on protecting the rights of LGBT employees, and judges have started citing the EEOC’s position on LGBT discrimination in their decisions,” the report also states.
Hartstein notes a preference among companies targeted by the EEOC in sexual discrimination lawsuits to settle these cases relatively promptly to avoid drawing too much attention. Surprisingly, the EEOC filed its first lawsuits based on gender identity and sexual orientation on March 1, 2016, and one of these cases—EEOC v. Pallet Companies d/b/a IFCO Sys. North Am., Inc.—was settled on June 28.
Hartstein believes human resources departments are trying to monitor the EEOC’s actions because “the Commission sets the barometer in this area and that has had an impact on employers trying to stay ahead of the curve. “It’s very clear employers don’t want to get it wrong,” he says. “[Despite] the fact that there have only been a few lawsuits in the gender identity and sexual orientation areas, they see far more enforcement in terms of charges and investigations, so I think there is a concern that the agency clearly is putting a spotlight on that area.”
At a minimum, employers should consider as a best practice reviewing their EOO policies to ensure they are broadened to include sex orientation and gender identity, and that when they conduct annual training, particularly with managers, discussions of equal employment and harassment include LGBT issues, Hartstein says. “Aside from doing the right thing, they want to minimize risk of litigation and charges in this area.”
EMPLOYER SURVEY FINDINGS
Below are key findings from Littler’s 2016 Executive Employer Survey
The fifth annual survey reveals that employers are still feeling the impact of key legislation and regulations, particularly the Affordable Care Act (ACA) and enforcement by the Equal Employment Opportunity Commission (EEOC) and Department of Labor (DOL). At the same time, they expect an uptick in enforcement and litigation stemming from more recent developments, such as the expanded definition of a “joint employer” and the revised overtime rules.
The greatest year-over-year change in our survey results came in the area of EEOC enforcement. There was a dramatic rise in the expectation of discrimination claims over the next year related to the rights of LGBT workers (31 percent in 2015 to 74 percent in 2016) and equal pay (34 percent in 2015 to 61 percent in 2016). The Commission has sent a clear signal that LGBT discrimination and equal pay nare among its top enforcement priorities—mirroring key areas of focus for the Obama administration, government efforts at the state and federal levels, and increased public attention.
Employers also expect a continued crackdown by the DoL, likely driven in large part by the recently revised overtime regulations. This year, 31 percent of respondents said they expect DoL enforcement of federal employment laws to have a significant impact on their workplaces – up from 18 percent last year. And even though they completed the survey in the weeks prior to the release of the final Fair Labor Standard Act “white collar” overtime regulations, 65 percent of respondents had already conducted audits to determine impacted employees. However, only 28 percent had taken further action and another 28 percent said they were taking a “wait and see” approach. Given that the reclassification process takes roughly six months and the rule is unlikely to be blocked from going into effect on December 1, 2016, employers should move quickly to ensure compliance.
The NLRB’s expanded definition of a “joint employer” has opened the floodgates for claims against employers based on the actions of subcontractors, staffing agencies and franchisees, according to respondents. A full 70 percent said they expected a rise in such claims over the next year and roughly half anticipate rising costs and increased caution in entering into arrangements that might constitute joint employment.
ACA implementation continues to affect employers, as 85 percent of our respondents said they expected the law to have some impact on their workplaces in the next 12 months. That is unchanged from last year, though down from 97 percent in 2012, the first year of our survey (and the year before the ACA’s major provisions started taking shape). Additionally, 66 percent do not anticipate a complete repeal of the ACA under a Republican president, but respondents saw a greater likelihood of changes to individual provisions. Approximately half anticipated a Republican administration could lead to a repeal of or changes to the Cadillac excise tax (53 percent) or play-or-pay mandate (48 percent).
The allegations in Broussard v. First Loan Tower underscore the need for workplace training about sexual discrimination to be more rigorous and comprehensive. The plaintiff alleges that on providing a driver’s license that identified him as female as valid identification for a manager trainee position and explaining that he was a transgender man, the employer insisted that he dress and act as a female while at work because it would confuse customers. When he refused to sign a statement agreeing to that, he was fired. The plaintiff’s complaint alleges that he was fired because he is transgender and because of his inability to conform to First Tower Loan’s stereotypical gender expectations, and specifically cites violation of Title VII’s prohibition on employment discrimination because of sex.
Employers with heightened anxiety about possible LGBT discrimination claims might choose to respond in two distinct ways—one strictly legal, the other aspirational, says Stephen Paskoff, president and CEO of Employment Learning Innovations (ELI), which provides civility training to managers at many companies and U.S. federal agencies.
The first way is to compare federal law, as interpreted in the employer’s local area, to state law to check whether any state laws are stronger than federal law. In general, states that have had civil rights commissions have prohibited discrimination on the basis of sexual orientation, with laws that traditionally have been stronger than federal law. “So the first thing you would look at is legally, where do you stand in terms of employment rights? That’s a compliance approach,” Paskoff says.
The aspirational response aligns with Benioff’s stance on transgender rights. While affirming its commitment to obey the law, a company would also revisit its corporate values, which quite often cover inclusion and respect for all employees, and then follow through by fashioning polices that extend beyond the law, says Paskoff. “How you figure that out is a combination of your corporate identity based on your values and how you view your business in terms of those values and in terms of how you want employees treated and the statements you’re making to the market, the community, and others,” he says.
The Human Rights Campaign Foundation releases a Corporate Equality Index each year that assesses LGBT-specific workplace and employee policies and benefits and provides a score for each company based on its adoption of those policies and benefits. In recent years, “the number of companies providing explicit sexual orientation and gender identity non-discrimination policies has consistently gone up, and the number of companies providing trans-inclusive healthcare benefits consistently increases,” says Sarah McBride, national press secretary for the HRC Foundation. “We’re also seeing more and more companies speak up publicly about issues of trans equality in their community or in their state or in the country—not just on issues of marriage but issues of trans equality, and part of that is measured in the corporate equality index.”
One key aspect of such policies is that by being largely preventative they reduce the need for any discrimination complaints, McBride says. While the Foundation doesn’t have data on discrimination complaint rates or experiences since the introduction of these policies, it works with companies to make sure their workplaces are not only inclusive in name, but also in action and climate.
In its Task Force Report on the Study of Harassment in the Workplace released in June, the EEOC notes a correlation between focusing on civil treatment in the workplace and a decline in harassment incidents reported to federal agencies delivering the EEOC programs.
The HRC Foundation also makes efforts to mobilize the business community on a range of related issues, including opposition to the North Carolina General Assembly’s House Bill 2, which bans transgender people from using public bathrooms of the gender they identify with. A few weeks ago, the HRC filed an Amicus brief signed by 68 major U.S. companies in in the 4th Circuit Court of Appeals in North Carolina. The brief was filed in support of the Department of Justice’s request for a halt of implementation of HB2’s bathroom ban pending the larger case brought through the court, McBride explains. “We organized the Amicus Brief and reached out to companies, but in a lot of instances these companies come to us and say we see this is happening, and we want to help,” she adds.