Submitted by Tami Z. Hannon, Esq., Mazanec, Raskin & Ryder LLP
Potato, Potahto…Sexual Orientation as Sex Discrimination
A Review of Hively v. Ivy Tech Community College
In recent years, the concept of “sex” discrimination under Title VII has been in the limelight. Everyone agrees that discrimination based on “sex” is prohibited under the laws, but there has been much dissent over what is encompassed under the concept of “sex.” Does sex discrimination cover appearance? What about transgender status? Does it cover sexual orientation?
Until recently, most courts agreed that “sex” was broader than just discrimination due to biological sex. “Sex” was interpreted as encompassing sexual stereotyping and an employer’s perception of what behavior was appropriate for a male or female. Despite this, the majority of courts resolutely held that concepts such as transgender and sexual orientation were not specifically protected under Title VII. That perception is now shifting.
The 7th Circuit Court of Appeals recently held that discrimination based upon sexual orientation is a form of “sex” discrimination under Title VII. In Hively v. Ivy Tech Community College, Ms. Hively was openly lesbian. She was hired as a part-time professor in 2000. Over the years, she applied for several full-time positions, but was never promoted. In 2014, her part-time teaching contract was not renewed, resulting in her termination from the college.
Ms. Hively filed a discrimination charge with the Equal Employment Opportunity Commission alleging that the failure to promote her to a full-time position and the decision not to renew her contract was based on her sexual orientation. The EEOC declined to pursue the case, and Ms. Hively filed a federal lawsuit under Title VII, alleging sexual discrimination. The district court dismissed her case on the basis that sexual orientation was not a protected class under Title VII.
Ms. Hively appealed. The three judge panel assigned to hear her case agreed that the district court had properly dismissed her case, though the panel believed the underlying law was in question given recent U.S. Supreme Court opinions. Ms. Hively requested that the entire 11 judge panel of the 7th Circuit Court of Appeals review her case (what is known as an en banc hearing) and determine whether the underlying law was still valid. The court accepted her petition and the entire 11 judge panel considered her claims. The panel concluded that the past case law was no longer valid, and that sexual orientation is a form of “sex” discrimination under Title VII.
While the final outcome is a marked departure, the law used by the 7th Circuit in reaching this conclusion is not. The court relied upon past U.S. Supreme Court cases prohibiting gender stereotyping and same sex harassment to find that Title VII applies to more than biological sex. The Hively court also gave a nod to the recent U.S. Supreme Court case of Obergefell which recognized the constitutional right of same sex couples to marry.
The court held that beliefs as to with whom one should be intimate is the sine quo non of gender stereotypes. The court further found that, under the allegations made by Ms. Hively, she would have received the promotions if she had been a man married to a woman. As she did not receive the promotions because she was a female, the claim properly alleged sex discrimination.
Ms. Hively also alleged that she was discriminated against for associating with (i.e. marrying) a female. Ms. Hively made her arguments under the now widely accepted case law that a person of one race cannot be discriminated against for marrying a person of another race. The court found that discriminating against a woman who was married to a woman was no different than the laws prohibiting discrimination based on interracial marriages. If the gender of one of the parties in the relationship was changed, so to would be the outcome. The court found that was the very definition of discrimination based on gender.
The Hively case was decided by the 7th Circuit Court of Appeals, which does not have jurisdiction over Ohio. Our own courts still hold that sexual orientation is not a separate protected class, though protection is granted to individuals who suffer discrimination if they do not conform to societal notions of “male” and “female.” The opinion in Hively may signal a shift towards accepting sexual orientation as a protected class, which would likely also extend to transgender individuals under the more inclusive definition of gender stereotyping being applied. Nevertheless, the Hively opinion was not unanimous, showing that there is still dispute as to whether sexual orientation is a form of sex discrimination.
The Hively case may find its way to the U.S. Supreme Court. The sitting panel is largely the same as that which issued the opinion in Obergefell, such that Hively could find a friendly ear. However, the Supreme Court has recently backed down from issuing opinions on what constitutes “sex” discrimination such that the Court may decline to hear the case. Despite the unknowns one thing remains clear, “sex” discrimination under Title VII remains difficult to define.
Top Changes in 2016 and Where To Look Next
As the new year is upon us, it is worth taking a few moments to look back at some of the changes in 2016, and what to watch for 2017.
1. The overtime updates. The increased salary threshold for exempt employees was to take effect in December 2016. An emergency order issued by a federal court in Texas delayed that start date. The case is still pending and is being heard by a higher court. It is possible for the delay to end at any time and employers should be ready to implement any necessary steps (if they haven’t already) in the event that the rule is put into place.
2. Adoption of Medical Marijuana. Ohio has joined the 27 other states and the District of Columbia that have legalized medical marijuana. The use of certain types of medical marijuana to treat identified medical conditions is now approved in Ohio. It is estimated that an additional 2 years will be needed before the full growing and sales operations are running. In the meantime, employers should familiarize themselves with their drug testing policies and determine how they wish to address the use of medical marijuana in the workplace.
3. Increased focus on transgender and sexual orientation rights. The EEOC has long taken the position that “gender” discrimination under Title VII includes protections based on gender identity and sexual orientation. In 2016, the EEOC continued to increase its involvement with advancing these protections, filing several lawsuits and seeing an increasing number of charges each year. At most recent count, settlement for these suits totaled over $3 million last year.
4. Enforceability of Arbitration Agreements. Some employers have employees agree to arbitrate disputes that arise regarding their employment. Depending upon the wording of these provisions, they are typically upheld. However, there are currently four cases seeking review by the U.S. Supreme Court questioning the enforceability of these clauses to the extent that they prevent an employee from being part of a class action. The cases allege these types of clauses violate the “concerted activity” protections granted by the National Labor Relations Act. The U.S. Supreme Court will consider at its January 6, 2017 conference whether it will review the cases. A ruling on these cases would impact union and non-union shops alike.
5. Individual Liability under ERISA. Another case seeking review by the U.S. Supreme Court is Fenkell v. Alliance Holdings, Inc. This case asks the high court to resolve the issue of whether an individual who has a fiduciary duty under the Employee Retirement Income Security Act of 1974 (ERISA) can also be required to contribute to any award given to an employee as a result of that individual’s breach of fiduciary duty. If the court accepts the case and answers the question in the affirmative, it would create the ability to file suit directly against individuals responsible for administering ERISA plans and hold them personally liable on awards.
6. Scope of Discrimination Claims. One other noteworthy case seeking to be heard by the U.S. Supreme Court is Lavigne v. Cajun Deep Foundations. That case seeks to have the Court address whether an employee must show that he or she was replaced by someone outside of the protected group in order to establish a claim. (The answer to that question has traditionally been yes.) The more interesting question posed to the Court is whether an employee may add new allegations to claims pending before the EEOC after the 300 day filing period has ended, or whether the employee may add new allegations to a subsequent lawsuit. For example, Employee A is terminated on January 2. She files a charge with the EEOC in August claiming gender discrimination. In December, she subsequently sees a report by her former supervisor that people of Employee A’s religion are less intelligent. Employee A now believes she was also terminated due to her religion. The question posed by Lavigne is whether Employee A can amend her claim with the EEOC to add religious discrimination even though her 300 days are up, or whether she can also claim religious discrimination once a lawsuit is filed on the claim of gender discrimination.
In addition to these updates and cases, the new administration is likely to bring several changes on the employment sector. We will continue to provide you updates on new developments.
After months of planning and preparing, you were prepared to adjust the wages and put into place new systems in response to the new overtime laws. Perhaps you have already implemented those changes in advance of the December 1 effective date. And then along came Texas…
On November 22, a federal judge in Texas issued a nationwide stay on the new overtime laws. A “stay” is a court order blocking parties from taking certain actions. In this case, the court is preventing the Department of Labor from both implementing and enforcing its new overtime regulations. What this means is that employers may continue to operate under the old rules while the court determines whether the Department of Labor has the authority to adopt the new rules.
What does this mean for you? It leaves you with a few options:
1. If you have not yet implemented or announced a new plan, or if you were not making any changes, you can continue to operate under your current pay structure and all exemptions will be the same as they have been.
2. If you have announced (but not yet implemented) a new plan, you can choose to either implement the plan even though the regulations are on hold or you can choose to delay the plan given this hold.
3. If you have already implemented a new plan, you can continue with the plan or it may be possible to revert to your old pay structure. Employees would have to be paid the higher salary for any work already performed under a new structure. You would also need to review the policies or any agreements put into place to make sure you do not have any contractual obligations that would prevent you from changing the wages back to their earlier levels.
A downward adjustment can be difficult for employees to accept, particularly as they may have already planned on a new or higher salary. If you are lowering wages or delaying a promised increase, then it is important to discuss with the employee why you are taking the action and assure the employee that it is not a reflection on their worth to the company. Employees may not understand how you were able to pay the increase yesterday, but cannot (or, potentially in their eyes, are not) willing to pay that increase today. You may need to explain to them that the adjustments were being made to comply with the legal requirements, not due to the reality of or a sudden increase in business or profits. Given the new change in the laws, the increase is being delayed and a pay rate being put into place that is more sustainable for the company and reflective of your business.
It is important to note that this stay is temporary. The court has not yet issued its final ruling on whether the regulations are enforceable, it is just holding the status quo while it figures that issue out. It is possible that the regulations may never go into effect or they could go into effect sometime next year. If you decide to delay implementing new pay structures, make certain to follow the law and be prepared to implement those structures if needed when a final ruling is issued.