Lobbying Affiliate: MML&K Government Solutions

Sexual Orientation, Gender Identity, and Religious Liberty Issues in the Workplace


May 11-13, 2016
Cindy Effinger

Sexual Orientation, Gender Identity and Religious Liberty Issues in the Workplace

Cindy Effinger

I.    Introduction

The legal landscape in the last several years with regard to sexual orientation and gender identity has seen an unprecedented level of upheaval. Cases from the United States Supreme Court such as United States v. Windsor[1] and Obergefell v. Hodges[2]have dramatically reshaped the way in which federal law and federal agencies view sexual orientation and gender identity, and this in turn has had a ripple effect throughout all areas where individual rights are concerned, including employment. 

II.    Sexual Orientation

        a.    Obergefell v. Hodges

The recent United States Supreme Court decision in Obergefell v. Hodges significantly altered the legal landscape with respect to same-sex marriages, finding that the Fourteenth Amendment to the United States Constitution requires all states to both license in-state same-sex marriages and recognize valid same-sex marriages performed out-of-state. The Court did not, however, go so far as to reach issues such as discrimination in employment or public accommodation.  So, while legal same-sex marriage is the law of the land, those newly-married couples may face legal uncertainty when it comes to discrimination in public accommodations or their place of employment, unless contravening state law applies. That said, there are still several ways that the Obergefell decision and its counterpart, United States v. Windsor, will affect employers and employees.

As an initial matter, Windsor changed how federal benefits applied to same-sex couples. Specifically, the Department of Labor published a final rule in February that defined a “spouse” for purposes of the Family and Medical Leave Act (“FMLA”) to include same-sex spouses if their marriage was legal in the place of celebration. Thus, employees can now take FMLA leave to care for sick or injured same-sex spouses. In addition, FMLA now provides leave for employees when a child is born or adopted, and Obergefell opened the door to more adoptions by same-sex married couples, which are now legal in the state of Kentucky.

The real issue for employers is how to treat same-sex spouses for purposes of employee benefits. Many employers offer benefits for employee spouses, but these benefits are not mandatory under state or federal law. Private business benefits plans covered by the Employee Retirement Income Security Act (“ERISA”) are required to provide qualified joint and survivor annuities (“QJSA”) as a form of retirement benefits in the case of all married employees. While the terms “spouse” and “marriage” include all legally-married same-sex spouses, ERISA allows private employers that choose to sponsor an employee health plan to determine who is an “eligible dependent” for the provision of health benefits. However, benefit plans that include exclusionary language and offer benefits only to opposite-sex spouses may come into conflict with what is now the legal definition of the word “spouse” in Kentucky, and employers should be wary of continuing policies that discriminate between same-sex and opposite-sex couples for the purposes of employee benefits.

Obergefell, Title VII of the Civil Rights Act of 1964, and Kentucky state law do not explicitly include same-sex individuals as a protected class for purposes of employment discrimination, but as will be discussed below, the Equal Employment Opportunity Commission (“EEOC”) has already taken the position that any discrimination against LGBT employees is impermissible sex discrimination based on Title VII. Although it will take some time for the legal consequences of Obergefell to become clear, discrimination protections for LGBT individuals will likely expand.

          b.    Title VII - EEOC Interpretation

Obergefell v. Hodges struck down restrictions on marriage by same-sex couples, but it did not address other forms of discrimination based on sexual orientation, such as in employment. The Equal Employment Opportunity Commission, however, did not wait for a ruling from the high court, instead ruling on its own that Title VII of the Civil Rights Act of 1964 prevents discrimination in an employment context on the basis of sexual orientation. This decision, Baldwin v. Foxx,[3] broadens Title VII protections considerably, although it remains to be seen if the high court agrees with the EEOC interpretation.

This is the first true decision from the EEOC on the application of Title VII to sexual orientation, and the agency found that prohibitions on sex discrimination under the law inherently apply to sexual orientation as well. The agency extended Title VII protection based on sex discrimination on the grounds that sex and sexual orientation are inherently inseparable, sexual orientation discrimination is a form of impermissible associational discrimination, and sexual orientation discrimination often occurs on the basis of sex stereotypes, a prohibited form of discrimination under U.S. Supreme Court Title VII interpretation.

This is not, however, the first time the EEOC has spoken to the topic of providing Title VII protection to sexual orientation. In October of 2014, the EEOC submitted a friend-of-the-court brief with the 7th Circuit Court of Appeals in the case of Muhammad v. Caterpillar,[4] putting forth the interpretation of Title VII that it adopted in Baldwin. This, too, came after the agency ruled in 2012 in the case of Macy v. Holder,[5] that Title VII prohibitions on sex discrimination applied towards transgender individuals as well. With this in mind, the official EEOC interpretation in Baldwin is new, but not surprising.

Though Title VII does not explicitly prohibit discrimination based on sexual orientation in its text, the EEOC interpretation will likely control for the time being, and employers should be wary about taking sexual orientation into account during the hiring process or in adverse employment decisions. Kentucky does not explicitly prohibit such discrimination directly, but Lexington, Louisville and Morehead have such ordinances, and many smaller municipalities are adopting similar prohibitions on an ongoing basis.

            c.    Other issues

                   1.    FMLA

After the 2013 Supreme Court decision in United States v. Windsor, federal agencies have been moving to align federal policies and procedures with the holding of that case. The Court held, basically, that same-sex marriages performed in states where those marriages are legal are valid, legal marriages for purposes of federal law. Since then, the Obergefell decision rendered this largely moot, but it is worth noting that the Department of Labor (“DOL”) promulgated a final rule on February 25th, 2015 that revised the regulatory definition of the word “spouse” to include same-sex spouses from legal marriages to eligible employees for purposes of the Family and Medical Leave Act (“FMLA”).  The final rule became effective on March 27th, 2015.

FMLA provides unpaid, job-protected leave to eligible employees of covered entities for certain family or medical reasons. The employee then may use this leave to care for an ill spouse or family member, so the definition of spouse is crucial in this instance.

The DOL’s Final Rule made two specific changes to FMLA regulations.  First, the rule’s definition of spouse now expressly includes an individual in a lawfully-recognized same-sex marriage. The rule also recognizes spouses from lawful common law marriages and marriages performed outside the U.S. if the marriage could have been entered into in at least one state.

The second change was more controversial, but again, now moot as a result of the decision in Obergefell – the DOL changed the definition of spouse from a “state of residence” rule to a “place of celebration” rule for purposes of the validity of the marriage.[6] The import of this is that a court will look to the law of the location of the celebration of the marriage to determine its validity, rather than to the state of residence of the parties. The effect of this pre-Obergefell was to provide FMLA benefits to same-sex spouses living in states where marriage bans were in place if the same-sex marriage was celebrated in a state where such a marriage was valid at the time. Marriage validity may still be an issue, but only in the same vein as this issue arises for opposite-sex marriages, which is to say, not that often.

            2.    Benefits

As same-sex marriage became legal in more and more states, and ultimately throughout the nation, many companies that have offered domestic partner benefits to same-sex couples started revising their policies to require the same couples to legally wed if they wanted to keep those benefits. While this outcome may sound odd, the reality is that these employers created alternative arrangements for domestic partnerships as a workaround to laws that prohibited same-sex marriage, so the legalization of such relationships negates the need for such alternatives in the eyes of the company. With the Supreme Court ruling in Obergefell v. Hodges and same-sex marriage now legal throughout the country, employers may now begin to review benefits policies to determine if domestic partner benefits may go the way of the marriage bans they were intended to work around.

Verizon, for instance, will now provide spousal benefits to same-sex partners only if they are married.[7]  Excellus BlueCross BlueShield, another company making such a policy change, is giving its employees over a year to meet the marriage requirements.

Most states, Kentucky included, don’t require that employers provide benefits to spouses, so there isn’t a state basis for requiring such benefits for any married partners. Still, now that same-sex marriage is legal, the real question for employers, though, may be whether employers who offer benefits to employee spouses will need to offer them to all employees with a lawful marriage. The answer to that question is still a bit murky and will largely depend on antidiscrimination laws in the jurisdiction of the business. The advocacy group Gay & Lesbian Advocates & Defenders (“GLAD”) released a guide in January of 2015 that suggests the law could go either way, depending on the overarching regulatory law.[8]  Obergefell does require that states treat same-sex marriages in the same manner as heterosexual marriages, so it’s likely that benefits for same-sex spouses will be required for at least state employees.

Kentucky does not have any state laws banning employment discrimination on the basis of sexual orientation, but local ordinances in Louisville, Lexington and other cities do ban forms of discrimination in employment based upon sexual orientation. It is possible that employers who offer spousal benefits to heterosexual married couples in jurisdictions that prohibit employment discrimination based on sexual orientation may need to offer benefits to same-sex spouses as well.  

III.           Gender Identity - Title VII

    A.        EEOC Interpretation

In 2012, the EEOC issued an opinion, Macy v. Holder,[9]  which held, for the first time, that discrimination against transgender persons based on gender identity is impermissible sex discrimination under Title VII of the Civil Rights Act of 1964. In April of 2015 in Lusardi v. McHugh,[10] the EEOC revisited discrimination against transgender persons and released a decision that sheds some light on how the practical applications of this finding may affect employers, holding that certain bathroom restrictions for a transgender employee constituted discrimination.

In Lusardi, a transgender employee of a civilian contractor at a military facility in Alabama was forced to use a single-use restroom at the facility. When that restroom was out of order or being cleaned, she used the women’s restroom, each time receiving a confrontation from her supervisor, who suggested that she could not use those facilities until she had proof that she had undergone full gender reassignment surgery. Another supervisor repeatedly referred to her by her former male name and male pronouns in front of other co-workers.

In ruling for the employee in Lusardi v. McHugh, the EEOC made a forceful statement on how it viewed the circumstances at issue, stating:

“This case represents well the peril of conditioning access to facilities on any medical procedure. Nothing in Title VII makes any medical procedure a prerequisite for equal opportunity (for transgender individuals, or anyone else). An agency may not condition access to facilities — or to other terms, conditions, or privileges of employment — on the completion of certain medical steps that the agency itself has unilaterally determined will somehow prove the bona fides of the individuals’ gender identity.”[11]

While the employer in Lusardi v. McHugh was a federal agency – the Army – this case should serve as a warning to private employers as well – the EEOC will pursue cases where it finds evidence of discrimination as to transgender individuals. In fact, it already has done so in two cases, one of which settled, and the other which is currently pending and recently survived a motion to dismiss.[12] 

Although transgender persons are not currently considered a protected class in the actual text of Title VII, Title VII does protect against sex-based discrimination, a line that both the EEOC and courts seem more willing to walk in these cases. The Justice Department has already taken a stance.  Recently, the Justice Department recently brought suit against Southeastern Oklahoma State University and the Regional University System of Oklahoma for violations of Title VII of the Civil Rights Act of 1964 by discriminating against a transgender employee on the basis of her sex and retaliating against her when she complained about the discrimination.  Explaining the Justice Department’s decision, former Attorney General Eric Holder announced that the Department believed Title VII’s prohibition against sex discrimination encompasses and includes protection for claims based on an individual’s gender identity, including transgender status.

      B.    OSHA Interpretation

One of the great equalizing principles in life is that everyone, regardless of gender, has to use a bathroom. This leads to one of the touchier issues involving employers and transgender employees, however, as bathroom use is generally divided by gender. Should employers allow transgender employees to use the bathroom of her or his gender identity? Should employers require transgender employees to use the bathroom of his or her gender assigned at birth? Luckily, OSHA recently released guidance to help employers understand the needs of transgender persons.

OSHA does not play coy with its advice. The OSHA publication of the guidance states at the top, “Core principle: All employees, including transgender employees, should have access to restrooms that correspond to their gender identity.”[13] OSHA’s advice, however, extends well beyond this statement. The crux of OSHA’s concern is that its sanitation standards require employers to provide employees with access to toilet facilities, but transgender persons may have health or safety issues beyond those of cisgender[14] individuals. Employer best practices allow a transgender employee to determine the most appropriate and safest option for her- or himself. OSHA also suggests that additional bathroom options for all are appropriate, such as single-occupancy unisex bathrooms, or even multiple-occupant, gender-neutral bathrooms with lockable single-occupant stalls.

Employers should not ask employees to provide any documentation of their gender identity to have access to bathroom facilities, and employers should not, under any circumstances, require transgender employees to use segregated bathroom facilities that keep them from other employees. The EEOC ruled in April that transgender employees cannot be denied access to common restrooms used by others of the same gender identity. It does not matter whether the employee had any procedures to change the employee’s physical sex or if other employees have negative reactions to such use of the restrooms. The EEOC, in the case of Lusardi v. McHugh, took the position that such denials or segregation of transgender persons constitutes impermissible sex discrimination under Title VII of the Civil Rights Act of 1964.

Federal agencies such as OSHA and the EEOC are recognizing the difficulties transgender employees face in the workplace and are making moves to combat discrimination.

IV.    Religious Liberty - Title VII

          A.      Abercrombie

It’s rather fitting that the Supreme Court’s decision in EEOC v. Abercrombie & Fitch Stores[15] turns on the idea of one’s belief; it is, after all, a decision about religious discrimination under Title VII of the Civil Rights Act of 1964. The belief at issue, however, is not the belief of the claimant of religious discrimination, but rather the belief of the employer.

In Abercrombie, an applicant for a position with an Abercrombie & Fitch store wore a hijab, a headscarf worn out of devotion to the Muslim faith, throughout her interview with the store’s assistant manager. Although the assistant manager determined that she was qualified for the position, the headscarf would be a violation of the store’s “Look Policy,” which prohibits head coverings of any kind. The assistant manager then sought the advice of the district manager, telling him that she believed the applicant wore the headscarf because of her religion.  The district manager then suggested that any headwear, religious or not, would be a violation of the store’s policy and then directed the assistant manager not to hire the applicant. At no time did the applicant give the store employees any actual notice of the reason she wore the hijab, nor did she request any accommodation from the store policy to wear one if she were hired.

The crucial question of the case, then, was whether the potential employer needed actual knowledge of the employee’s religious reasons for the headscarf or if the manager’s belief that the hijab may have been part of a religious practice was enough to implicate Title VII. The Supreme Court agreed with the EEOC that actual knowledge was not required if the potential need for a religious accommodation was a motivating factor in the employer’s hiring decision. Because the employer was aware that there may be a need for an accommodation, it showed disparate treatment under Title VII to the applicant due to her religion.  The court focused on the language of Title VII in 42 U. S. C. §2000e–2(m), which states that, “an unlawful employment practice is established when the complaining party demonstrates that race, color, religion, sex, or national origin was a motivating factor for any employment practice.” There is no knowledge requirement in the text, merely a prohibition on discriminatory motivating factors in employment decisions. It was significant for the court that some antidiscrimination laws such as the Americans with Disabilities Act do contain knowledge requirements, while Title VII clearly does not.

The Abercrombie case may be the strongest statement yet from the court on Title VII protections for religious discrimination. The import for employers is tremendous, in that an employer cannot merely claim ignorance of actual knowledge of the applicant or employee’s religion when the employer made an employment decision based on the employer’s belief that the person may need a religious accommodation. Employers should take caution when faced with potential religious accommodation issues, and they should evaluate potential trouble spots where otherwise neutral policies such as the appearance policy at issue in this case might conflict with the religious practices of applicants or employees. Simply put, a belief about another’s belief may be enough to rise to a claim of discrimination. 

          B.    Religious Accommodation

Similar to provisions of the Americans with Disabilities Act, Title VII prohibits discrimination based on religious belief and practice, and therefore employers must also reasonably accommodate an employee’s religious practices unless they create an undue hardship. Examples of accommodations are exceptions to a company dress code for Jewish or Muslim persons to wear, respectively, a yarmulke or a hijab; a schedule change so an employee can attend religious services on a holy day or a Sabbath; a different break period so that an employee can pray at a prescribed time; or even allowing an atheist employee to be excused from religious invocations at staff meetings.

These accommodations cannot create an undue hardship on the employer, and examples of this include a lack of necessary staffing; the jeopardizing of security or health; more than minimal cost to the employer; or violation of a seniority system.

Employers also cannot give disparate treatment to employees or segregate them based on religious beliefs or practices, and they also cannot retaliate against employees for exercising their rights.

[1] United States v. Windsor, 133 S.Ct. 2675 (2013)

[2] Obergefell v. Hodges, 135 S.Ct 2584 (2015).

[3] Baldwin v. Foxx, FAA-2012-24738 (EEOC June 15, 2015).

[4] Muhammad v. Caterpillar, 767 F.3d 694 (7th Cir. 2014).

[5] Macy v. Holder, No. 0120120821, 2012 WL 1435995 (E.E.O.C. Apr. 20, 2012).

[6] Family Medical Leave Act 29 CFR §§ 825.102 and 825.122(b)

[7] Julie Appleby, Once, Same- Once, Same-Sex Couples Couldn’t Wed; Now, Some Employers Say They Must, Kaiser Health News, January 20, 2015, available at http://khn.org/news/once-same-sex-couples-couldnt-wed-now-some-employers-say-they-must/ (Last accessed January 22, 2016).

[8] Same-Sex Spousal Health Benefits, Gay & Lesbian Advocates & Defenders, January 2015, available at https://www.glad.org/uploads/docs/publications/hla-glad-health-benefits.pdf (Last accessed January 22, 2016).

[9] Macy v. Holder, Appeal No. 0120120821 (U.S. Equal Employment Opportunity Commission, Apr. 20, 2012).

[10] Lusardi v. McHugh, EEOC Appeal No. 0120133395 (April 1, 2015).

[11] Lusardi at 9.

[12] EEOC v. Lakeland Eye Clinic, P.A. (M.D. Fla. Civ. No. 8:14-cv-2421-T35 AEP filed Sept. 25, 2014); EEOC v. R.G. & G.R Harris Funeral Homes, Inc., (Civ. No. E.D. Mich. 2:14-cv-13710-SFC-DRG filed Sept. 25, 2014).

[13] Best Practices: A Guide to Restroom Access for Transgender Workers, OSHA https://www.osha.gov/Publications/OSHA3795.pdf

[14] Cisgender, http://www.dictionary.com/browse/cisgender?s=t (defining cisgender individuals identify with the gender that corresponds to the gender assigned to the individual at birth.

[15] Equal Employment Opportunity Commission v. Abercrombie & Fitch Stores, 135 S. Ct. 2028 (2015).

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