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Transgender bathroom law prompts employer action

North Carolina's stance causes predicament

Transgender bathroom law prompts employer action

North Carolina's controversial “bathroom law” has prompted litigation and spurred federal agencies to speak out about transgender rights while putting public entities and employers at risk of violating the state and federal laws.

H.B. 2, which North Carolina Gov. Pat McCrory signed into law in late March, requires that transgender individuals use the restroom that corresponds with the sex listed on their birth certificate. It applies to public restrooms in places such as schools, universities, city and state facilities, and airports.

A host of musicians and organizations responded by canceling events ranging from concerts to trade shows and other business gatherings. A study by the William's Institute at the University of California-Los Angeles' School of Law earlier this month said H.B. 2 could cost North Carolina upward of $5 billion a year, much of that from the loss of federal dollars, from the state's noncompliance with the U.S. Civil Rights Act of 1964.

“It's not only stirred the pot, it's caused real discussion and, unfortunately, it has created barriers ... for a certain group of our citizenry,” said Reuben Daniels, district director of the U.S. Equal Employment Opportunity Commission's Charlotte district office. “This has caused most people in the country a great deal of concern.”

North Carolina's law is the only one of its kind. Although lawmakers in a handful of states attempted to pass similar restrictions, none became state law, according to the Washington-based National Center for Transgender Equality.

As a result of the law, the EEOC, the U.S. Occupational Safety and Health Administration and the U.S. Department of Health and Human Services in recent weeks restated or introduced guidelines for various organizations, naming transgender individuals as being among the protected classes in federal anti-discrimination laws.

The law also has sparked litigation by several organizations and governmental entities, such as a U.S. Justice Department suit that seeks to withhold federal money from the North Carolina Department of Public Safety and the University of North Carolina.

“This is evolving extraordinarily quickly,” said Nonnie Shivers, a Phoenix-based shareholder at employment law firm Ogletree, Deakins, Nash, Smoak & Stewart P.C. who spends much of her time advising employers on how to handle gay and transgender issues. “This is the time for employers to identify what their obligations are.”

Private employers ought to examine this carefully, as they are subject to EEOC investigations and lawsuits, according to Mr. Daniels, who is predicting an uptick in activity. The EEOC maintains a list on its website of cases on discrimination against transgender employees. Since 2012, the commission has gone after 17 private enterprises. Businesses with more than 15 employees are subject to investigations by the EEOC.

And while North Carolina's law affects one segment of the working public, it's helped declare on a national level the rights of transgender individuals, said Todd Solomon, a Chicago-based partner in the employee benefits affinity group at McDermott Will & Emery L.L.P. He said national attention on the issue has spurred private businesses and organizations to establish policies if they haven't already.

“At this point, (public) employers are caught in the middle of lawsuits,” said Mr. Solomon.

Several public entities in North Carolina reportedly have decided to follow federal guidelines under Title VII of the Civil Rights Act instead of the new state law given the threat of losing federal funding.

At the University of North Carolina-Chapel Hill, enforcement of the law isn't clear, said Terri Phoenix, director of the campus's LGBTQ Center, which provides services for the “lesbian, gay, bisexual, transgender and queer” population. “There are no enforcement procedures whatsoever ... the bill has amplified anxiety on campus, making people think they have the right to police the bathroom,” he said. “It is a problem on campus.”

The law also includes a provision disallowing individuals to sue the state for discrimination, another contested issue that Gov. McCrory has said he would like to see repealed.

While the North Carolina law, introduced to nullify a transgender rights law passed by the City of Charlotte, responded to concerns that Gov. McCrory said included fears that transgender individuals could “do harm,” opponents said the law won't stop criminal activity.

All the hype has caused mass anxiety among transgender individuals who fear being attacked “no matter what bathroom they use,” said Mr. Phoenix.

That's why the American Civil Liberties Union and Lamda Legal in mid-May filed an injunction seeking more time to study the law's ramifications before it's put into effect.

“H.B. 2 is causing ongoing and serious harm to transgender people in North Carolina,” Chris Brook, Raleigh-based legal director of the ACLU of North Carolina, said in a statement. “Our Legislature and our leaders of our state pedal some problematic mythology about the LGBT community, and that bullying is only going to increase,” he said in an interview.

Among the pleadings are statements by several transgender individuals — mostly university students — who said they fear for their safety.

The North Carolina law “says I am supposed to use the men's room,” said Victoria E. Nolan, risk and benefits manager at Hillsboro, Oregon-based Clean Water Services, who transitioned to female in 2011. “I would just use the women's room and take my chances.”

As a frequent speaker at risk management conferences on workplace transgender issues, Ms. Nolan is slated to speak in June at the Public Risk Management Association conference in Atlanta, a part of the country she travels to reluctantly. In March, the Georgia governor vetoed a law that would have allowed businesses in the state to refuse service to gay or transgender individuals.

“A year ago, I could have walked into any public restroom and not have anybody look twice at me,” Ms. Nolan said of the furor caused by the North Carolina law. “I feel very vulnerable right now. This feels a lot like the times of segregation, when blacks were separated from whites because (people feared) blacks were going to harm whites.”