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The U.S. Supreme Court’s refusal so far to accept certiorari on cases concerning sexual and gender identity leaves employers facing an uncertain legal landscape and a litigious U.S. Equal Employment Opportunity Commission.
The Supreme Court has turned away cases by two U.S. appeals courts that said such issues are covered under Title VII of the Civil Rights Act of 1964, and one by a third that held it does not.
At the same time, states are issuing their own laws and policies. According to the Washington-based Human Rights Campaign, 21 states and the District of Columbia prohibit discrimination based on sexual orientation and gender identity as of Jan. 28.
“Employers were looking for the Supreme Court to provide some clear guidance,” said Mark T. Phillis, a shareholder with Littler Mendelson P.C. in Pittsburgh.
But while the federal law on the issue remains uncertain, employers who do not have policies prohibiting discrimination because of sexual orientation or gender identity policies still face possible litigation from the EEOC, which has disagreed with the administration’s Justice Department on the issue.
The Supreme Court’s apparent reluctance to accept the cases has generated speculation the court is wary of dealing with such a contentious issue.
The court “is leaving the split between the EEOC and the Justice Department because they don’t want to deal with it, because politically it’s a hot potato. That’s my guess,” said Richard B. Cohen, a partner with FisherBroyles LLP in New York.
“It is somewhat of a calculated move by the Supreme Court to not take these cases which are highly volatile and that are subject to being resolved through legislation and by public opinion,” said Paul E. Starkman, a member of law firm Clark Hill PLC in Chicago.
If and when the Supreme Court takes such a case, they will seek to rule on “the most narrow ground on which they can get a consensus or majority,” Mr. Starkman said. “I don’t know that they’re looking to make any broad pronouncements of the law if they can avoid it.”
Furthermore, with state and local entities issuing regulations on their own, “this issue is going to be largely resolved without having to have a broad pronouncement by the Supreme Court on an issue of federal law.
It’s not going to have a huge practical impact because of all these other local activities,” said Mr. Starkman.
But there would be advantages for employers and their insurers to having the Supreme Court interpret federal law on the issue, experts say.
“There‘s no consistency, there’s no clarity on where the law is, and that just proves difficult from an underwriting perspective,” said Talene Carter, New York-based national employment practices liability leader in Willis Towers Watson PLC’s FINEX North America practice.
“Until there’s some consistency and certainty, the state laws are really going to be the drivers” on the issue, she said.
“It would be really helpful to insurers” to have a Supreme Court ruling on the issue because they would like certainty rather than the current patchwork of laws, said Tom Hams, Chicago-based managing director and national employment practices liability insurance practice leader at Aon PLC.
Meanwhile, the EEOC “is going to continue to take the position that Title VII should be read expansively,” and even if the agency does not file suit itself, “there are also plenty of plaintiff lawyers who would relish the opportunity to become one of the seminal cases” that expand its interpretation, said Tim K. Garrett, of Bass, Berry & Sims PLC in Nashville, Tennessee.
A congressional solution is also possible, said Kelly Thoerig, Richmond, Virginia-based U.S. employment practices liability product leader for Marsh LLC, who pointed to the proposed Equality Act recently introduced in Congress that would expand Title VII to include gender identity and sexual orientation. Past congressional legislative efforts have been unsuccessful.
Experts advise employers to act in effect as though their circuit court has ruled Title VII covers sexual orientation and gender identity, even if they have not done so.
In its February 2018 ruling in Melissa Zarda et al. v. Altitude Express, the 2nd Circuit in New York decided in favor of Donald Zarda, a gay skydiver, who sued his former employer, Calverton, New York-based Altitude Express, alleging he was fired from his job as a skydiving instruction because of his sexual orientation.
In March 2018, the 6th Circuit in Cincinnati, in R.G. & G.R. Harris Funeral Homes Inc. v. Equal Employment Opportunity Commission, ruled in favor of a transgender worker who was fired when she told her funeral home employer she was undergoing a gender transition to male from female.
In contrast, in a May 2018 ruling, the 11th Circuit in Atlanta in Gerald Lynn Bostock v. Clayton County upheld a lower court decision and ruled against Mr. Bostock, a gay man who contended he was fired as a child welfare services coordinator for the Clayton County Juvenile Court system because of his sexual orientation.
The employment practices liability market is beginning to show some signs of hardening, but experts do not attribute it to the uncertain legal landscape surrounding gender identity and sexual orientation issues.