The Changing Landscape of Sexual Orientation Discrimination Law

From the time Congress passed the Civil Rights Act of 1964 until earlier this year, federal courts have consistently held that the Act’s protections against employment discrimination did not apply to discrimination on the basis of sexual orientation. However, in March, the Seventh Circuit Court of Appeals (which covers Wisconsin, Illinois, and Indiana) became the first court to rule the other way, holding that Title VII of the Civil Rights Act’s prohibition against discrimination on the basis of sex includes discrimination based on sexual orientation. What has occurred in federal courts in the wake of that decision, however, has only muddied the waters.

Title VII prohibits employment discrimination based on race, color, religion, sex, and national origin. Prior to the Seventh Circuit’s notable decision, courts had only permitted gay employees to make claims of sex discrimination if the employee could show the discrimination occurred because the employee did not conform to gender stereotypes, not simply because of the employee’s sexual orientation. The Seventh Circuit found that the gender stereotype argument is unnecessary, stating “it is . . . impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex.”

The question is far from settled. In April, in a case involving a gay skydiving instructor who claims he was fired because of his sexual orientation, a three-judge panel of the Second Circuit ruled that it could not follow the Seventh Circuit’s decision. It held that a three-judge panel could not overturn precedential decisions regarding Title VII’s application to sexual orientation discrimination. Such a ruling would require a review by the entire panel of judges. The Second Circuit has granted such a review (an en bancreview), indicating that perhaps the full panel of judges may be willing to follow the lead of the Seventh Circuit.

The picture becomes fuzzier still because of conflicting input from two government agencies. In preparation for its en banc review, the Second Circuit invited the EEOC to offer an opinion on the matter. The EEOC restated a stance it has held since 2012, saying sexual orientation discrimination is inextricably linked to gender and gender stereotypes and should fall under the protection of Title VII. However, on July 26, 2017, the Department of Justice filed a brief taking the opposite position. The DOJ argued Congress did not intend Title VII to apply to sexual orientation, and that expansion of the protection should be left to Congress, not implemented by the courts. The DOJ also says that the court owes no deference to the EEOC.

Because the federal circuits are now split on the issue, the question may eventually be decided by the United States Supreme Court. The Court has already been asked to review a case in which a former security guard at a Georgia hospital claims she was forced to quit because she was gay. The Court has not yet said whether it will hear the case. Ultimately, as the DOJ suggests, Congress could pass legislation to decide the issue one way or the other.

The takeaway from this flurry of activity is that this is an area of law that is very much in flux. For decades, the position of federal courts in regards to sexual orientation discrimination under Title VII was clear. Now, the landscape has shifted, and the ground is still settling. Employers should be aware that changes are happening quickly in this area and proceed cautiously when a situation potentially involving a sexual orientation discrimination claim arises.

This post was written by Mark G Jeffries of  Steptoe & Johnson PLLC.
Much more legal analysis at the National Law Review.

Lawmakers Continue Focus on TSA Wait Times, While House Spending Panel Approves TSA Funding for FY 2017; Government Officials React to Deadliest Shooting in US History, Worst Terror Attack Since 9/11

TSA wait linesLawmakers Continue Focus on TSA Wait Times, While House Spending Panel Approves TSA Funding for FY 2017

The House Appropriations Committee approved it draft FY 2017 homeland security appropriations measure on Thursday, June 9, including $7.6 billion for the Transportation Security Administration (TSA), $163 million more than in FY 2016 and $21.8 million greater than the Obama Administration’s FY 2017 budget request.  The House Appropriations Committee has yet to approve a request from the U.S. Department of Homeland Security (DHS) for an additional $28 million to help keep airport security lines under control during the ongoing summer travel season.  The Senate Appropriations Committee, which has already approved of its FY 2017 homeland security spending measure increasing funds for TSA, has also signed off on the reallocated funds, the second such request from DHS this year.

On June 7, the House of Representatives approved legislation, the Checkpoint Optimization and Efficiency Act of 2016 (H.R. 5338), aimed at shortening TSA wait times.  The measure would direct both the TSA Administrator and the Government Accountability Office (GAO) to review TSA’s staffing allocation model.  The Act also requires the TSA Administrator to take a number of actions related to the agency’s staffing and resource allocation.  Across the Capitol, TSA Administrator Peter Neffenger testified before a Senate Homeland Security and Governmental Affairs Committee hearing last week, where lawmakers encouraged the agency to increase access to PreCheck, an expedited security screening program.

This Week’s Hearings:

  • Tuesday, June 14: The House Homeland Security Committee Subcommittee on Border and Maritime Security will hold a hearing titled “Overstaying Their Welcome: National Security Risks Posed by Visa Overstays.”

  • Wednesday, June 15: The Senate Homeland Security Committee will hold a hearing titled “America’s Insatiable Demand for Drugs: Examining Alternative Approaches.”

  • Thursday, June 16: The Senate Judiciary Committee will hold a meeting to consider pending legislation and nominations.

Executive Branch Activity

Government Officials React to Deadliest Shooting in US History, Worst Terror Attack Since 9/11

President Barack Obama, senior Administration officials, and lawmakers reacted to the shooting at a crowded Orlando nightclub filled with members of the lesbian, gay, bisexual and transgender community.  As of Sunday night, the shooting, which ended with police storming the club after a three-hour stand-off, had left 50 dead and at least 53 injured.  Reports indicated the alleged shooter had pledged allegiance to ISIS, making it the United States’ worst terror attack since September 11, 2001, and the deadliest mass shooting in the country’s history.

President Obama delivered remarks from the White House early in the day, confirming he had met with his homeland security and national security advisors and assuring Americans that he has “directed that the full resources of the federal government be made available for this investigation.”  Congressman Mike McCaul (R-TX), Chairman of the House Homeland Security Committee, offered thoughts and prayers for the victims and thanked local law enforcement for their efforts responding to the attack, calling it “a sobering reminder that radical Islamists are targeting our country and our way of life.” Senator Ron Johnson (R-WI), Chairman of the Senate Homeland Security and Governmental Affairs Committee, echoed his House colleague, confirming that his committee “will work to support the federal role in investigating this terror attack and protecting against further threats.”  Secretary of Homeland Security Jeh Johnson stated that senior agency officials “are dedicated to investigating this tragedy, along with the FBI and our state and local partners, and supporting the Orlando community in the tragedy’s aftermath.”  Secretary Johnson canceled planned travel to Beijing in light of the attack.

© Copyright 2016 Squire Patton Boggs (US) LLP

Arkansas Cities and Counties Provide Local LGBT Nondiscrimination Protections

A new civil rights law affording nondiscrimination protections for most lesbian, gay, bisexual, and transgender residents of Fayetteville, Arkansas, will go into effect on November 7, 2015.

Passed by the City Council and ratified by a popular vote in a Special Election held on September 8, 2015, the Uniform Civil Rights Protection ordinance (Ordinance 5781) prohibits discrimination in employment, housing, and public accommodations, based upon sexual orientation or gender identity. Declaring that “[t]he right of an otherwise qualified person to be free from discrimination because of sexual orientation and gender identity is the same right of every citizen to be free from discrimination because of race, religion, national origin, gender and disability as recognized and protected by the Arkansas Civil Rights Act of 1993,” the Ordinance also protects anyone who opposes any act prohibited by the Ordinance or who participates in such an investigation.

Designed to overcome objections to a similar measure that was repealed in 2014, Ordinance 5781 exempts from its coverage any employer with fewer than nine employees, as well as any church, religious school or day school, and any other religious organization. It also includes an enforcement scheme that is conciliatory, rather than punitive, with civil fines imposed for violations.

Civil Rights Commission

Enforcement will be handled by a newly formed, seven-member Civil Rights Commission appointed by the City Council and comprised of representatives of the business community, owners or managers of rental property, and citizens at large (at least one of whom identifies as LGBT), as well as at least one person with experience in human resources or employment law.

Anyone claiming a violation of the ordinance must present that claim in writing to the Fayetteville City Attorney within 90 days of the alleged violation. The City Attorney must then forward the complaint to the Commission.

Resolution of any complaint will begin with informal and confidential mediation between the parties. If such attempts are unsuccessful, the claim will ultimately go to an evidentiary hearing before the Commission. Anyone found to have violated the Ordinance will be fined up to $100 for the first offense, with subsequent violations carrying the City’s general penalty of fines up to $500 and up to 30 days in jail if fines are not paid. However, there is no criminal classification or penalty associated with the Ordinance or its violation.

Opposition

The Fayetteville Chamber of Commerce, though a leading opponent of the measure repealed in 2014, is in full support of this one. The story may not end there, however.

Opponents of the law filed suit in August 2015, seeking to stop the Special Election and arguing that the measure infringes upon individuals’ and business owners’ freedom of religion, that sexual predators might use the law to prey upon women and children in public restrooms, and that the ballot had a misleading title that did not include any details about LGBT protections, among other things. Injunctive relief was denied, but the lawsuit is pending in Washington County Circuit Court. Further, Arkansas Attorney General Leslie Rutledge released an opinion on September 1, 2015, stating that Ordinance 5781, as well as any similar measure passed by other municipalities, conflicts with Arkansas state law, and therefore, should not survive legal challenge. She relies upon the state’s recently enacted Intrastate Commerce Improvement Act, which bans cities and counties from enacting or enforcing “an ordinance, resolution, rule or policy that creates a protected classification or prohibits discrimination on a basis not contained in state law.”

On the other hand, Fayetteville City Attorney Kit Williams has stated that he will defend the Ordinance. He said the Ordinance incorporates several existing state laws, including the Arkansas Anti-Bullying Act and the Fair Housing Act, which, by their very terms, provide LGBT protections. “The protected classifications are certainly there in state law, and, therefore, this is not a new protected classification,” said Williams. He also has questioned whether the Intrastate Commerce Improvement Act is constitutional under the equal protection clause of the U.S. Constitution’s 14th Amendment.

The new Ordinance is a part of a growing national trend to prevent employers, at the local level, from firing or declining to hire any person because of his or her sexual orientation or gender identity. Similar measures have been enacted by Pulaski County and five other cities in Arkansas: Little Rock, North Little Rock, Hot Springs, Eureka Springs, and Conway.

Jackson Lewis P.C. © 2015

Uncertainty Follows Judicial Decision Enjoining DOL’s Same Sex Spouse Rule Change

Dinsmore Shohl LLP

Following Indiana Governor Mike Pence’s decision to sign the Religious Freedom Restoration Act (RFRA), a decision by Texas District Court Judge Reed O’Connor adds to the controversy and conversation surrounding the lesbian, gay, bisexual, transgender (LGBT) rights movement.

Opponents to the Indiana law say it will allow businesses to deny services to customers based on customers’ sexual orientation or gender identity and justify this denial based on religious beliefs. A day after Governor Pence signed Indiana’s RFRA into law, on March 27, 2015, the Arkansas legislature voted to enact its own religious freedom legislation known as the “Conscience Protection Act”, and the bill is currently before Governor Asa Hutchinson.

While the Arkansas Governor is set to consider religious freedoms and LGBT discrimination, Arkansas’s Attorney General has been battling the Department of Labor (DOL) in another issue impacting LGBT employees. On March 26, 2015, in Texas v. United States, N.D. Texas No. 7:15-cv-00056-O, Judge O’Connor granted an injunction to Texas, Arkansas, Louisiana, and Nebraska to temporarily halt the DOL’s Final Rule revising the definition of “spouse” under the Family and Medical Leave Act (FMLA).

The DOL’s Final Rule took effect on March 27, 2015 and changed the definition of “spouse” to include individuals in same-sex marriages if the marriage was valid in the place it was entered into regardless of where they live. The Final Rule reads as follows:

Spouse, as defined in the statute, means a husband or wife. For purposes of this definition, husband or wife refers to the other person with whom an individual entered into marriage as defined or recognized under state law for purposes of marriage in the State in which the marriage was entered into or, in the case of a marriage entered into outside of any State, if the marriage is valid in the place where entered into and could have been entered into in at least one State. This definition includes an individual in a same-sex or common law marriage that either:

(1) Was entered into in a State that recognizes such marriages; or

(2) If entered into outside of any State, is valid in the place where entered into and could have been entered into in at least one State.

29 C.F.R. § 825.102. This change enables eligible employees in legal same-sex marriages to take FMLA leave to care for a spouse with a serious medical condition. The Final Rule no longer looks to the laws of the state in which the employee resides but rather relies on the laws of the jurisdiction where the marriage was entered into–i.e. the place of celebration.

Texas law, similar to Ohio, does not recognize same sex marriage. Texas, joined by Arkansas, Nebraska, and Louisiana, argued that the DOL exceeded its jurisdiction by requiring them to violate the Full Faith and Credit Statute and/or state law prohibiting recognition of same-sex marriages from other jurisdictions. Texas argued that the Final Rule would require it to violate state law which prohibits it from giving any legal benefits asserted on the basis of a same-sex marriage. Judge O’Connor also relied on Section 2 of the Defense of Marriage Act (DOMA) to hold that Congress intended to preserve a state’s ability to define marriage differently than another state or jurisdiction. Finding that the Final Rule would require Texas agencies to recognize out-of-state same-sex marriages in violation of state law, Judge O’Connor temporarily halted the application of the Final Rule pending a full determination of this matter on the merits.

In these four states, Judge O’Connor’s decision prevents employees in same-sex marriages from receiving the benefits afforded heterosexual married couples until the issue is resolved through legal channels. However, employers are not prohibited from granting family leave benefits to qualifying employees to care for a loved one. Despite the decision—only applicable in four states—the Final Rule is currently in effect. For this reason, employers should proceed in accordance with the DOL’s regulation and fulfill its obligations to its LGBT employees by revising their family and medical leave policies and providing FMLA benefits to employees in legal same-sex marriages.

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Utah Passes Law Prohibiting LGBT Employment Discrimination

Squire Patton Boggs (US) LLP law firm

On March 12, Utah Governor Herbert signed into law S.B. 296, which amends the Utah Antidiscrimination Act to prohibit discrimination in employment by Utah employers on the basis of sexual orientation and gender identity. Notably, and perhaps not surprisingly given that 60% of Utah residents identify as Mormons, although the law had the support of the Church of Jesus Christ of Latter-Day Saints, it exempts from coverage religious institutions, organizations, and affiliates (as well as the Boy Scouts of America) from its definition of employer.

It also allows for employee expression of religious or moral beliefs in the workplace – which would appear to include opposition to LGBT issues or lifestyles – as long as such expression is “reasonable, non-disruptive and non-harassing.” In passing this law, Utah becomes the 18th state (including the District of Columbia) to adopt LGBT anti-discrimination legislation. (LGBT discrimination is also prohibited against federal employees pursuant to Executive Order 13672, signed by President Obama in June 2014.)

EEOC Part of Increasing Focus On LGBT Issues

Barnes Thornburg

We seem clearly to be in the midst of a shift towards greater employment protections for LGBT employees, evidenced both by discrimination legislation largely at a state and local level and less directly in the legal environment by developments such as greater acceptance of gay marriage including the Supreme Court’s recent refusal to consider lower court decisions invalidating state statutes prohibiting gay marriage.

EEOC Commissioner Chai Feldblum recently released thisinteresting summary of the EEOC’s activities and positions on LGBT issues. Highlights include:

  • Title VII prohibits discrimination on the basis of sex.  The EEOC interprets the law to provide protection on the basis of sexual orientation and gender identity.  This has not always been the case – in the 1970s the EEOC held that discrimination on the basis of gender identity (1974) and sexual orientation (1976) were not prohibited under Title VII.
  • Courts have not yet developed a clear position on this.  (And for lawyer readers, there are numerous case cites that provide a useful reference.)
  • The EEOC has accepted discrimination charges from LGBT individuals since January 2013 and reports that it is has received and resolved hundreds of them.
  • Commissioner Feldblum states that strong laws at all levels of government explicitly protecting LGBT workers are still necessary.

Anecdotally, more and more employers seem to be voluntarily extending to LGBT employees the protection they extend to employees in generally accepted protected classes.  In many cases, the employer is required to do so under the laws of some places it does business, and simply implements the protection uniformly.  Employers who choose not to do so voluntarily and are not yet required to do so in places where they do business should at least be thinking ahead on administering what seem like inevitable changes.

As always, regardless of what classes are protected in what jurisdictions, the best defense against discrimination liability are making good business decisions and being able to document that you have done so.

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OF

2013 Year-End Planning for Lesbian, Gay, Bisexual and Transgender (LGBT) Taxpayers

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2013 has been a year of historic change for the LGBT community. The landmark Supreme Court decision in U. S. v. Windsor, decided on June 26, 2013, held that Section 3 of the Defense of Marriage Act (DOMA) (defining marriage for federal purposes as being between a man and a woman) violates the equal protection clause of the Constitution and is therefore unconstitutional.

For married same-sex couples living in one of the 14 states (as of this writing) or District of Columbia which recognize same-sex marriages, their marriages are now recognized for both federal and state purposes. Married same-sex couples living in a state that does not recognize same-sex marriages are left with many questions.

Place of Celebration

On August 29, 2013 the IRS released Revenue Ruling 2013-17 clarifying that where a couple was married (place of celebration) rather than where a couple resides (place of domicile) determines a same-sex couple’s marital status for federal tax purposes. A tremendous benefit of this decision is that married same-sex couples can now travel freely across state lines and be considered married in each state for federal tax purposes. This ruling applies to same-sex marriages legally entered into in a US state, the District of Columbia, a US territory or foreign country. The ruling does not apply to civil unions, registered domestic partnerships or similar relationships that might be recognized under state law but do not necessarily guarantee the same protection as marriage.

Impact on Gift and Estate Taxes

Before the Windsor decision, transfers between same-sex married couples could result in significant gift and estate taxes. Now transfers between same-sex spouses can generally be made with no tax consequences. In addition, certain estate provisions such as portability, the marital deduction and qualified terminable interest property (QTIP) trusts are now available to same-sex married couples. Other commonly used estate and gift planning tools for married couples, such as gift splitting and spousal rollover IRA’s, are also now available to a same sex married couple.

If you die in a state that does not recognize same-sex marriage, your spouse will not automatically inherit under state spousal rights statutes. Therefore, if the couple intends to inherit from each other, a will or living trust is still needed.

Planning tip: An important part of 2013 year-end planning is to review and update wills and estate documents to make sure to take advantage of the new rules and to properly designate beneficiaries.

Impact on Income Taxes

Many married couples have a lower joint tax liability because of netting income and deductions, eligibility for certain tax credits and income exclusions, or have an increased tax liability due to the marriage penalty tax or because of limitations on deductions based on their combined adjusted gross income. For 2013, LGBT couples considered married under the state of celebration rule will have to file their federal tax return as married filing joint or married filing separate, which may cause a shift in tax planning.

Planning tips: As part of 2013 year-end planning, same-sex couples should work with their tax advisors to determine if original or amended returns, using married filing joint or married filing separate status, should be filed for years open under the statute of limitations. The statute for a refund claim is open for three years from the date the return was filed or two years from the date the tax was paid, whichever is later. Projections should be run to compare the potential benefit or cost of a married-joint filing versus separate-single or head of household filing, as there may be a better tax result to leave the returns as filed and not amend.

In addition, same-sex couples should consider credits that might not have been available as single filers, or consider the traditional year-end planning ideas for married couples mentioned in other sections of this guide.

Impact on Benefits

Before the fall of DOMA, benefits provided to the non-employee same-sex spouse, such as employer provided health insurance, flexible spending plans, etc. were paid with after-tax dollars and the benefit was included in the employee’s taxable income. Now, same-sex couples can pay for these benefits with pre-tax dollars and the coverage will not be included in their taxable income. Employees can file amended returns (for years prior to 2013) excluding those benefits from taxable income and request refunds. Also, employers who paid payroll taxes based on previously taxed health insurance and fringe benefits can also file amended returns (Notice 2013-61 provides guidance to employers for correcting overpayments of employment taxes (FICA) for 2013).

On August 9, 2013, the US Department of Labor (DOL) announced that the Family and Medical Leave Act (FMLA) extends only to same-sex marriage couples who reside in states that recognize same-sex marriage.

On September 18, 2013 the DOL announced (in Technical Release 2013-04) that same-sex couples legally married in a jurisdiction that recognizes their marriage will be treated as married for purposes of the Employee Retirement Income Security Act of 1975 (ERISA) and the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The DOL recognizes the marriage regardless of where the legally married couple currently resides. This announcement covers pensions, 401K’s, and health plans.

The Social Security Administration (SSA) also announced that it will process and pay out spousal retirement claims for same-sex spouses. The SSA urges people who believe they are eligible for benefits to apply as soon as possible in order to establish a protective filing date, which is used to determine the start of potential benefits. Under the SSA’s “Windsor instructions”, claims can be filed when the holder of a social security number was married in a state that permits same-sex marriages and resides in a state that recognizes same-sex marriage at the time of application. Once benefits are approved, the recipient can move to any state without disqualification. Applications that don’t meet these criteria are being held for later processing when further guidance is issued.

Planning tips for employees: Employees in a same-sex marriage should consider amending their tax returns if they were paying for employer-provided benefits to their spouse. Employees in a same sex-marriage should also review the benefits their employer offers to married couples to make sure they are taking full advantage of all benefits. Also, same-sex married couples should provide their Human Resource Department with a copy of their marriage license and confirm that the spouse’s insurance coverage is no longer being included in taxable income and/or that an appropriate adjustment will be made for the 2013 calendar year.

Planning tips for employers: Employers should ensure that their benefits packages are in compliance with the new laws. See Rev. Rul. 2013-61 for guidance on how to correct overpayments of employment taxes for 2013 by either adjusting 4th QTR 2013 Form 941, (correcting the 1st -3rd Quarterly filings) or by filing Form 941-X (correcting all quarters of 2013).

Pre- and Post-Nuptial Agreements

Consider agreements for same-sex couples to avoid disagreements and litigation expenses for future possible divorce. State uncertainty remains.The majority of states currently do not recognize same-sex marriages. There are prominent court cases challenging these state laws, and the resulting impacts on tax and estate planning for same-sex married couples are as yet unknown.

Article by:

Janis Cowhey McDonagh

Of:

Marcum LLP