Key Implications of Fourth Circuit’s Denial of En Banc Review of Pro-Transgender Ruling

On May 31, 2016, the Fourth Circuit Court of Appeals denied en banc review of an April decision permitting transgender students to use sex-segregated facilities that are consistent with their gender identity.  The Fourth Circuit encompasses North Carolina; thus, the case G.G. v. Gloucester County Public School Board (“Gloucester County”), although it arose in Virginia, creates a conflict between federal law and North Carolina’s House Bill 2 (“HB2”), which requires transgender individuals to use public bathrooms that match the gender listed on their birth certificates.  Although Gloucester County applies on its face to students and public schools, the decision impacts retailers who provide bathroom facilities to employees and customers and who must navigate conflicting laws regarding transgender protections.  Of additional importance, plaintiffs in sex discrimination lawsuits will likely use the decision as support for the view that a person’s “sex” includes “gender identity.”North Carolina Transgender students

In Gloucester County, a sixteen-year-old transgender high school student who was born a biological female filed suit to use the boys’ restroom at school.  G.G. and his mother contended that the school’s policy of providing separate restrooms and locker rooms based upon a student’s biological sex constituted sex discrimination under Title IX—the federal law that prohibits sex-based discrimination in federally funded educational programs and activities.  On April 19, G.G. prevailed in a two-to-one decision of a three member panel of the Fourth Circuit, which deferred to the U.S. Department of Education’s interpretation that the reference to “sex” in Title IX includes “gender identity.”

Following the panel’s ruling, the school board asked the Fourth Circuit to rehear the case with the full panel of 15 active judges.  On May 31, the en banc panel denied the school board’s request.  Circuit Judge Paul V. Niemeyer, widely considered the most conservative member of the Fourth Circuit, filed the lone dissent, stating the issue “deserves an open road to the Supreme Court to seek the Court’s controlling construction of Title IX for national application.”

Regardless whether the case proceeds to the Supreme Court, the decision signifies the first time a federal appeals court has found that federal law protects the rights of transgender persons to use sex-segregated facilities that are consistent with their gender identity.  Although decided under Title IX with regard to student rights, the decision may have ramifications in the area of employment law, inasmuch as Title VII, like Title IX, prohibits discrimination based on “sex.”  Retailers and other employers should be alert to the issue and may expect that future litigants will seek to expand the Gloucester County ruling to Title VII and other sex discrimination claims.

Given the political and legal climate surrounding HB2 and related laws that affect the rights of transgender persons, we recommend that retailers proactively accommodate the needs of transgender workers rather than reactively respond to potential claims of discrimination.  Retailers, particularly those operating in states with anti-discrimination laws that cover sexual orientation and gender identity, should implement a policy designed to foster workplace inclusion.  In particular, retailers are encouraged to provide transgender employees access to bathrooms that correspond to their gender identity and, where possible, provide employees with additional options, including single-occupancy gender-neutral (unisex) facilities and use of multiple-occupant, gender-neutral restroom facilities with lockable single occupant stalls.  Furthermore, retailers in the clothing industry with dressing/fitting rooms should accommodate their employees and patrons alike by permitting them to use the dressing/fitting room that corresponds to their gender identity.  These recommendations apply equally to those retailers in North Carolina because, although HB2 remains in effect in that state, the law applies only to places of public accommodation, and, in any event, the Fourth Circuit’s recent decision signals that the controversial law may not withstand judicial scrutiny.  In general, retailers should beware that engaging in discriminatory practices may have negative business as well as legal ramifications.

©2016 Epstein Becker & Green, P.C. All rights reserved.

North Carolina Retailers Navigate Conflicting Laws Regarding Transgender Protections

On March 23, 2016, the North Carolina Legislature passed House Bill 2, the “Public Facilities Privacy and Security Act” (“HB2”), that overturned a Charlotte ordinance extending anti-discrimination protections to lesbian, gay, bisexual, and transgender (“LGBT”) individuals and allowing transgender persons to use the bathroom of their choice. Instead, HB2 requires individuals to use public bathrooms that match the gender listed on their birth certificates. A swift public outcry followed, with many celebrities denouncing the law and canceling appearances in North Carolina, companies threatening to boycott, and the American Civil Liberties Union filing a lawsuit challenging HB2 as unconstitutional and for violating federal law.

North Carolina TransgenderNorth Carolina officials have refused to disavow HB2 and, on May 9, filed a lawsuit against the federal government seeking a ruling that HB2 is not discriminatory. The Justice Department has countersued, alleging that HB2 violates Title VII of the Civil Rights Act of 1964 (“Title VII). Regardless of the ultimate outcome of these lawsuits, it is clear that discriminating against LGBT individuals has real consequences, from both a business and legal perspective. What should retailers know and, more importantly, do to survive in this current environment?

At a minimum, retailers should familiarize themselves with their state’s employment nondiscrimination laws (if any) that apply to private employers. Twenty states (including California, Illinois, New Jersey, and New York) and the District of Columbia have passed employment non-discrimination laws that prohibit discrimination by private employers based on both sexual orientation and gender identity. Two states (New Hampshire and Wisconsin) have such laws covering sexual orientation only. These laws protect LGBT persons from discrimination in hiring and in the workplace.

Retailers also are encouraged to review their municipality’s nondiscrimination laws and regulations, if any. For example, New York City law prohibits gender identity discrimination, and the New York City Commission on Human Rights recently announced guidance (“NYC Guidance”) that makes clear what constitutes gender identity and gender expression discrimination under the NYC Human Rights Law. The NYC Guidance warns employers and business owners that they may violate New York City law if they intentionally fail to use a transgender employee’s preferred name, pronoun, or title, or refuse to allow a transgender employee to use single-sex facilities, such as bathrooms or locker rooms, and participate in single-sex programs consistent with their gender identity.

Retailers also should know that the EEOC has aggressively pursued transgender discrimination claims on theories of sex stereotyping and gender nonconformity under Title VII, which bars employers from discriminating against employees on the basis of their sex. In cases involving government employees, the EEOC has held that: (i) an employer’s restriction on a transgender woman’s use of a common female restroom facility constituted illegal sex discrimination under Title VII,(ii) an employer’s intentional references to a transgender female as “he” may constitute sex-based discrimination and/or harassment, and (iii) a transgender employee stated a valid Title VII sex discrimination claim based on his allegation that his employer took over a year to correct his name in the company’s computer system.

The EEOC has taken further action against private companies. For example, it recently entered into a consent decree with a Minnesota financial services company for allegedly refusing to let a transgender employee use the women’s restroom and subjecting her to a hostile work environment. In another action, a Florida eye clinic paid $150,000 to settle an EEOC lawsuit that sought relief for an employee who was allegedly discriminated against when transitioning from male to female.

In light of this climate, retailers are encouraged to accommodate the needs of transgender workers proactively rather than reactively responding to potential claims of discrimination. Retailers, particularly those operating in states with anti-discrimination laws that cover sexual orientation and/or gender identity, should implement a policy designed to foster workplace inclusion. Retailers can avoid significant business and legal risk if they follow these two directives:

  • Call transgender employees by their preferred names, pronouns, and titles, and promptly update internal databases (pay accounts, training records, benefits documents, etc.) with this information upon an employee’s request. The NYC Guidance, for example, advises employers to use the employee’s preferred name regardless of whether the employee has legally changed his or her name “except in very limited circumstances where certain federal, state, or local laws require otherwise (e.g., for purposes of employment eligibility verification with the federal government).” This is a sound policy that retailers beyond New York City should consider following. In addition, employers may choose to offer new business cards and email aliases for their employees.

  • Provide transgender employees access to bathrooms that correspond to their gender identity. On May 3, the EEOC issued a “Fact Sheet” stating that the denial of equal access to a bathroom corresponding to an employee’s gender identity qualifies as sex discrimination prohibited under Title VII and that contrary state law is no defense. The Fact Sheet encourages employers to refer to the more comprehensive “Guide to Restroom Access for Transgender Workers,” which was issued by the Occupational Safety and Health Administration (“OSHA”) and offers model practices for restroom access for transgender employees. Like the EEOC, OSHA advises that “all employees should be permitted to use the facilities that correspond with their gender identity.” Where possible, employers should provide employees with additional options, including single-occupancy gender-neutral (unisex) facilities and use of multiple-occupant, gender-neutral restroom facilities with lockable single occupant stalls.

While the North Carolina Legislature has rolled back protections for the LGBT community, the media attention surrounding HB2 has been largely negative and has affected the businesses of companies operating in the state. Given the number of other states that have enacted laws expressly prohibiting sexual orientation and/or gender identity discrimination, the federal government’s enforcement position, and changing public opinion on the issue, retailers are on notice that such discrimination may have negative business or legal ramifications.

©2016 Epstein Becker & Green, P.C. All rights reserved.

Subpoenas Without Depositions: A Valuable Point From The North Carolina Business Court

8 inch color white background

Can you send a subpoena duces tecum — which translated from Latin is “a writ commanding a person to produce in court certain designated documents or evidence ” —  without coupling it with a deposition?

Maybe that question has never puzzled you, but in an Order of the Business Court on February 12, 2015 in Harriott v. Central Carolina Surgical Eye Associates, P.A. Judge Bledsoe answered whether a subpoena duces tecum can be served without noticing a deposition in conjunction with the subpoena.

Plaintiff had served a subpoena duces tecum on several entities which were not party to the case. Those entities objected contending that a “subpoena duces tecum must be issued in conjunction with a proceeding in which testimony is to be received.”

Judge Bledsoe disagreed, ruling “a subpoena duces tecum . . . can . . . be used to compel a non-party to produce documents without a concurrent request to testify.”  Order at 1-2.

The governing Rule of Civil Procedure (NCRCP 45) is less than clear on this point. It says that a “command to produce records, books, papers, electronically stored information, or tangible things may be joined with a command to appear at trial or hearing or at a deposition, or any subpoena may be issued separately.” NCRCP 45(a)(2).

The federal rule, by contrast,  is explicit on being able to serve a subpoena for documents without a contemporaneous deposition.  It says that:

Combining or Separating a Command to Produce or to Permit Inspection . . . . A command to produce documents, electronically stored information, or tangible things or to permit the inspection of premises may be included in a subpoena commanding attendance at a deposition, hearing, or trial, or may be set out in a separate subpoena.

FRCP45(a)(1)(C).

So, if there was any doubt about this practical nuts and bolts issue, state law practice is now consistent with the federal rule.  Subpoena away.  At least in the Business Court.

Only two more weeks until the Retail Law 2014 Conference – October 15-17, 2014, Charlotte, NC

The National Law Review is pleased to bring you information about the upcoming Retail Law Conference:

Retail Law 2014: At the Intersection of Technology and Retail Law
Retail Law 2014: At the Intersection of Technology and Retail Law

Register Today!

When

October 15-17, 2014

Where

Charlotte, NC

The 2014 Retail Law Conference takes place October 15-17 in Charlotte, NC. This year’s program is stronger than ever with relevant, compelling and interactive sessions focused on the legal issues affecting retailers. In partnership with the Retail Litigation Center (RLC), RILA will host legal counsel from leaders in the retail industry for the fifth annual event.

This year’s Retail Law Conference will feature issues at the intersection of technology and law, how the two spaces interact and the impact that they have on retailers. Topics will likely include:

  • Anatomy of a Data Breach: Prevention & Response
  • Privacy: Understanding New Technologies & Data Collection
  • Advertising Practices: Enforcement & Social Media
  • ADA Implications for New Technologies
  • Legal Implications for Future Payment Technologies
  • Policies & Procedures of The “Omnichannel” Age
  • Patent Litigation “Heat Maps”
  • Union Organizing Campaigns
  • Wage & Hour Litigation
  • EEOC Enforcement
  • Foreign Corrupt Practices Act
  • Corporate Governance & Disclosure
  • Election 2014
  • Dueling Views of The U.S. Supreme Court
  • Legal Ethics

The Retail Law Conference is open to executives from retail and consumer goods product manufacturing companies. All others, such as law firms and service providres, must sponsor in order to attend, and can do so by contacting Tripp Taylor at tripp.taylor@rila.org.

Attend the Retail Law 2014 Conference – October 15-17, 2014, Charlotte, North Carolina

The National Law Review is pleased to bring you information about the upcoming Retail Law Conference:

Retail Law 2014: At the Intersection of Technology and Retail Law
Retail Law 2014: At the Intersection of Technology and Retail Law

Register Today!

When

October 15-17, 2014

Where

Charlotte, NC

The 2014 Retail Law Conference takes place October 15-17 in Charlotte, NC. This year’s program is stronger than ever with relevant, compelling and interactive sessions focused on the legal issues affecting retailers. In partnership with the Retail Litigation Center (RLC), RILA will host legal counsel from leaders in the retail industry for the fifth annual event.

This year’s Retail Law Conference will feature issues at the intersection of technology and law, how the two spaces interact and the impact that they have on retailers. Topics will likely include:

  • Anatomy of a Data Breach: Prevention & Response
  • Privacy: Understanding New Technologies & Data Collection
  • Advertising Practices: Enforcement & Social Media
  • ADA Implications for New Technologies
  • Legal Implications for Future Payment Technologies
  • Policies & Procedures of The “Omnichannel” Age
  • Patent Litigation “Heat Maps”
  • Union Organizing Campaigns
  • Wage & Hour Litigation
  • EEOC Enforcement
  • Foreign Corrupt Practices Act
  • Corporate Governance & Disclosure
  • Election 2014
  • Dueling Views of The U.S. Supreme Court
  • Legal Ethics

The Retail Law Conference is open to executives from retail and consumer goods product manufacturing companies. All others, such as law firms and service providres, must sponsor in order to attend, and can do so by contacting Tripp Taylor at tripp.taylor@rila.org.

North Carolina General Assembly Fails to Jump Start Our Businesses with Crowdfunding Legislation

Poyner Spruill Law firm

Crowdfunding is a relatively new capital raising tool, which was generally used in the past as a financing method for such ventures as films and music recordings.  To date, crowdfunding has not been a popular method for offering and selling securities because offering a share of financial returns or profits from business activities would subject the transaction to federal and state securities laws, requiring certain registrations with the Securities and Exchange Commission (SEC) and state securities regulators. U.S. Securities and Exchange Commission, SEC Issues Proposal on Crowdfunding (October 23, 2013).

In 2012, Congress passed the JOBS Act (Jumpstart Our Business Startups Act).  The JOBS Act, among other things, added a new section, 4(a)(6), to the Securities Act of 1933, creating a new exemption for certain crowdfunding offerings from SEC and state law registration requirements.  However, before the law can become effective the SEC must promulgate and implement rules regulating the exemption.  For further information on the JOBS Act, please see The JOBS Act—An Overview and Some Recent Developments, written by Michael E. Slipsky and David R. Krosner.

As of this summer, the SEC has proposed rules for crowdfunding, but those rules are not final. A dozen states are making an effort to join Georgia, Kansas, Michigan, Alabama, Maine, Washington, Wisconsin, and Indiana by developing their own regulations allowing crowdfunding within the states. States are growing frustrated and tired of waiting for the SEC to adopt federal regulations.  See Posting of Bill Meagher to TheDeal.com, States make own crowdfunding rules, rather than wait for SEC (May 5, 2014, 15:03 EST).

In response to the federal delay, Representative Tom Murry of Wake County sponsored state legislation attempting to allow and regulate crowdfunding in North Carolina, filing House Bill 680, the JOBS Act, on April 9, 2013.  House Bill 680 did not pass the Senate and was not eligible for consideration in the 2014 short session.  For that reason, in June the House added the crowdfunding provisions, titled, “Jump-Start Our Business Start-Ups Act,” to the 32 page fifth edition of Senate Bill 734, Regulatory Reform Act of 2014. 

When compromise discussions between the House and Senate on Senate Bill 734 stalled, the Senate added to House Bill 1224 various provisions regarding modifications to the local government sales and use tax rate as well as other provisions including the crowdfunding provisions.  House Bill 1224 had been filed at the beginning of the short session as a bill modifying the Job Maintenance and Capital Development Fund.  The House rejected the Senate’s modifications of House Bill 1224.  As a result, the House and Senate appointed a conference committee, and the committee made its report on July 31, 2014.  The Proposed Conference Committee Substitute was passed by the Senate, however it failed in the House. 

The final version of House Bill 1224, the Proposed Conference Committee Substitute, would have allowed North Carolina residents to invest up to only $2,000 per purchaser – unless the purchaser is an accredited investor as defined by rule 501 of SEC regulation D, 17 C.F.R. § 230.501 – in new in-state ventures through the crowdfunding mechanism.  It would have allowed most companies to raise up to $1 million in capital through unregistered securities without a financial audit and up to $2 million in capital if the issuer has undergone and made available to each prospective investor and the Secretary of State the documentation resulting from a financial audit.  Essentially companies would have been able to sell securities directly to the North Carolina public without having to incur the expense of conducting a registered securities offering.  The NC Secretary of State would have been tasked with the regulation of these types of transactions and would have collected quarterly reports.  See Posting of Mark Binker to WRAL TechWire, Crowdfunding bill clears N.C. Senate Committee,  (July 16, 2014 14:08 EST).

The General Assembly has adjourned sine die.  Although crowdfunding provision had an opportunity to become law during the 2014 short session in either Senate Bill 734 or the Proposed Conference Committee Substitute of House Bill 1224, the General Assembly did not pass the crowdfunding provision.  House Bill 1224 failed in the House and the compromise finally reached for Senate Bill 734 in the ratified bill excluded the crowdfunding provision.  There is a possibility the crowdfunding provision could again be considered before the 2015 session, scheduled for late January, if three-fifths of all members of the Senate and three-fifths of all members of the House vote to do so, as provided in Section 11(2) of Article II of the North Carolina Constitution.  However, the more likely scenario for the General Assembly to return would be for a “special session” by call of the Governor.  As provided in Section 5(7) of Article 3 of North Carolina Constitution, “[t]he Governor may, on extraordinary occasions, by and with the advice of the Council of State, convene the General Assembly in extra session by his proclamation, stating therein the purpose or purposes for which they are thus convened.”

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Attend the Retail Law 2014 Conference – October 15-17, 2014, Charlotte, North Carolina

The National Law Review is pleased to bring you information about the upcoming Retail Law Conference:

Retail Law 2014: At the Intersection of Technology and Retail Law
Retail Law 2014: At the Intersection of Technology and Retail Law

Register Today!

When

October 15-17, 2014

Where

Charlotte, NC

The 2014 Retail Law Conference takes place October 15-17 in Charlotte, NC. This year’s program is stronger than ever with relevant, compelling and interactive sessions focused on the legal issues affecting retailers. In partnership with the Retail Litigation Center (RLC), RILA will host legal counsel from leaders in the retail industry for the fifth annual event.

This year’s Retail Law Conference will feature issues at the intersection of technology and law, how the two spaces interact and the impact that they have on retailers. Topics will likely include:

  • Anatomy of a Data Breach: Prevention & Response
  • Privacy: Understanding New Technologies & Data Collection
  • Advertising Practices: Enforcement & Social Media
  • ADA Implications for New Technologies
  • Legal Implications for Future Payment Technologies
  • Policies & Procedures of The “Omnichannel” Age
  • Patent Litigation “Heat Maps”
  • Union Organizing Campaigns
  • Wage & Hour Litigation
  • EEOC Enforcement
  • Foreign Corrupt Practices Act
  • Corporate Governance & Disclosure
  • Election 2014
  • Dueling Views of The U.S. Supreme Court
  • Legal Ethics

The Retail Law Conference is open to executives from retail and consumer goods product manufacturing companies. All others, such as law firms and service providres, must sponsor in order to attend, and can do so by contacting Tripp Taylor at tripp.taylor@rila.org.