As a federal contractor, you have probably been told in no uncertain terms that federal laws (and specifically, anti-discrimination laws) pre-empt state laws. You may have also heard some rumblings from the EEOC about transgender employees’ access bathrooms. You may also have heard of some controversy on this point in North Carolina. If you are located or employ people in North Carolina, you have particular reason to be concerned. Regardless of where you are located or employ people, however, it is very much in your interest to gain a good understanding of this issue and to remain mindful of it.

So what is the issue? Earlier this month, May 2 to be exact, the EEOC posted information on its website regarding its position on issues related to transgender workers. Per the EEOC, the following employment practices violate Title VII of the Civil Rights Act of 1964:

  • Failing to hire an applicant because of his or her transgender status;
  • Denying an employee equal access to a common restroom that corresponds to his/her gender identity (i.e. requiring an employee to use a separate, single-user or “family” bathroom or one corresponding to the gender indicated on his/her birth certificate);
  • Harass an employee because of a gender transition (e.g. intentionally and persistently failing to use the name and gender pronoun that correspond to the gender identity with which the employee identifies, and which the employee has communicated to management and employees).

This alone would be enough to suggest that the EEOC plans to pursue gender identity discrimination claims under Title VII. In addition, within the last year the EEOC reached at least two settlements of claims under Title VII alleging discrimination against transgender employees. If that is not enough, the EEOC’s issuance of a Fact Sheet, entitled Bathroom Access Rights for Transgender Employees Under Title VII of the Civil Rights Act of 1964, makes it a virtual certainty that transgender employee rights in general and specifically the right to use common restrooms in accordance with their gender identity will remain on the radar screen.

It is no coincidence that the EEOC’s actions come less than two months after the North Carolina legislature passed a law blocking local governments from granting civil rights protections to LGBT individuals. It is also no coincidence that the North Carolina legislature passed this law on an expedited basis one week before a Charlottesville ordinance allowing transgender individuals to use the public bathroom of their choice was to take effect. It is also not a coincidence that the State of North Carolina has sued the federal government, claiming that the federal government has exceeded its authority by issuing and enforcing any such requirements. (To be fair, North Carolina is not the only State to attempt such action. The Commonwealth of Virginia, came extremely close to passing legislation that would have prevented transgender individuals from using the bathroom of their choice. It took bi-partisan efforts to narrowly defeat such legislation.)

What does this mean for employers in general and federal contractors in particular?

The EEOC’s Fact Sheet clearly articulates the EEOC’s position: employers are required under Title VII to provide transgender employees access to bathrooms that corresponds to their gender identity. The EEOC further states in no uncertain terms that “contrary State law is not a defense to Title VII”. In other words, failure to adhere to this requirement is discrimination. Discrimination allowed under State law still violates federal law and will land employers in hot water with the EEOC should it find out about it.

Now, before we go further, let’s answer a different question: How much does or should the EEOC’s position matter to federal contractors? The short answer: Quite a lot. First, federal contractors are also subject to Title VII. Admittedly, Title VII does not specifically prohibit discrimination on the basis of an employee or applicant’s sexual orientation or gender identity. The EEOC however, interprets the prohibition against discrimination “because of sex” as implicitly including these two categories. Unless and until the U.S. Supreme Court decides otherwise, employers with 15 or more employees –and that includes federal contractors—must essentially treat the EEOC’s position as the Law of the Land—even if it technically is not. If you are a federal contractor, however, then this last point is a distinction without a difference. Why? Executive Order 13672, signed by President Obama on July 21, 2014 specifically extends the protections of E.O 11246 to employees of federal contractors on the basis of sexual orientation and gender identity. Furthermore, the OFCCP almost always follows the EEOC’s positions and practices with respect to anti-discrimination laws. The point is all employers, federal contractors included, should make sure that this issue is on their radar. So going forward, what should you do?”

Let’s start first for those of you who are not in North Carolina. You should read the EEOC’s Fact Sheet, which you can find here. Then what? Follow the federal laws – as interpreted by the EEOC. If you do employ people in North Carolina, you are in an unenviable position. Do you choose to violate state or federal law? The EEOC will not be lenient with you for adhering to what it sees as a contrary State law. North Carolina contractors should consult with competent counsel to decide the best course of action.

For more information, contact Ahmed Younies at (714) 426-2918, ext. 1 or [email protected].