Historic EEOC Settlement of Sexual Orientation Discrimination Lawsuit 19:27, July 7, 2016

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Historic EEOC Settlement of Sexual Orientation Discrimination Lawsuit

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The US Equal Employment Opportunity Commission (EEOC) calls the $202,000 settlement of one of the agency’s first sexual orientation discrimination lawsuits a “landmark.”

The payout follows a lawsuit against IFCO Systems, a pallet-exchange company, for sex discrimination under Title VII. According to the EEOC, an IFCO supervisor harassed a lesbian employee based on her sexual orientation by repeatedly making comments such as “I want to turn you back into a woman” and “You would look good in a dress.” The EEOC also charged that the supervisor directed sexually suggestive gestures at the employee, including blowing a kiss and circling his tongue. The employee allegedly reported the supervisor to IFCO, but was fired a few days later in retaliation for complaining.

As part of the settlement, IFCO must pay the employee $182,200, donate $20,000 to the Human Rights Campaign Foundation to support the Human Rights Campaign’s Workplace Equality Program, and hire a subject matter expert to train managers and employees on LGBT workplace issues.

“This consent decree,” stated EEOC General Counsel David Lopez, “marks EEOC’s first resolution of a suit challenging discrimination based on sexual orientation under Title VII.” [EEOC v. Pallet Companies, d/b/a IFCO (USDC BD MD 2015) no. 1:16-cv-00595-CCB]

As a testament to the historical nature of this settlement, the EEOC only recently recognized sexual orientation as protected by Title VII less than a year ago [Baldwin v. Foxx (EEOC 2015) no. 2012-24738]. Prior to that, the agency had set the groundwork for the Baldwin holding by interpreting Title VII’s protections against sex discrimination to apply to a transgender employee [Macy v. Holder (EEOC 2012) no. 0120120821].

But no settlement, however historic, is binding law. Nor is the EEOC’s broad interpretation of Title VII universally accepted. For example, a federal court in the Second Circuit Court of Appeals noted that the EEOC’s Baldwin decision is “binding on federal agencies (though not federal courts)” and that according to case law in the Second Circuit, Title VII does not prohibit discrimination because of sexual orientation [Christiansen v. Omnicom Group, Inc., et al. (USDC SDNY 2016) no. 15 Civ. 3440 (KPF)].

In contrast, a federal court in Alabama supported the EEOC’s interpretation, persuaded in part by the following passage from a New York University Law Review article:

If a business fires Ricky . . . because of his sexual activities with Fred, [but would not have fired] Lucy if she did exactly the same things with Fred, then Ricky is being discriminated against because of his sex.

— Andrew Koppelman, “Why Discrimination Against Lesbians and Gay Men is Sex Discrimination” (1994)  [As quoted in Isaacs v. Felder Services, LLC (USDC MD AL 2015) no. 2:13cv693-MHT]

Although there is uncertainty about the applicability of the federal law to the private sector, it’s important to recognize that several states, including national trend-setters like California, specifically protect LGBT employees from workplace discrimination in the public and private sectors.

Additionally, until there’s more cohesion among the courts (or a clarifying act of Congress), the EEOC’s interpretation must be reckoned with. The federal enforcement agency has promised vigilance in “ensuring that individuals are not subjected to discriminatory treatment in workplaces based on their sexual orientation” and “looks forward to the day that this fundamental right is widely recognized.”

LawRoom provides online compliance training on sexual harassmentethics, FCPA and data security to thousands of companies and universities. To learn more, visit us here: LawRoom.com.

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Steve Treagus
Stephen Treagus, JD's, previous practice as an attorney specializing in employment litigation exposed him to the rough-and-tumble world of employment relationships gone awry. Today, this experience informs his articles and courses, helping employers avoid costly litigation and get employment law right. Stephen earned his JD from John F. Kennedy University School of Law and his BA from Sonoma State University.

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