American business is quite happy to hire gay and lesbian employees, and needs no federal mandate to do so. Virtually all Fortune 500 companies already ban sexual orientation discrimination in their own hiring and firing, and have done so for years. But on June 12, a Senate Committee held a hearing to promote a bill, the Employment Non-Discrimination Act (ENDA), that would hold private employers liable for potentially hundreds of thousands of dollars in punitive damages and attorneys fees if a judge or jury later decides they committed discrimination based on sexual orientation. Never mind the fact that free-market competition already provides private employers with a powerful incentive not to discriminate, as even the bill's supporters, like the Center for American Progress (CAP), have admitted in the past. As CAP conceded on March 22, "Businesses that discriminate based on a host of job-irrelevant characteristics, including sexual orientation . . put themselves at a competitive disadvantage compared to businesses that evaluate individuals based solely on their qualifications and capacity to contribute."
Since American business seldom discriminates based on sexual orientation, the potential benefits of ENDA are limited, at best. But ENDA would impose real and substantial costs on business, and it could trigger conflicts with free speech and religious freedom. Even if chemotherapy cured a cold, you wouldn't use it, because the "cure" would be worse than the disease. ENDA should be rejected for the same reasons: its costly "cure" is not warranted given the increasing rarity of private-sector discrimination against gays.
ENDA would harm even businesses that hire and fire based on merit, not sexual orientation. It would also erode free speech in the workplace about sexual-orientation-related political and religious issues.
Since ENDA is modeled on other employment laws that have produced many meritless discrimination lawsuits (through one-way fee shifting), ENDA, too, is likely to result in wasteful litigation and settlements paid out by employers that are actually innocent of discrimination (most employment discrimination claims turn out to be meritless). ENDA's attorney fee provision, Section 12, uses the same language as other federal employment laws that incorporate the Christiansburg Garment standard for awarding attorneys fees — a sort of “heads I win, tails you lose” scheme under which the plaintiff gets his attorneys fees paid for by the other side if he wins, but the employer has to pay its own attorneys fees even if it wins (a win at trial typically costs an employer at least $250,000). While the language of ENDA's attorney-fee provision is seemingly neutral on its face, similar provisions in other federal employment laws have consistently been interpreted by the courts as favoring plaintiffs under the Supreme Court's 1978 Christiansburg Garment decision. Moreover, even if the plaintiff's case is so insubstantial that the plaintiff only wins $1 at trial, the employer can still be ordered to pay tens of thousands of dollars in attorneys fees. For example, an appeals court ruling awarded $42,000 in attorneys fees to a plaintiff who suffered only $1 in damages. (See Brandau v. Kansas, 168 F.3d 1179 (10th Cir.1999).) These attorney fee provisions will lead to some employers paying thousands of dollars to plaintiffs just to settle weak or meritless discrimination claims.
While the typical private employer has no reason to hire or fire based on sexual orientation (and few do), ENDA's Section 4(a)(1) reaches beyond hiring and firing to vaguely defined “terms, conditions, or privileges of employment,” which courts interpret as requiring certain restrictions on speech. In Meritor Savings Bank v. Vinson, 477 U.S. 57 (1986), the Supreme Court interpreted the same vague "terms or conditions" language in another statute, Title VII of the Civil Rights Act, as requiring employers to prohibit employee speech or conduct that creates a “hostile or offensive work environment” for women or blacks. The employer is liable for damages and attorneys fees if a court decides that it was negligent in failing to detect, prevent, or punish such speech or conduct. Such "hostile work environment" liability applies to each and every protected class covered by federal law, such as race, religion, national origin, and disability, not just gender. See, e.g., Amirmokri v. Baltimore Gas and Electric Co., 60 F.3d 1126 (4th Cir. 1995) (employer was liable for national-origin based taunts and harassment by plaintiff's co-workers).
If ENDA were enacted, such liability would also cover "sexual orientation"-based hostile work environments, meaning that a company would potentially be liable for a “hostile work environment” resulting from anti-gay things its employees say (even if those employees’ sentiments are at odds with the company's own views or policies). Thus, to avoid liability, an employer might have to silence employees with political opinions that are perceived as anti-gay, and prevent such employees from expressing political views such as opposition to gay marriage or gays in the military that could contribute to a "hostile work environment." As Professor Eugene Volokh, one of America's leading First Amendment scholars, has noted, political speech can create a "hostile work environment," despite the serious First Amendment problems that creates. While I have supported gay marriage and the inclusion of gays in the military, I do not think employers should be sued because their employees express contrary views.
Although Section 4(g) of ENDA only bans “disparate treatment” based on sexual orientation, some courts have interpreted “disparate treatment” to include speech or conduct by the complainant's co-workers that affects the complainant's work environment, even when the speech is not aimed at the complainant, and is not motivated by the complainant's sex or minority status. For example, in Reeves v. C.H. Robinson Worldwide, Inc., 594 F.3d 798 (11th Cir. 2010), a unanimous court of appeals held that a female employee could sue over recurring offensive speech, such as co-workers listening to vulgar radio programs and a co-worker who looked at a picture of a nude woman on his computer screen, even though most of this speech was not aimed at her, and not motivated by her (or anyone's) sex. The appeals court expressly labeled this "disparate treatment," even though in reality, there was no differential treatment, since her male co-workers would have been just as vulgar even if there were no women around.
The possibility that ENDA will be used to silence speech about gay issues is very real. Some supporters of ENDA openly hope to use it to squelch viewpoints that offend them. For example, a detractor of the New York Post, who dislikes its coverage of gay celebrities and public figures, hopes that the Post’s gay employees will sue the newspaper if ENDA passes, under the theory that its content creates a hostile work environment for gay employees. In Seattle, a city human rights commission official suggested that complainant John Dill might have had a valid sexual-orientation harassment claim based on allegations that a co-worker listened to conservative talk radio shows and posted a letter from a congresswoman skeptical of repealing the military’s ban on gays.
"Hostile environment" liability could pose a real threat to religious businesses like Christian bookstores that are not run by a church or religious institution (and thus are not not exempt under Section 6 of ENDA). Working in a fire-and-brimstone conservative Christian bookstore might be said to be a “hostile or offensive environment” for a gay or lesbian employee, but the contents of the bookstore ought nonetheless to be protected by the First Amendment. The primary purpose of the First Amendment is to protect religious and political speech that is so offensive to some people that it risks being suppressed. But there is no guarantee that the courts would respect the First Amendment in the event of a clash between ENDA and the First Amendment. Some courts are eager to stretch anti-discrimination laws to punish conservative Christians who object to gay marriage, as is illustrated by a recent New Mexico Court of Appeals ruling that expanded the reach of the state's law banning discrimination in public accommodations, and gutted the New Mexico Religious Freedom Restoration Act, in order to uphold a penalty imposed on an Evangelical Christian wedding photographer who did not want to photograph a lesbian couple's commitment ceremony. I earlier discussed that court ruling in Elane Photography v. Willock, and how it violates First Amendment free-speech rights, at this link. (There are only a few court rulings that have limited the reach of "hostile environment" liability for religiously or politically-offensive speech at all. See Meltebeke v. B.O.L.I., 903 P.2d 351 (Or. 1995) (overturning fine for religious harassment of private employee, and citing state religious-freedom guarantees); Rodriguez v. Maricopa Community College, 605 F.3d 703 (9th Cir. 2010) (dismissing racial harassment lawsuit over racially-charged anti-immigration emails, because of First Amendment free speech rights.). But those rulings seem to be the exception rather than the rule, and the EEOC has completely disregarded them, as I explained at this link.)
It is conceivable that if ENDA is passed, a civil-rights agency could use it to pressure some employers to adopt sexual-orientation-based hiring goals or veiled quotas, notwithstanding the language of Section 4(f) of ENDA. Activists have already pressured President Obama to mandate sexual-orientation-based hiring goals for government contractors. The Supreme Court's decision in International Brotherhood of Teamsters v. United States, 431 U.S. 324 (1977), permits employers to be held liable for "disparate treatment" (not just "disparate impact") if circumstantial evidence in the form of workplace racial imbalances suggests that the employer is guilty of discrimination. Statistical disparities are treated as creating a "prima facie" case of "disparate treatment" if the racial or sexual composition of the employer's workforce is at least two standard deviations away from the purported norm. But no one knows exactly what that norm is for sexual orientation, although the gay percentage of the workforce is probably less than five percent for most occupations. As the leading pollster Gallup notes, Americans tend to vastly overestimate the percentage of the population that is gay. "Surveys show a shockingly high fraction think a quarter of the country is gay or lesbian, when the reality is that it's probably less than 2 percent." Most people erroneously believe that a tenth or more of the population is gay -- a gross overestimate based on obsolete research -- and a "high" percentage of Americans even believe that a quarter or more of the population is gay. Such overestimates may make employers that have perfectly normal percentages of gay employees look to some civil-rights officials (or jurors) as if they are anti-gay under the logic of the Teamsters decision.
As Garance Franke-Ruta of The Atlantic notes, Americans systematically overestimate the percentage of the population that is gay or lesbian:
In surveys conducted in 2002 and 2011, pollsters at Gallup found that members of the American public massively overestimated how many people are gay or lesbian. In 2002, a quarter of those surveyed guessed upwards of a quarter of Americans were gay or lesbian (or "homosexual," the third option given). By 2011, that misperception had only grown, with more than a third of those surveyed now guessing that more than 25 percent of Americans are gay or lesbian. Women and young adults were most likely to provide high estimates, approximating that 30 percent of the population is gay. Overall, "U.S. adults, on average, estimate that 25 percent of Americans are gay or lesbian," Gallup found. Only 4 percent of all those surveyed in 2011 and about 8 percent of those surveyed in 2002 correctly guessed that fewer than 5 percent of Americans identify as gay or lesbian.
Although Section 4(f) of ENDA purports to prohibit quotas and preferences, the courts may well interpret that provision so narrowly as to make it meaningless, as they have done with similar language in other civil-rights statutes, such as 20 U.S.C. 1681(b) and 42 U.S.C. 2000e-2 (j), whose limits on racial and gender balancing and preferences were largely nullified by the courts in cases like Steelworkers v. Weber, 443 U.S. 193 (1979) and Cohen v. Brown University, 101 F.3d 155 (1st Cir. 1996).
Finally, in addition to banning sexual-orientation discrimination, ENDA also contains “transgender rights” provisions that ban discrimination based on "gender identity." Similar prohibitions in state laws created legal headaches for some businesses. One case pitted pitted a transgender employee with male DNA who sued after being denied permission to use the ladies' restroom, a denial that resulted from complaints filed by female employees. The employer lost in the Minnesota Court of Appeals, but then prevailed in the Minnesota Supreme Court. Another case involved a male-looking person who sued and obtained a substantial settlement after being ejected from the ladies room in response to complaints by a female customer who thought that a man had just invaded the ladies' room.