LGBT Employment Discrimination and Small Business

In June 2020, the United States Supreme Court issued an important decision expanding employment protections for the LGBT community, and further protections are currently being debated in congress. It is prudent for small business owners to understand what Title VII of the Civil Rights Act does and evaluate potential compliance issues with LGBT employees and prospective employees.

Title VII and LGBT Employment Discrimination

Title VII of the Civil Rights Act of 1964 prevents employers, employment agencies, and unions, from discriminating in employment based on race, color, religion, sex, and national origin. It also prohibits retaliation against persons who complain of discrimination or participate in an Equal Employment Opportunity Commission (EEOC) investigation. With respect to sex discrimination, a plaintiff must meet all four requirements:

  • A member of a protected class (race, color, religion, sex, and national origin),  
  • Applied and was qualified for a promotion, 
  • Was considered for and denied a promotion, and
  • Other employees of similar qualifications who were not members of the protected class received promotions.

Once the employee makes the above prima facie case, the employer must present some evidence of a legitimate, nondiscriminatory motive for the challenged action or decision (i.e., unqualified, poor performance, poor conduct, another member of the same protected class was hired). The employee will then have an opportunity to prove that the employer evidence is a pretext, simply masking the employer’s true discriminatory intent. This often becomes fact intensive and is where many employment discrimination cases turn.

Bostock Expands LGBT Employment Discrimination Protections

The US Supreme Court in Bostock (1) primarily considered the first element, evaluating whether Title VII protects homosexual and transgender individuals as a “protected class” from workplace discrimination. This case was three cases combined. Three employers each fired a long-time employee for being homosexual or transgender, arguing that employment discrimination against LGBT was not prohibited “sex discrimination” under Title VII. The cases considered the following fact patterns:

  • Bostock: a government worker was fired after his employer learned that he participated in a gay softball league.
  • Zarda: a skydiving instructor who was fired by his employer a few days after mentioning he was gay.
  • Stephens: a transgender woman worked for years presenting as a man for a funeral home but was fired after telling her employer that she intended to live and work as a woman.

Each employee sued under Title VII alleging unlawful sex discrimination. The lower court in Bostock said he was not a protected class and that employers could legally fire employees for being LGBT. The lower courts in Zarda and Stephens found that LGBT is a protected class based on sex. The case essentially challenges the first element of a plaintiff’s case, namely whether being gay or transgender is a “protected class” based on sex.

In a 6-3 decision, a recent Trump appointee, Neil Gorsuch, wrote for the majority and found that discrimination based on LGBT status requires an employer to intentionally treat individual employees differently because of their sex, which is prohibited under Title VII. The four liberal justices were joined by Gorsuch and John Roberts, a W. Bush appointee. The dissent argued that congress has for many years considered, but has not passed, bills (like the Equality Act of 2020) to add sexual orientation or gender identity to Title VII’s list of protected categories, and that the drafters of the Civil Rights Act of 1964 probably did not intend for this law to cover those individuals.

LGBT Employment Discrimination History

The EEOC’s guidance to small businesses on LGBT-related discrimination highlights cases as far back as 1989, supporting LGBT protections in the workplace. 

For example, in Oncale (1998) (2), the US Supreme Court held that same sex sexual harassment is prohibited sex discrimination under Title VII, with conservative justice Scalia arguing that sex-based discrimination of any kind is prohibited under Title VII.

In Hopkins (1989) (3), the US Supreme Court explained that employment discrimination based on sex stereotypes, particularly about how persons of a certain sex should dress, behave, walk, and talk, was illegal. Hopkins was denied promotions because decision-makers believed she did not walk and talk femininely-enough, and the Court found that illegal discrimination based on sex strikes the “entire spectrum of disparate treatment of men and women resulting from sex stereotypes.”

In Barnes (2005) (4), a transgender Cincinnati police officer (a pre-operative male-to-female transsexual) alleged the denial of her promotion was due to sex-based discrimination and failure to conform to male sex stereotypes, such as wearing makeup, in violation of Title VII. The Federal Appellate Court found she had met all four requirements of a sex discrimination claim.

But Can My Small Business Still Discriminate?

Nope. While it is true that the EEOC may not apply to companies with less than 15 employees, Wisconsin state laws provide strong protections for LGBT employees. Wisconsin’s Department of Workforce Development – Civil Rights Division has a process similar to the EEOC where it investigates employment discrimination claims. Wisconsin state law provides that “sexual orientation” is a protected class, defined as “having a preference for heterosexuality, homosexuality or bisexuality, having a history of such a preference or being identified with such a preference.”

In short, if you think small businesses can get away with discriminatory employment practices because they are small, you are wrong.

But Maybe I Can Still Win The Discrimination Lawsuit?

My personal experience in litigating employment discrimination is that the law does not always provide relief to every victim of employment discrimination. The steps outlined above are sometimes hard to prove. Employee-plaintiffs are sometimes simply unable to prove up their claim. Employees are sometimes scared to testify fully and truthfully because they fear losing their job. Often, an employer may have enough leverage to settle out of court for a much lower amount than what may be awarded at trial. They may be able to prevent a public spectacle.

However, discriminating and getting away with it has dire consequences. Most Americans support laws that protect LGBT individuals from discrimination in employment, housing, and other important areas. You may think your employees and clients will not care about your employees’ discrimination complaints. You may have been right 20 years ago, but that assumption is now wrong.

Embracing Change

As a small business lawyer, I am here to help you understand how shifts in law and public norms could increase your legal exposure. Discrimination against LGBT employees is illegal, will cost you legal fees, and could ruin your business. Your employees have strong legal protections from discrimination based on sexual orientation. LGBT employees are becoming much more aware of how to utilize federal agencies like the EEOC or Wisconsin’s state equivalent to enforce them. My legal advice, business advice, and personal advice is to embrace this shift and adjust your employment practices accordingly.  If you don’t, your business is destined to fail.

(1) Bostock v. Clayton County, Georgia, 590 U.S. __, 140 S. Ct. 1731, 1737 (2020).

(2) Oncale v. Sundowner Offshore Servs., 523 U.S. 75 (1998).

(3) Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).

(4) Barnes v. City of Cincinnati, 401 F.3d 729 (6th Cir. 2005).



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