EEOC Settles One of Its First Sexual Orientation Lawsuits

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By Kevin McGowan

June 24 — The Equal Employment Opportunity Commission and a Maryland employer have settled for about $200,000 one of the agency's first lawsuits against a private employer alleging that sexual orientation bias violates Title VII of the 1964 Civil Rights Act ( EEOC v. Pallet Cos., D. Md., No. 16-595, consent decree 6/23/16 ).

The settlement is a “very positive resolution” that “reflects the EEOC's commitment” to litigating the Title VII sexual orientation issue, said Shannon Minter, legal director of the National Center for Lesbian Rights in San Francisco.

The EEOC's settlement of its complaint against Pallet Cos. requires the packaging supplies company to pay $182,200 to Yolanda Boone, a lesbian former employee who said she was harassed because of her sexual orientation and fired in retaliation for complaining about it.

The company, which operates as IFCO Systems, also would contribute $20,000 to the Human Rights Campaign, an LGBT rights advocacy organization, according to the consent decree filed June 23 in federal district court.

Sexual orientation isn't listed as a protected category under Title VII, but the EEOC contends that bias based on sexual orientation is inherently sex discrimination. No federal appeals court has ruled that Title VII prohibits bias based solely on sexual orientation.

Judge Catherine C. Blake of the federal district court in Maryland still must sign the consent decree between the EEOC and Pallet.

Result Applauded by LGBT Advocate

The EEOC on March 1 filed separate lawsuits against Pallet and Scott Medical Health Center, the first two agency complaints against private employees alleging that sexual orientation discrimination violates Title VII. The lawsuit against Scott remains pending in the U.S. District Court for the Western District of Pennsylvania.

That the EEOC is litigating the Title VII issue is “really empowering” to advocacy groups and private attorneys representing LGBT workers that are pursuing their own claims, Minter told Bloomberg BNA June 24.

Title VII's coverage of sexual orientation discrimination is “one of the most important legal issues” for the LGBT community, Minter said. Although 22 states currently prohibit employment discrimination based on sexual orientation, it's critical to have a national standard that protects workers in every locality, he said.

Federal district court case law regarding when workplace anti-gay harassment and slurs amount to sex discrimination under Title VII is “in a state of utter disarray and inconsistency,” Minter said. “It's a crap-shoot for employees and employers right now,” he said.

But it's probably just a matter of time before a federal appeals court rules Title VII does cover sexual orientation, a circuit split develops and the U.S. Supreme Court ultimately decides the issue, Minter said.

Enhanced Training, Posting Required

The consent decree requires Pallet to develop an employee training program that includes a module on LGBT workplace issues. That training, once approved by the EEOC, would be presented to all employees in IFCO's North Region, which includes facilities in Maryland, New Jersey, Maine, Massachusetts and Virginia, the decree provides.

Pallet also would post workplace notices informing employees that Title VII prohibits sex discrimination and retaliation and that the company “will conduct its hiring and employment practices without regard” to an individual's sexual orientation, the decree provides.

Pallet would distribute to all employees copies of its equal employment opportunity policy as well as wallet cards containing the toll-free phone number and web address of a company hotline for bias complaints.

An EEOC spokeswoman June 24 declined to comment, citing an agency policy not to do so before a decree has been signed.

Attorneys representing Pallet didn't respond to Bloomberg BNA's request for comment June 24.

EEOC attorneys in Baltimore represented the agency. Baker & Hostetler LLP represented Pallet Cos.

To contact the reporter on this story: Kevin McGowan in Washington at kmcgowan@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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