Contracting Into Antidiscrimination Law

More than 100 companies say they support legal protection for LGBTQ employees. Why wait for Congress to act?

Today’s installment of the excellent public radio show “1A” features an interesting conversation between host Joshua Johnson and Human Rights Campaign President Chad Griffin on a wide range of issues related to LGBTQ organizing, including the proposed Equality Act. That legislation — which now has 198 sponsors and cosponsors in the House and 48 in the Senate — would amend Titles II, III, IV, VI, VII, and IX of the Civil Rights Act of 1964, the Fair Housing Act, the Equal Credit Opportunity Act, and federal jury selection standards to add sexual orientation and gender identity as classes protected against discrimination. During the interview, Griffin also mentions that the bill now has more than 100 “corporate cosponsors,” including Amazon, Apple, Google, Facebook, and Microsoft.

I think that the Equality Act ought to be enacted immediately and that the lawmakers and corporations that have come out in support of the legislation deserve praise. But while nondiscrimination ought not be a partisan issue, I think it’s quite unlikely that a Republican-controlled Congress will pass the Equality Act this session. Fortunately, we don’t need to wait for Congress to implement the Equality Act on a national scale. The corporate cosponsors of the Equality Act can do it themselves.

Here’s the idea: Corporations could add a provision to their contracts with employees that (1) prohibits discrimination on the basis of sexual orientation and gender identity and (2) allows employees to seek the civil remedies that otherwise would be available under Title VII if the Equality Act were law. We’d need a few more lines of text to account for the fact that some of the civil enforcement provisions of Title VII depend upon action/inaction by the federal Equal Employment Opportunity Commission (EEOC), which obviously we couldn’t control by contract, and also to ensure that state courts have jurisdiction over claims that wouldn’t meet the federal standard for diversity jurisdiction (amount in controversy exceeding $75,000 plus a plaintiff domiciled in a different state than the defendant/defendants). But beyond that, there’s nothing stopping corporate supporters of the Equality Act from effectively subjecting themselves to the Act’s provisions, even if Congress stays on the sidelines. (Heck, they could even opt into arbitration before a panel of jurists selected in conjunction with the Human Rights Campaign — though I think it’s probably better to channel these claims to the courts so that federal and state judges acquire experience adjudicating claims based on sexual orientation and gender identity discrimination.)

What’s in it for an employer? Well, for one, good publicity. Seeing that American Airlines supports the Equality Act and that Southwest and United Airlines have yet to come out in favor makes me somewhat more likely to book my next trip on American. If American went a step further and bound itself to the Equality Act, I’d be even more favorably inclined toward the airline. (Sure, maybe American would lose some homophobic customers as a result, but U.S. adults overwhelmingly support LGBTQ nondiscrimination laws, and I have to imagine that this is even more true among U.S. adults who regularly travel.) Moreover, subjecting oneself to Equality Act-type protections should help firms attract talented employees. If I were coming out of an MBA program and looking for a job in consulting, would the fact that Bain & Co. has come out in favor of the Equality Act but McKinsey hasn’t make me more inclined to work for Bain? Maybe. If Bain went a step further and subjected itself to the Equality Act, then it’s even likelier that this would affect my choice. (This assumes I could get a job at either Bain or McKinsey — when I applied as a recent college graduate, I got rejected by both.) And last but not least, sometimes large corporations do something just because it’s the right thing. Treating sexual orientation and gender identity like other protected classes is the right thing even if a narrow majority of Congress refuses to recognize that.

Contracting into nondiscrimination law goes a step beyond adopting an LGBTQ nondiscrimination policy, which may or may not give rise to legally enforceable rights. See, e.g., Hessenthaler v. Tri-County Sister Help, Inc., 616 S.E.2d 694, 698 (S.C. 2005) (employee handbook promising that “[a]ll decisions, including hiring, training, and promotion, are made without regard to . . . sexual preference” does “not constitute a promise altering the at-will employment relationship and giving rise to a breach-of-contract claim”); Cherella v. Phoenix Techs., Ltd., 586 N.E.2d 29, 31 (Mass. App. 1992) (“equal employment opportunity policy announced in an employee handbook” after the employee was hired “did not establish contractual rights which would support an action for breach of contract”). It would be largely duplicative of laws in at least 20 states and the District of Columbia that already prohibit private-sector employment discrimination on the basis of sexual orientation and gender identity, but it would make a meaningful difference elsewhere, including in Texas, Florida, and Pennsylvania. (Federal courts are split as to whether Title VII applies to sexual orientation — the Second and Seventh Circuits say it does; the Eleventh Circuit says it doesn’t.) And while one-by-one action by employers still would leave lots of workers uncovered, just getting the Equality Act’s corporate cosponsors to opt into the bill’s provisions would reach (by my count) more than 5 million employees.

I recognize that for the Human Rights Campaign, pressuring corporate cosponsors of the Equality Act to opt into its provisions by contract would raise a difficult strategic tradeoff. On the one hand, this is a way to make a meaningful difference in the lives of LGBTQ employees; on the other hand, the Human Rights Campaign might be concerned about cracking the coalition of support for the Equality Act. At the very least, the organization would be well-advised to focus on extolling the firms that opt in rather than naming and shaming the corporations that say they support the Equality Act but won’t opt in. But that shouldn’t stop the rest of us — as consumers, shareholders, and potential hirees — from asking and/or demanding that corporations that profess a commitment to LGBTQ equality put their money (or more accurately, their legal liability) where their mouth is.