In the last several weeks, North Carolina and Mississippi have passed laws about transgender rights that have garnered headlines across the country. Although both touch on issues of transgender rights, they are actually very different. While there is a lot of general discussion about the public policy behind such laws, employers would be wise to look closely at these laws to see how they will affect you and your employees.

North Carolina’s “Act to Provide for Single-Sex Multiple Occupancy Bathroom and Changing Facilities in Schools and Public Agencies and to Create Statewide Consistency in Regulation of Employment and Public Accommodations”

This succinctly titled law is an apparent response to the City of Charlotte’s expansion of an existing nondiscrimination ordinance. The expansion extended discrimination protection to gay, lesbian and transgender people and also stated that transgender persons could use either a man or woman’s bathroom, depending on the gender with which they identify. The North Carolina General Assembly promptly passed legislation addressing ordinances like the one in Charlotte. Gov. Pat McCory then signed the bill, it became effective immediately, and the outcry across the country began. At least one corporation, PayPal, has cancelled plans to build a center for operations in North Carolina, citing this law, while other businesses signed a letter criticizing the law.

So what does the law specifically provide?

The North Carolina Constitution gives the General Assembly the power to pass statewide laws relating to commerce and that regulation of discriminatory practices in places of public accommodation is an issue of statewide concern. The law supersedes and preempts any local government ordinance, regulation, or policy pertaining to discriminatory practices in places of public accommodation. This effectively negates the Charlotte ordinance (and that of any other city or town) in favor of the statewide law.

Importantly, the Act has some specific definitions. Biological sex is defined as “the physical condition of being male or female, which is stated on a person’s birth certificate.” Multiple occupancy bathroom or changing facility is a facility “designed or designated to be used by more than one person at a time where individuals may be in various states of undress in the presence of other persons.” Single occupancy bathroom or changing facility is a facility designated to be used by only one person at a time. Single occupancy may include a single stall restroom designated as unisex.

The law requires local boards of education, state public agencies and state colleges to make every multiple occupancy bathroom or changing facility designated for and used only by individuals based on their biological sex (what it says on their birth certificate). This applies to restrooms, locker rooms, changing rooms or shower rooms. The law goes further to state that this same requirement applies to “places of public accommodation” which means any place or business open to the public. For employers and business owners, this means that if you have a bathroom or locker room that can be used by more than one person at a time, you must designate that facility for use ONLY by individuals according to the sex that is listed upon their birth certificate.

The North Carolina Act also specifically lists the protected classes covered by state non-discrimination laws, which apply to employers with at least 15 employees. Those classes include race, religion, color, national origin, age, “biological sex” or handicap. Notably absent is sexual orientation or transgender status. As such, discrimination against LGBTQ individuals is not illegal under STATE law. It is important to note that North Carolina’s definition of protected class has no effect on what types of discrimination federal agencies like the EEOC or the Department of Justice choose to pursue.

Finally, the Act also prohibits any unit of local government from setting its own minimum wage or any requirement about the payment of benefits to employees. The General Assembly is the only body that can regulate those issues in North Carolina.

The North Carolina statute has already been challenged in federal court. However, since it applies now, employers need to make sure that they comply with the restroom designation requirements if they have multiple occupancy facilities on site. If, however, an employee identifies him or herself as transgender and seeks to use a facility based on the sex with which he or she identifies, the employer needs to figure out whether it wants to defend the state law challenge or an EEOC charge.

Interestingly, Gov. Nikki Haley of neighboring South Carolina has publicly stated that she saw no reason for her state to enact a law restricting the use of public restrooms in the same manner as North Carolina.

Mississippi’s “Protecting Freedom of Conscience from Government Discrimination Act”

Effective date 7/1/16

The Mississippi law is broader than North Carolina’s and will likely be much more controversial. To start, instead of attempting to protect all religious types of thought, the Mississippi law protects three specific “religious beliefs” and/or “moral convictions”:

  1. marriage is the union of one man and one woman;
  2. sexual relations should only be within marriage; and
  3. the definition of “man” and “woman” refers to biological sex objectively determined by anatomy and genetics at birth.

The law states that “state government” (broadly defined) will not take any discriminatory action against a religious organization that:

  1. Performs or refuses to perform a marriage or refuses to provide a facility or service related to such a marriage based on one of the protected religious beliefs;
  2. Makes an employment decision regarding an individual whose conduct or religious beliefs are inconsistent with one of the protected religious beliefs;
  3. Makes a decision concerning housing consistent with one of the protected religious beliefs; or
  4. Provides or declines to provide any adoption or foster care service consistent with one of the protected religious beliefs.

However, the law does not only protect the actions of religious organizations. State government also cannot take any discriminatory action against a person who:

  1. Is the custodian of an adoptive or foster child who intends to raise the child in a manner consistent with the protected religious beliefs,
  2. Declines to participate in the treatment, counselling, or surgeries related to sex reassignment or gender identity transitioning based on the protected religious beliefs,
  3. Provides or refuses to provide wedding services such as photography, poetry, videography, disc-jockey services, wedding planning, printing, floral arrangements, dress making, cake baking, jewelry sales or car-service, or
  4. Establishes sex-specific standards regarding employee or student dress or grooming, or concerning access to restrooms and other “intimate facilities or settings” based upon one of the protected religious beliefs.

State employees are protected from disciplinary action if they engage in “expressive conduct” based upon one of the protected religious beliefs—either at work or outside of work. There are several provisions that deal with circuit court clerks who want to refuse to issue same-sex marriage licenses, but in the interest of time, we will skip over those.

At first blush, the Act seems to only regulate the conduct of “state government.” However, the Act itself tells a slightly different story. The Act appears to provide that any person can allege a violation as either a cause of action or as an affirmative defense in any judicial or administrative proceeding whether or not the state is a party. That arguably means that a person can use this law as a sword or a defense—even if the state government is not involved. Further, if a person successfully establishes a violation of this law, they can recover attorneys’ fees and costs. For example, if a person sues a business for breach of contract and the business successfully uses this law as a defense, the business may be able to recover its attorney’s fees.

So—are private individuals covered by this Act or not? The law defines state government to include “any private party or third party suing under or enforcing a law, ordinance, rule or regulation of the state or political subdivision of the state.” This could mean that all Mississippi citizens are considered part of the “state government” if they are seeking to enforce this law.

Like the North Carolina law, the Mississippi Act also specifically supersedes any conflicting local ordinances. Interestingly, numerous cities in Mississippi have affirmatively stated that they will not enforce this Act.

Where does this leave Mississippi employers?

Although the Mississippi law appears to empower employers to exercise the cited religious or moral beliefs (e.g., deciding to not employ individuals who are married to someone of the same-sex, are engaging in sex outside of marriage, or identify as transgender), employers must still consider federal law. Federal agencies have made clear that they will enforce Title VII’s sex discrimination bar to include discrimination based on sexual preference or gender identity. Employers who are not looking to exercise their religious or moral beliefs in this way still need consider the law’s impact on how they deal with employees who do. If your employee refuses to make the cake or DJ for the upcoming same sex couple’s wedding, this law may prohibit you from terminating his or her employment.

So now what?

Recently, the Governors of Georgia and South Dakota have vetoed similar laws, while the Governor of Pennsylvania intends to sign executive orders stating that no state agency shall discriminate on the basis of gender expression, and identity. The North Carolina law has already been challenged and the challenge to the Mississippi statute cannot be long in coming. Stay tuned, and we will continue to update you on these laws.