The U.S. Supreme Court’s landmark decision holding that employers can’t discriminate against workers based on their sexual orientation or gender identity has a glaring loophole: It doesn’t apply to small businesses that employ as many as one in six Americans.
A 1960s-era ban on sex discrimination in the workplace was extended to millions of LGBT workers with the court’s 6-3 decision on Monday – the most significant LGBT ruling since same-sex marriage was legalized in 2015. But the law doesn’t cover companies with fewer than 15 employees.
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Nor did the decision address other civil rights questions, such as whether LGBT people can be refused access to housing or denied services from businesses including restaurants or movie theaters, and whether discrimination is justified by religious beliefs.
The ruling is a “monumental decision for the LGBTQ community, but it is not the end of our struggle,” said Alphonso David, president of the Human Rights Campaign, which advocates for LGBT rights. “We’re still fighting to make sure LGBTQ people are protected in all aspects of their lives.”
The statute at issue is Title VII of the Civil Rights Act of 1964, which granted a wide array of protections to many American workers for the first time, including a ban on “sex” discrimination. Advocates argued the definition of “sex” also barred employment discrimination against the LGBT community, and the court agreed over objections from the Trump administration.
The exclusion for smaller companies was “one of several subtleties that got lost in the headlines given the significance of the decision, which is certainly a landmark,” said Jon Nadler, a Philadelphia-based lawyer who represents businesses in employment litigation. “Today’s decision interprets only this one statute and did not interpret the U.S. Constitution or anything else.”
Before Monday’s ruling, 22 states prohibited discrimination on the basis of sexual orientation and gender identity, and Wisconsin protects for sexual orientation, according to the Human Rights Campaign. Another 10 states had some level of protection for public employees only.
There are 17 states with no protection at any level, including Texas, Florida, Louisiana and Mississippi.
Many employees at the largest companies already get workplace protections regardless of what state they are in. Among the Fortune 500, more than 90% of companies have a non-discrimination policy protecting sexual orientation and gender identity, according to Human Rights Campaign’s 2020 Corporate Equality Index. Of the companies surveyed by HRC, almost 700 earned a perfect score for protecting LGBT workers.
Monday’s decision will make life easier for those companies because it assures their LGBT employees will have the same federal protections no matter where they are hired or transferred, said Gregory R. Nevins, senior counsel and Employment Fairness Project director for Lambda Legal, an LGBT rights group.
“This way the same law applies coast to coast,” Nevins said in an interview. “That’s always something that businesses like, as well they should.”
Opponents of the ruling, including some religious groups, say the court erred in expanding protections to LGBT people.
“Redefining ‘sex’ to mean ‘gender identity’ will create chaos and enormous unfairness for women and girls in athletics, women’s shelters, and many other contexts,” said John Bursch, the vice president for appellate advocacy at Alliance Defending Freedom, which promotes faith-based rights. “Allowing a court or government bureaucrats to redefine a term with such a clear and important meaning undermines those very opportunities — the ones the law was designed to protect.”
One of the cases the Supreme Court reviewed was that of a gay skydiving instructor who had been fired. His New York attorney, Gregory Antollino, said the decision is an important sign of changing attitudes, but that not all workers are covered.
“There are many companies that have fewer than 15 employees,” Antollino said in an interview. “It doesn’t apply to every employer per se.”
To be sure, some states have stronger laws, such as California, where businesses with at least five workers can’t discriminate. But LGBT Americans employed by the smallest companies in more conservative states may find themselves out of luck.
Just how many fall into that category is unclear. While there’s no data on how many people work for companies with 15 or fewer workers, the U.S. Bureau of Labor Statistics estimates about 17% of the workforce is employed by companies with 19 or fewer employees.
Moe Vela, who served as a senior advisor on LGBT affairs to former Vice President Joe Biden, said Monday’s ruling highlights a loophole for which there has never been a good rationale. He said Congress should ditch its usual exemptions for small businesses and fix the discrimination-protection gap.
“I don’t know of any decent excuse or rationale for having let that sit on the books,” Vela said. “There’s always been a special kind of place for small businesses in the legislative process, but I don’t understand how that protective spirit can translate in any way to allowing them to discriminate against employees based on who they love or what gender they identify with.”
(Updates with comment from Alliance Defending Freedom.)