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  • Writer's pictureSwansburg & Smith PLLC

Gender Identity, Sexual Orientation, and Executive Order 13988: What It Means for Small Businesses

Updated: Feb 1, 2021

By | Michael G. Swansburg, Jr.

On January 20, 2021, just hours after being sworn in as the nation’s 46th chief executive, President Joseph R. Biden, Jr., signed Executive Order 13988, the goal of which is to prevent and combat discrimination on the basis of gender identity and sexual orientation in the United States.

Enumerated in Section 1 of the Order, it is the stated policy of the new Biden Administration to “prevent and combat discrimination on the basis of gender identity or sexual orientation, and to fully enforce Title VII and other laws that prohibit discrimination on the basis of gender identity or sexual orientation.” This policy comes on the heels of the U.S. Supreme Court’s decision in Bostock v. Clayton County, 590 U.S. __ (2020), which held, for the first time, that discrimination based on “sex,” as provided in Title VII of the Civil Rights Act of 1964, necessarily encompasses sexual orientation and gender identity.

Although Bostock’s inclusion of sexual orientation and gender identity under the term “sex” was limited to Title VII, Executive Order 13988 goes further, applying the same rationale to other federal laws that prohibit sex discrimination, including Title IX of the Education Amendments of 1972, as amended (20 U.S.C. § 1681 et seq.), the Fair Housing Act, as amended (42 U.S.C. § 3601 et seq.), and section 412 of the Immigration and Nationality Act, as amended (8 U.S.C. § 1522).

So how does it change the enforcement of these laws? Under Section 2 of the Order, federal agency leaders, in consultation with the U.S. Attorney General, must first “review all existing orders, regulations, guidance documents, policies, programs or other agency actions . . . that . . . were promulgated or are administered by the agency under Title VII or any other statute or regulation that prohibits sex discrimination, including any that relate to the agency’s own compliance with such statutes or regulations.” Thereafter, those same agency leaders must “as soon as practicable . . . consider whether to review, suspend or rescind such agency actions, or promulgate new agency actions” to fulfill and implement this new policy.

In other words, federal agencies like the U.S. Equal Employment Opportunity Commission are required to look at their current policies, practices, and procedures, and amend them to include sexual orientation and gender identity as a protected class on which basis an individual or an entity cannot discriminate. For employers, this means federal agencies, like the EEOC, will begin to regulate and, if necessary, prosecute employers who are accused of engaging in discrimination through regular business practices, like hiring, pay, classification, training, or termination, on the basis of sexual orientation or gender identity. What that looks like at a micro level will be fact-specific.

What does this mean for small businesses? Well, depending on the size of the business’s workforce, maybe nothing. Title VII defines the term “employer” to mean “a person engaged in an industry affecting commerce who has fifteen or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year.” 42 U.S.C. § 2000e(b). So, if you are a business that employs fewer than fifteen (15) employees, Title VII, and, by extension, the interpretation of the statute under Bostock and Executive Order 13988, has no application to you.

In Kentucky alone, this means the majority of the 57,586 firms that employ between one (1) and nineteen (19) individuals and the 285,053 firms that employ no one at all, as categorized by the U.S. Small Business Administration’s Office of Advocacy in 2019, likely will face no liability under this new federal policy.

Let's be clear, though: That many small businesses might not fall within the scope of coverage for Title VII does not mean they should engage in discriminatory practices on the basis of sexual orientation or gender identity. The Kentucky Civil Rights Act, for example, which is analyzed in lock-step with its federal counterpart, defines the term “employer” to mean “a person who has eight (8) or more employees within the state in each of twenty (20) or more calendar weeks in the current or preceding calendar year.” KRS 344.030(2). Other local laws, rules, or regulations may still prohibit such practices for businesses with fewer than fifteen (15) employees. And, of course, there are many other reasons not to discriminate on this basis, not least of which is the arbitrary exclusion of individuals who may be competent, hard-working employees for small businesses.

Given its infancy, there remains much to be seen in how this new policy will be applied by federal agencies in a practical sense. It would be wise, however, for small businesses to be proactive and seek the advice of counsel on whether, and how, the Order might impact their workforce down the road.


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