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Defense Digest

“Because of an Individual’s Sex”—The Supreme Court of the United States Holds that Sexual Orientation and Gender Identity Qualify for Protection Under Title VII

Defense Digest, Vol. 27, No. 1, January 2021

January 29, 2021

by Danielle M. Vugrinovich

Key Points:

  • Treat complaints of discrimination based upon sexual orientation and gender identity as you would with any other claim for sex discrimination based upon Title VII.
  • Employers should update and distribute all discrimination policies to include sexual orientation and gender identity as classes against whom discrimination will not be tolerated.
  • Apply policies and procedures consistently and fairly.

Title VII of the Civil Rights Act of 1964 was enacted to prohibit discrimination in the workplace because of an individual’s race, color, religion, sex or national origin. In June of 2020, the Supreme Court of the United States announced a decision on an issue that has garnered much attention throughout the entire legal community and the country. In Bostock v. Clayton County, Georgia, et. al., the High Court found that sexual orientation and gender identity qualify for Title VII’s protection because any such discrimination is “because of” the individual’s sex. In the Court’s opinion, the terms “sex,” “because of,” “discriminate” and “individual,” used in the statute, were examined in depth. The Court noted that when considering statutes that had unambiguous and clear terms, there was no reason to look any further than what the statute actually stated. Neither Congress’s intent nor the employer’s motivation or label for the discriminatory practice was relevant.

In Bostock, the Court consolidated three cases for decision on the same issue—two in which the employee was terminated due to his or her sexual orientation and one for the employee’s gender identity. The issue presented in these cases was “whether an employer can fire someone for being homosexual or transgender.” The Court held that the answer was clear. “An employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.”

Justice Gorsuch, writing for the majority, explained that it was impossible to discriminate against a person for being homosexual or transgender without discriminating against them because of his or her sex. Consider a situation in which an employer had two employees who were “materially identical” in all respects, both of whom were attracted to men, but one is a woman and one is a man. If the employer fires the male employee for no other reason than he is attracted to men, the employer discriminated against him because of his sex. Similarly, consider a circumstance in which an employer has a female employee and an employee who at birth was identified as a male, but now identifies as a female. If the employer fires the transgender employee, but retains the employee who identified as female at birth for no other reason than their gender traits at birth, the employer discriminated against the transgender employee because of her sex. The employee’s sex does not have to be the primary reason for the adverse employment action in order for the employer to be liable under Title VII. The Court held that, even if there were other factors involved in the decision to terminate, if one factor was the employee’s sex, the employer would be liable under Title VII.

What does this opinion mean for employers? An employer must treat a complaint for discrimination based upon sexual orientation or gender identity exactly the same as it would treat a complaint of sex discrimination, or any other class that is protected by Title VII. Even if the employer does not have the requisite number of employees to fall under Title VII, it is a best practice to employ the same procedures and policies as if it did fall under Title VII. Some state laws may already specify that discrimination based upon sexual orientation or gender identity is unlawful. If states do not already have such laws, it is very likely that they will follow the Supreme Court’s lead in their own interpretation of liability for discrimination complaints based upon sexual orientation and gender identity. Discriminatory actions include failure to hire, failure to promote, pervasive inappropriate comments or actions, denying such individual conditions and/or privileges of employment, and termination. Employers must perform an investigation when they receive complaints regarding harassment or discrimination that in any way could relate to the sex of the individual complaining of such behavior. As always, policies and procedures must be applied consistently and fairly among all employees.

Additionally, employers should update their employee manuals and any other documentation that explains anti-discrimination and anti-harassment policies to reflect that the employer will not tolerate harassment or discrimination based upon sexual orientation or gender identity. The policies should also explain how to report complaints of discrimination or harassment of any type, including those based upon sexual orientation and gender identity. If the employer requires employees to sign an acknowledgement of anti-discrimination policies, those acknowledgments should be updated to include sexual orientation and gender identity.

As with all employment-relations activities, it is of the upmost importance to apply policies consistently and fairly, promulgate written anti-discrimination and harassment policies, and ensure that all employees understand the policies.

*Danielle is a shareholder in the Pittsburgh, Pennsylvania office and can be reached at (412) 803-1185 or dmvugrinovich@mdwcg.com.

Defense Digest, Vol. 27, No. 1, January 2021 is prepared by Marshall Dennehey Warner Coleman & Goggin to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. ATTORNEY ADVERTISING pursuant to New York RPC 7.1. © 2021 Marshall Dennehey Warner Coleman & Goggin. All Rights Reserved. This article may not be reprinted without the express written permission of our firm. For reprints, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

Florida Supreme Court Rules Florida Statute §627.70152 Does not Apply Retroactively

In a decision that resolves years of appellate uncertainty and confirms that insurers and insureds alike can rely on the legal framework in place when a policy is issued, the Supreme Court of Florida last week found that Florida Statute §627.70152, which involves an insured’s requirement to provide an insurer with pre-suit notice before filing a suit, cannot be applied retroactively. In Universal Property & Casualty Insurance Company v. Hughes, the Court was presented with the issue of whether the statutory pre-suit notice requirement applied retroactively and whether it would apply to a breach of contract of an insurance policy that was issued before the statute went into effect. Before the Court was an appeal from a homeowner, Ms. Hughes, who sued her insurance carrier, Universal Property & Casualty Insurance Company (Universal) for breach of contract under an insurance policy that was in effect from April 24, 2019 through April 24, 2020. During the policy period, Ms. Hughes suffered a loss and, on May 29, 2019, made a claim for water damage. The carrier investigated the loss and issued payment; Ms. Hughes disputed the payment, finding the amount insufficient for repairs. On July 1, 2021, Florida Statute §627.70152 went into effect, which required insureds to provide notice of intent to initiate litigation against the carrier prior to filing a lawsuit; if an insured filed the lawsuit without complying with §627.70152, a court must dismiss the case without prejudice. On August 4, 2021, Ms. Hughes filed her lawsuit against Universal for breach of contract. Universal moved to dismiss based on her failure to comply with §627.70152. Ms. Hughes contended the notice requirement could not be applied retroactively. The trial court disagreed and dismissed the lawsuit without prejudice, and Ms. Hughes appealed. During the appeal, the Fourth District Court of Appeal, in Cole v. Universal Property & Casualty, 363 So. 3d 1089 (Fla. 4th DCA 2023), ruled that Florida Statute §627.70152 did apply retroactively to policies issued before the effective date of §627.70152. However, the Sixth District Court agreed with Ms. Hughes and overturned the trial court’s ruling, finding the statute could not retroactively apply to policies issued prior to the statute effective date. Thereafter, the other district courts weighed in, with the Third District Court agreeing with the Fourth District Court, and the First, Second and Fifth District Courts agreeing with the Sixth District Court. In resolving the conflict amongst the district courts, the Supreme Court advised “as a general rule, ‘the statute in effect at the time an insurance contract is executed governs substantive issues arising in connection with that contract.’ Hassen v. State Farm Mut. Auto. Ins. Co., 674 So. 2d 106, 108 (Fla. 1996). The Court applied the two-step test when deciding whether a statute has retroactive application: “First, the Court must ascertain whether the Legislature intended for the statute to apply retroactively. Second, if such an intent is clearly expressed, the Court must determine whether retroactive application would violate any constitutional principles.” Menendez v. Progressive Exp. Ins. Co., 35 So. 3d 873, 877 (Fla. 2010). In analyzing the Legislature’s intent, the Court must determine whether the Legislature has manifested a clear command for retroactivity in the statutory text.  In review of the statutory text, the Court found nothing in the language of the statute to indicate that the phrase “all suits” was serving another purpose of expanding its reach to suits based on policies that both predate and postdate the enactment of the statute. Buis v. Universal Prop. & Cas. Ins. Co., 394 So. 3d 738, 741 (Fla. 2d DCA 2024). Further, the Court noted the statute has an effective date, which has long been considered to be evidence against retroactive application of a statute. The Court concluded that, on its face, no provision of §627.70152 speaks to application of the statute to insurance policies issued before the statute’s effective date and therefore, the Legislature did not clearly command retroactivity of the statute to include insurance policies issued prior to the enactment of the statute. The Court briefly reviewed Universal’s argument that the presuit notice requirement was procedural, not substantive, and therefore should be applied retroactively; however, the Court agreed with the Sixth District Court’s finding that, in its entirety, §627.70152 transformed an insured’s ability to sue an insurance company under a property insurance policy and an insurer’s obligations to respond to and pay insurance claims, thus making the requirement a substantive change. The Court thereby upheld the decision of the Sixth District and disapproved the decision of the Fourth District in Cole.

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Summary Judgment Obtained in Insurance Coverage Case

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Thought Leadership

The Tolling Trap: Filing Alone Will Not Toll the Statute Without Good-Faith Service

The Eastern District of Pennsylvania recently reinforced a critical limitation on bad faith claims, holding that a timely filing alone will not preserve a cause of action absent a good-faith effort to serve the original process. The plaintiff had presented a claim for underinsured motorist benefits to his auto insurer. The insurer evaluated the claim and determined that the plaintiff’s accident-related damages did not exceed the bodily injury liability insurance limits of the at-fault driver and denied his claim. Among other claims, the plaintiff sought to present a claim for insurance bad faith under 42 Pa. C.S.A. § 8371, to which a two year statute of limitation applies. He first filed a praecipe for writ of summons before the expiration of the statute of limitation. However, the plaintiff did not attempt to serve the praecipe or writ until after the statute of limitations had expired. Additionally, the service failed as the plaintiff had mailed the original process to an incorrect address. Despite receipt of the Postal Service’s failure to deliver the original process, the plaintiff did not attempt to re-serve the writ. Two months later, the plaintiff filed a complaint and then successfully served that complaint. The insurer sought to dismiss the plaintiff’s bad faith claim as time-barred by the statute of limitations. The district court agreed. Though the plaintiff had filed a praecipe for a writ of summons prior to the expiration of the statute of limitations, the statute is only tolled if there is a good faith effort to serve that original process. In this case, the court determined that the plaintiff had failed to perform a “good faith effort to serve the original process”. Additionally, though the filing and service of a complaint can serve as alternative original process when the lawsuit is commenced by the filing of a praecipe for a writ of summons, the plaintiff filed his complaint after the statute of limitations had expired. The plaintiff’s bad faith claim was therefore determined to be barred by the statute of limitations and dismissed by the court, with prejudice. A key takeaway for the defense is not to assume that the statute of limitations has been successfully tolled by a plaintiff merely because a praecipe for a writ of summons or complaint has been filed prior to the expiration of the statute. A filed complaint or writ is only part of the equation. The defense should carefully review the docket and filings to confirm that the plaintiff also performed the requisite good faith effort to serve that original process. A thorough review of the docket may reveal that the plaintiff failed to make the good-faith service efforts necessary to toll the statute of limitations.

Complete Victory Obtained in a Workers’ Compensation Matter

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Defense Victory Obtained in Workers’ Compensation Case

Event

CLM 2026 Focus Conference

Allison joins three insurance industry leaders to discuss how cyber coverage disputes, the growing impact of social inflation on bodily injury claim valuation, and the use of artificial intelligence are reshaping the bad faith landscape. The panel will examine emerging sources of extra-contractual exposure, including evolving cyber insurance coverage issues and the challenges of accurately valuing bodily injury claims. Practical approaches to claim evaluation using AI, along with defense strategies designed to help prevent or successfully defend against bad faith litigation, will also be addressed. 

Thought Leadership

Commonwealth Court Reaffirms the Constitutionality of Act 111's IRE Provisions

In this case, the claimant sustained a work injury of January 6, 1994, which was acknowledged by Notice of Compensation Payable (NCP). After the claimant’s receipt of 104 weeks of temporary total disability benefits, the employer filed a Request for an Impairment Rating Examination (IRE). The IRE was performed in May 2023 and the IRE physician found that the claimant had a 5% whole person impairment, under the AMA Guides. The employer filed a Petition based on the IRE results, and the Petition was granted by the WCJ. During litigation, the claimant argued that the IRE provisions of Act 111 (Section 306(a.3) of the Act) were not applicable to her injury, since it predated June 24, 1996, the date Act 57 went into effect, and that the IRE provisions were unconstitutional. The Workers’ Compensation Judge (WCJ)) granted the Petition and the Board affirmed. On appeal to the Commonwealth Court, the claimant argued that Act 111 violated the nondelegation doctrine and that its retroactive application to the claimant’s injury was unconstitutional. The court rejected the arguments on the basis that they had already found the same arguments without merit in multiple, prior cases. The court also addressed an argument made by the claimant that Act 111 was procedurally defective under the Pennsylvania Constitution because it was only considered on two days in each House after having undergone amendments and reassignments. The court noted that the Pennsylvania Constitution requires every bill to be considered on three different days in each House. The claimant maintained that, according to the legislative history, the bill did not receive three separate days of consideration from each House when it was assigned a new bill number. The court pointed out, however, that the bill number, H.B. 1840 remained constant and was considered on three occasions by the House. Further, the court concluded that minor amendments to the bill were germane to its original subject, which was to modify the Act’s IRE process, in accordance with Protz II.