Last week, North Carolina lawmakers repealed the state’s controversial House Bill 2 (“HB 2”), which had required individuals to use the public bathroom that corresponds with the sex on their birth certificate, along with several other provisions.  The repeal bill has been called a compromise between the state’s Republican General Assembly and Democratic Governor Roy Cooper: it repeals HB 2 but, for the time being, maintains its restriction on cities and counties passing ordinances governing employment or public accommodation.

How did this begin?

HB 2 was passed in March 2016 in response to amendments to a local Charlotte ordinance that banned discrimination on the basis of sexual orientation and gender identity in public accommodations and other areas.  HB 2 was widely known for requiring all government entities to designate multiple-occupancy bathrooms and changing facilities (i.e., restrooms, locker rooms, or other facilities where more than one person may be undressing) for use by individuals based on their “biological sex,” defined as the gender listed on a person’s birth certificate. 

HB 2 also nullified all local ordinances concerning wages, employment, and public accommodations, and it eliminated causes of action for workplace discrimination under North Carolina state law.

HB 2 generated significant backlash across the country for restricting LGBT protections.  After the law passed, a number of businesses, events, and performers boycotted the state.  As a result, then-Governor Pat McCrory – who had championed HB 2 – signed an executive order in April of 2016 that added employment protections based on sexual orientation and gender identity for state employees and affirmed private sector employers’ right to establish anti-discrimination and bathroom policies for their own employees.  In July, state lawmakers amended the law to restore employees’ ability to sue for employment discrimination under state law.

HB 2 was a major issue in last year’s gubernatorial race, in which Cooper narrowly defeated McCrory after criticizing HB 2 as bad for the state.  In December, an attempt to repeal HB 2 was made during a special session of the General Assembly, but such efforts failed largely due to partisan disagreement over state senate Republicans’ proposed “six-month cooling-off period” during which no local government could pass a new ordinance regulating employment discrimination or public accommodations.  Yet, interestingly, the repeal bill that passed last week is more restrictive than the repeal attempt that failed in December.  

What does the new bill do?

The new bill (HB 142) expressly prohibits any state entity except the state legislature from regulating the use of multi-occupancy facilities (such as bathrooms), but it removes the HB 2 language about who may use which bathroom.  Like HB 2, the new bill prohibits local governments from passing new ordinances that regulate private employment practices or the use of public facilities (as Charlotte had done) until December 2020, when that provision will expire.  This prohibition is not limited to anti-discrimination laws based on sexual orientation or gender identity; it extends to all local wage and employment laws.

What does this mean for private employers in North Carolina? 

Because HB 2 did not apply to private sector bathrooms, the repeal of HB 2 has only a limited effect on private sector employers. 

Since HB 142 prohibits local governments from enacting local ordinances governing employment practices and public accommodations until December 2020, in the near term, employers will only need to ensure that their employment practices comply with state anti-discrimination and wage and hour laws. Nothing in HB 2 or HB 142, however, precludes private employers from adopting policies that prohibit discrimination on the basis of sexual orientation and gender identity or expression or that regulate employee or public access to their bathrooms.

Although there are no state or local laws prohibiting private employers from discriminating against LGBT individuals, employers should keep in mind that federal law may render such discrimination illegal.  For example, despite the change in administration and the rescission of the Department of Education and Department of Justice’s guidance on restroom usage under Title IX, the U.S. Equal Employment Opportunity Commission has not retreated from its position that Title VII’s prohibition on employment discrimination on the basis of “sex” includes a prohibition on discrimination based on gender identity or expression and sexual orientation.  Two EEOC commissioners have stated that the EEOC will continue to pursue such claims as part of its 2017-2021 Strategic Enforcement Plan.  Several federal appeals courts (including the Fourth Circuit) are presently considering the issue, which may end up before the Supreme Court.