It's Not Just About "Sex": Preventing Sexual Orientation Discrimination in the Dealership

By Ehsan Tabesh
Fisher Phillips

It is well settled that federal law prohibits discrimination based on a person's sex. More recently, however, federal courts have grappled with determining whether employees may assert a claim for sexual orientation discrimination under Title VII of the Civil Rights Act of 1964, the primary federal antidiscrimination statute. This debate among courts has gained steam following the landmark 2015 Supreme Court decision that legalized same-sex marriage
across the country.  

In the last several months, both the 2nd Circuit Court of Appeals (with jurisdiction over Connecticut, New York, and Vermont) and the 11th Circuit Court of Appeals (Alabama, Florida, and Georgia) have refused to extend Title VII's protections to sexual orientation discrimination claims. In contrast, the 7th Circuit Court of Appeals (Illinois, Indiana, and Wisconsin) recently became the first federal court of appeals in the nation to rule that sexual orientation is a form of sex discrimination under Title VII. The 7th Circuit's ruling sets up a clear split among federal circuit courts about whether sexual orientation is a protected category under Title VII. 

Notably, the Fifth Circuit Court of Appeals (with jurisdiction over Texas, Louisiana, and Mississippi) has not yet ruled on this issue. Nevertheless, the 7th Circuit's ruling may open the door for LGBT employees to use Title VII to seek relief for allegations of employment discrimination and retaliation. What will this groundbreaking decision mean for your Texas dealership?

Evolving Law in Texas State and Federal Courts

Although nearly half of the states in the country prohibit sexual orientation discrimination, Texas does not. Additionally, federal courts in Texas have been reluctant to extend Title VII's protections to sexual orientation claims. Even so, plaintiffs' attorneys in Texas have successfully relied on an alternative, “sex-stereotype” legal theory to seek relief for discrimination on behalf of LGBT employees.
Specifically, plaintiffs have argued that Title VII prohibits employers from discriminating against employees based on preconceived notions of how a man or a woman should behave. In a precedent-setting 2013 decision, the Fifth Circuit Court of Appeals held, for the first time, that same-sex harassment under Title VII can be unlawful if it is based on conduct motivated by “sex stereotyping” – that is, stereotypical beliefs about how a man or a woman must appear or act in the workplace.
Just two months ago, the District Court for the Northern District of Texas dismissed a former employee's sexual orientation discrimination claim under Title VII, but allowed the employee to assert a claim under a sex-stereotype theory of discrimination.
The law on sexual orientation and sex-stereotype discrimination is evolving. Courts have noted that it is “exceptionally difficult” to draw a line separating “sex-stereotyping” claims from pure sexual orientation claims. Nevertheless, because the possibility of a claim exists, your dealership should take steps to minimize its risk and exposure to such claims.

Best Practices to Avoid and Address Harassment and Discrimination

Aside from the legal considerations, many dealers and employers have realized that promoting a workplace free from inappropriate, offensive, or unprofessional of any kind is critical to remaining competitive in the industry. This is especially true in light of the #MeToo movement, which has spread nationwide – in part through social media – to denounce sexual assault and harassment. There is now an expectation that all companies, including automobile dealerships, must enforce zero-tolerance harassment and discrimination policies, particularly in workplaces where boorish, “boys will be boys” behavior used to be tolerated.
For these reasons, it is recommended that you take the following steps to minimize your legal liability and maximize your competitiveness in the workplace:
  • Amend your policies, postings, and handbook provisions to prohibit discrimination and harassment of any kind, including discrimination based on sexual orientation and gender stereotypes.
  • Ensure that your policies provide clear assurances that employees who make complaints or provide information related to complaints will be protected against retaliation.
  • Ensure that you have a clearly described complaint process with multiple, avenues of complaint, such as procedures for reporting harassment or discrimination to Human Resources.
  • Provide training and mentoring to employees and supervisors about their rights and obligations in the workplace. 
In business and in law, it is critical to evolve and stay ahead of recent trends. As courts debate the scope of federal protections against sexual orientation discrimination, dealerships should be sure to take steps to promote equal employment policies and a workplace culture that stays ahead of the curve.
Ehsan Tabesh is an associate in the Houston office of Fisher Phillips, a national labor and employment law firm. He can be reached at or (713) 292-5627.


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