N.C. Repeals ‘Bathroom Bill,’ Pre-Empts Local Employment Laws

Transgender public workers can use the bathroom of their choice; cities and towns barred from creating any new workplace laws until 2020

Allen Smith, J.D. By Allen Smith, J.D. March 31, 2017
N.C. Repeals ‘Bathroom Bill,’ Pre-Empts Local Employment Laws

After one controversial year on the books, North Carolina's H.B. 2—requiring transgender individuals to use the bathroom in public buildings that matches the gender indicated on their birth certificates—has been repealed. Both the state House and Senate voted to overturn the law on March 30 and Gov. Roy Cooper (D) quickly signed the bill that undoes the measure.

But the bill that rolled back H.B. 2 was a compromise: H.B. 142 now pre-empts all localities from enacting or amending employment law legislation of any kind through Dec. 1, 2020. This pre-emption is not limited to barring local bathroom access statutes or laws prohibiting discrimination based on sexual orientation, but extends to local minimum-wage laws and ban-the-box ordinances, and "the list goes on," noted Jonathan A. Segal, an attorney with Duane Morris in Philadelphia and New York City. Existing ordinances would not go away, in his opinion, but North Carolina jurisdictions would not be able to pass new employment law ordinances until this pre-emption provision sunsets at the end of 2020. There may be litigation over whether the law applies retroactively though, he noted. 

Segal said this state pre-emption is "absolutely a trend." He noted that Ohio passed a law at the end of last year pre-empting local minimum wage and paid sick leave laws. Iowa has signed into law a bill that blocks cities and counties from raising the minimum wage above the state level. And Pennsylvania is considering a state law that would pre-empt all local laws affecting the employer-employee relationship, such as the Philadelphia ordinance prohibiting employers from asking questions about applicants' salary histories. 

The repeal of H.B. 2 has a limited effect on private-sector employers. Under H.B. 2, when such employers held retreats in public buildings or spaces in North Carolina, their transgender employees weren't able to use bathrooms that matched their gender identities. And North Carolina public employers' transgender workers weren't either. But the law did not apply to private-sector bathrooms.

[SHRM members-only toolkit: Employing Transgender Workers]

The pre-emption provision "makes compliance with North Carolina laws easier as private employers will  not have to worry about local employment laws, which may be different than state laws," noted Ann Smith, an attorney with Jackson Lewis in Raleigh, N.C., and Michelle Phillips, an attorney with Jackson Lewis in White Plains, N.Y., in an e-mail to SHRM Online. "Obviously, however, it takes away a local government's ability to legislate in the employment law and public accommodations arenas." This provision of the law, however, has a sunset date; it will expire on Dec. 1, 2020, "at which point local governments will have the discretion to pass local laws prohibiting LGBTQ [lesbian, gay, bisexual, transgender and queer/questioning] discrimination.  Of course, this assumes that the legislature does not change this sunset provision."

The state law pre-emption provision could result in more businesses deciding not to locate in North Carolina, as Millennials are values-driven and might oppose the limitation on local civil rights legislation, Segal noted. Following the passage of H.B. 2, the National Collegiate Athletic Association cancelled all plans to host its annual basketball tournament in the state. Musicians relocated concerts and businesses moved to other states.

'Bargaining Chip'

Civil rights groups made their opposition to the repeal compromise immediately apparent. "Lawmakers must reject this disgraceful backroom deal that uses the rights of LGBT people as a bargaining chip," said Sarah Gillooly, policy director for the American Civil Liberties Union of North Carolina. "One year after H.B. 2 was introduced and signed into law in just 12 hours, legislative leaders and North Carolina's governor are once again rushing through a discriminatory anti-LGBT measure without proper vetting or an opportunity for public input."

"While this repeal may not go as far as LGBTQ advocates would like, this is a small step in the right direction," Smith and Phillips wrote. "This repeal should send a message to other states that they should not go down this path.  It is estimated that H.B. 2 cost North Carolina almost $4 billion in revenue. Other jurisdictions such as Texas and the approximately nine other states that are considering such anti-transgender legislation should hesitate before following in the footsteps of the North Carolina legislature."


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