On November 7, the United States Senate passed the Employment Non-Discrimination Act of 2013 (ENDA) in a bipartisan vote of 64 – 32. The bill protects individuals from discrimination in employment, including hiring and firing decisions, and compensation or other terms and conditions of employment, based on their “actual or perceived sexual orientation or gender identity.” (Gender identity discrimination is also known as transgender discrimination.) ENDA prohibits disparate treatment but excludes disparate impact claims (claims that a facially neutral policy is disproportionately harmful to those of a certain sexual orientation or gender identity). The act contains an exemption for religious organizations and does not cover employers with fewer than 15 employees.

ENDA faces a challenging road to becoming law because of widely-reported opposition in the Republican-controlled House of Representatives. In this explainer, I contextualize some of the main questions and points of opposition to the ENDA legislation.

Isn’t this already covered by existing law?

As Senators Harry Reid (D-NV) and Susan Collins (R-ME) observed recently, many Americans are surprised to learn that firing an employee on the sole basis of the employee’s sexual orientation or gender identity is not already prohibited under federal law.

Currently, 21 states and the District of Columbia have laws barring employment discrimination based on sexual orientation, and 17 states and the District of Columbia also bar gender identity employment discrimination. But there is no explicit federal protection against employment discrimination on the basis of sexual orientation or gender identity. Title VII of the Civil Rights Act of 1964 prohibits employment discrimination based on “race, color, religion, sex, or national origin.” Since 1975, there have been numerous unsuccessful attempts to broaden federal law to cover discrimination based on sexual preference or orientation. Prior to the latest vote on ENDA, neither the House nor the Senate had ever voted as a full body on a bill to prohibit gender identity discrimination.

In part because of this history of failed legislative efforts, federal courts have routinely rejected the argument that sexual orientation and gender identity are protected directly under Title VII as a form of sex-based discrimination. However, two Supreme Court decisions provided a basis for some limited protections. In Price Waterhouse v. Hopkins (1989), the Court found that Title VII prohibits discrimination on the basis of “gender stereotypes,” such that “an employer could [not] evaluate employees by assuming or insisting that they matched the stereotype associated with their [sex] group.” Later, in Oncale v. Sundowner Offshore Services (1998), the Court held that Title VII sexual harassment claims could be brought by a plaintiff against alleged harassers of the same sex.

As this review of current case law explains in more depth, applying these precedents, some federal appellate courts have recognized Title VII claims by plaintiffs alleging sexual orientation or gender identity discrimination, but only in the “very narrow set of factual circumstances” that support claims of “same-sex sexual harassment, gender stereotyping, or [discrimination] on basis of gender.” For example, the Third Circuit in 2009 held that a male employee could proceed with a sex discrimination claim based on the “gender stereotype” theory when that employee had been subjected to harassment by co-workers not only on account of his sexual orientation (which is not itself protected under Title VII) but also because of his “effeminate” mannerisms. Nevertheless, the Equal Employment Opportunity Commission (EEOC), which administers Title VII, has expansively interpreted the gender stereotype theory in Title VII discrimination claims, and in an important 2012 decision, held that discrimination against an individual because the person is transgender is itself discrimination because of “sex” under Title VII (regardless of allegations of gender stereotyping).

Protections for religious organizations

ENDA contains an explicit exemption for those religious organizations that are “exempt from the religious discrimination provisions of title VII of the Civil Rights Act of 1964.” Title VII exempts a “religious corporation, association, educational institution, or society” from the provision prohibiting discrimination on the basis of religion when employing a person “to perform work connected with the carrying on by such [organization] of its activities.” Thus, religious organizations cannot discriminate in employment on the basis of race, color, sex, and national origin (although there is a further “ministerial exception” under the First Amendment which applies to the hiring of clergy). The Human Rights Campaign explains that the Title VII religious organization exception covers “not just houses of worship,” but has also been applied to “a gymnasium run by the Mormon Church,” “a Jewish community center,” and “numerous Christian elementary schools and universities,” to list a few examples. The Senate also prohibited federal agencies or any State or local agencies that receive federal funding from taking certain actions, including withholding licenses, contracts, or tax-exempt status from organizations exempted from ENDA. Furthermore, as noted above, ENDA does not apply to businesses of fewer than 15 employees, which protects the associational interests of small businesses that would prefer not to associate (for religious or other reasons) with individuals of a particular sexual orientation or gender identity.

Advocates from both sides have criticized the scope of ENDA’s religious exemption. Senator Dan Coats (R-Ind.) argued during floor debate that the religious exemption is inadequate because it does “not extend to all organizations that wish to adhere to their moral or religious beliefs in their hiring practices,” and would “silence[]… employees who express their deeply held beliefs.” By contrast, the ACLU argues that ENDA’s exemption “gives a stamp of legitimacy to LGBT discrimination that our civil rights laws have never given to discrimination based on an individual’s race, sex, national origin, age, or disability.”

Weighing the litigation costs

In response to ENDA’s passage in the Senate, Speaker Boehner stated that he “believes this legislation will increase frivolous litigation and cost American jobs, especially small business jobs.” It must be true that creating any cause of action will, speaking literally, increase the legal costs of businesses by increasing the number of both meritorious and frivolous claims. However, a 2009 report of the Government Accountability Office, and 2013 update, evaluated the number of lawsuits in states that have already passed similar laws and found “relatively few employment discrimination complaints based on sexual orientation and gender identity.” This evidence could be interpreted to discredit concerns of crippling costs on businesses, but it could also suggest that the discrimination that ENDA targets is not widespread enough to warrant federal legislation. The latter interpretation is undermined, however, by surveys by the Williams Institute at the UCLA Law School, which has found that “[b]etween 15% to 43% of lesbian, gay, bisexual, or transgender workers have experienced being fired, denied promotions, or harassed.” ENDA’s potential costs to businesses should be considered not only in the abstract and in isolation, but in their actual impact and in relation to perceived worth of preventing and/or remedying the discrimination and harassment the legislation outlaws.