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Legal Issues
Apr 15, 2016

HB2’s Impact On Private And Public Employers

Sponsored Content provided by Kara Gansmann - Attorney, Cranfill Sumner & Hartzog LLP

In the wake of North Carolina’s recently enacted House Bill 2 (HB2), employers have expressed concern with how the legislation now affects their responsibilities. While discussion of the controversial “bathroom bill” has largely been reduced to which people can use which bathrooms, parts of the law have nothing to do with gender identity, but these parts still affect employer accountability.
 
Minimum Wage
 
First, HB2 prohibits municipalities from imposing employment conditions on private employers. Part 2 of the law reworks North Carolina’s Wage and Hour Act, prohibiting local government from regulating wage levels, hours of labor, leave or benefits of private employers. While municipalities can still control benefits and compensation of their own employees, municipalities cannot impose stricter labor or non-discrimination laws on private employers or contractors than those promulgated by the North Carolina legislature. Because municipalities cannot regulate employment compensation under HB2, private employers remain subject only to the state mandated minimum wage.
 
Discrimination
 
Next, all claims of discrimination against employers may only be brought through the Equal Employment Opportunity Commission or Human Relations Commission. This aspect of the law eliminates a common law cause of action for wrongful discharge in violation of public policy for claims based on discrimination. This is significant for employers because, unlike the former state law claims, the federal causes of action have different damages and caps on damages, different cost considerations, and generally a shorter statute of limitations. HB2 does not affect the ability of employees to file discrimination claims under federal laws like Title VII of the Civil Rights Act. HB2 also does not affect wrongful discharge claims brought on grounds other than discrimination.
 
Restrooms
 
Finally, as for bathroom regulation, state employers like municipalities, public agencies and public schools must regulate the use of multi-stall bathrooms and changing facilities by individuals based on biological sex as indicated by an individual’s birth certificate. Exceptions include single occupancy restrooms, unisex facilities and entry of maintenance or cleaning personnel or those assisting others with the facilities. Under HB2, regulation of bathroom facilities by biological sex is not discriminatory. On the other hand, private employers are not required to regulate bathroom and changing facilities according to biological sex. Even if private entities are considered places of public accommodation, they can implement a restroom policy independent of that required for public agencies and schools.
 
As for whether HB2 could be struck down, the severability clause in Part 4 provides that if any part of the law is held invalid or unenforceable (for example, by court order), the other parts of the law will remain in force. Therefore, if a court tosses out the more controversial gender-identity portions of the bill, the restrictions on regulating behavior of employers on a local level would likely remain.
 
To read the bill in its entirety, visit here.
 
Kara Gansmann, a North Carolina native, is an associate in Cranfill Sumner & Hartzog LLP’s Wilmington office, where she focuses her litigation and appellate practice on various aspects of labor and employment law, business and contractual disputes, medical malpractice, and HOA matters. To contact Kara Gansmann, call (910) 777-6055 or email her at [email protected].
 

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