Litigate or Arbitrate? Sixth Circuit Decision Looks at Timing of Sexual Harassment Claim
Can you compel arbitration with an employee who is alleging sexual harassment? You may recall that in 2022, Congress enacted the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act (EFAA), which precludes employers from requiring employees to arbitrate sexual harassment claims. But what if the alleged harassment occurred before the EFAA effective date? A recent Sixth Circuit opinion, Memmer v. United Wholesale Mortgage, LLC, answered this question.
EFAA Background
Congress passed the EFAA on the heels of the #MeToo movement, which highlighted that arbitration could be used to hinder public awareness of sexual harassment claims and potentially deter employees from pursuing claims, including class actions. Under the EFAA, an employee may voluntarily agree to proceed with arbitration of a sexual harassment claim, but an employer cannot compel as much.
The EFAA applies “with respect to any dispute or claim that arises or accrues on or after the date of enactment of this Act [March 3, 2022].”
But what does this language actually mean? Is it possible for the EFAA to apply to an instance of sexual harassment that occurred prior to March 3, 2022? If the employee left employment before the effective date, can you compel arbitration?
The Memmer Decision Sheds Some Light
Kassandra Memmer quit her job several months before the enactment date of the EFAA and filed a lawsuit alleging a variety of discrimination claims, including sexual harassment. Given her termination date, the alleged harassment occurred prior to March 3, 2022. Not surprisingly, the defendant moved to compel arbitration based on a valid agreement, arguing that the EFAA did not apply to the plaintiff’s claims. The district court agreed, and Memmer appealed.
The majority opinion, authored by Judge Karen Moore and joined by Judge Eric Clay, focused on the EFAA’s language in a statutory note, specifically Congress’s disjunctive language choice, “dispute or claim.” Given Congress’s use of both words, the Court held it had to ascribe a separate meaning to each word. On the one hand, a “claim” accrues when the cause of action accrues, meaning certain elements are in place to form an injury or legal claim ripe for vindication. As for the word “dispute,” the Court held that there is no “set legal framework” to determine when a dispute arises. Instead, the question involves determining exactly when the parties became adverse to one another.
By giving distinct meanings to the words “dispute” and “claim,” the Court held that even though the plaintiff’s claims accrued prior to the enactment date of the act, the dispute between the parties may have transpired after the enactment date of the EFAA. Accordingly, the Court remanded to the district court for consideration of exactly when the dispute arose between the parties.
Based on the Memmer case, employers who seek to compel arbitration of sexual harassment claims cannot rely only on the employee’s separation date. Instead, an employer must also consider when the dispute arose, or when some type of opposition between the parties transpired. The operative dates could be when the employee complains of harassment, when the employer investigates (or does not investigate) the sexual harassment complaint, when the plaintiff files an EEOC charge, or even when the plaintiff files a lawsuit. In the words of the Sixth Circuit, “[u]ltimately, when a dispute arises is a fact-dependent inquiry” that depends on the specific context of each case.
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President Trump Issues Executive Order Aimed at Eliminating Disparate Impact Liability Under Anti-Discrimination Laws
On April 23, 2025, the White House issued an Executive Order (“EO”) entitled “Restoring Equality of Opportunity and Meritocracy,” which aims to “eliminate the use of disparate-impact liability in all contexts to the maximum degree possible.”
First recognized under Title VII of the Civil Rights Act of 1964 (“Title VII”) by the U.S. Supreme Court in Griggs v. Duke Power Co. (1971), disparate impact liability provides that a policy or practice that is facially neutral and applied without discriminatory intent may nevertheless give rise to a claim of discrimination if it has an adverse effect on a protected class, such as a particular race or gender. Disparate impact liability has also been recognized under fair housing laws and in other contexts.
The EO characterizes disparate impact liability as creating “a near insurmountable presumption of unlawful discrimination . . . where there are any differences in outcomes in certain circumstances among different races, sexes, or similar groups, even if there is no facially discriminatory policy or practice or discriminatory intent involved, and even if everyone has an equal opportunity to succeed.” The EO further states that disparate impact liability “all but requires individuals and businesses to consider race and engage in racial balancing to avoid potentially crippling legal liability” and “is wholly inconsistent with the Constitution.”
To that end, the EO, among other things:
directs all executive departments and agencies to “deprioritize enforcement of all statutes and regulations to the extent they include disparate-impact liability,” including but not limited to Title VII;
orders the Attorney General, within 30 days of the EO, to report to the President “(i) all existing regulations, guidance, rules, or orders that impose disparate-impact liability or similar requirements, and detail agency steps for their amendment or repeal, as appropriate under applicable law; and (ii) other laws or decisions, including at the State level, that impose disparate-impact liability and any appropriate measures to address any constitutional or other legal infirmities”;
orders the Attorney General and the Chair of the EEOC, within 45 days, to “assess all pending investigations, civil suits, or positions taken in ongoing matters under every Federal civil rights law within their respective jurisdictions . . . that rely on a theory of disparate-impact liability, and [] take appropriate action” consistent with the EO;
orders all agencies, within 90 days, to “evaluate existing consent judgments and permanent injunctions that rely on theories of disparate-impact liability and take appropriate action” consistent with the EO;
orders the Attorney General, in coordination with other agencies, to “determine whether any Federal authorities preempt State laws, regulations, policies, or practices that impose disparate-impact liability based on a federally protected characteristic such as race, sex, or age, or whether such laws, regulations, policies, or practices have constitutional infirmities that warrant Federal action, and [] take appropriate measures” consistent with the EO; and
orders the Attorney General to initiate action to repeal or amend regulations contemplating disparate impact liability under Title VI of the Civil Rights Act of 1964, which prohibits race, color, and national origin discrimination in programs and activities receiving federal financial assistance.
The EO also orders the Attorney General and the Chair of the EEOC to “jointly formulate and issue guidance or technical assistance to employers regarding appropriate methods to promote equal access to employment regardless of whether an applicant has a college education, where appropriate.”
Takeaways
This EO is the latest evidence of shifting enforcement priorities by the federal agencies tasked with enforcing civil rights laws, including the EEOC. The ultimate scope of the EO’s impact remains to be seen, particularly as it relates to the potential for preemption of disparate impact liability under state or local anti-discrimination laws. Congress has the authority to amend any federal statutes to specifically address a disparate impact theory of liability, and the courts will continue to have the ultimate say on whether and to what extent such a theory is cognizable under particular statutes. We anticipate further updates in this area and will continue to monitor and report on these updates.
Washington State Makes Key Changes to Amend Equal Pay and Opportunities Act
On April 22, 2025, the Washington State Senate passed Substitute Senate Bill 5408, as amended by the House on April 15, 2025 (“Amended SSB 5408”), making substantial changes to the Equal Pay and Opportunities Act related to pay and benefit information in job postings, a law that has resulted in hundreds of class action lawsuits since summer 2023.
Amended SSB 5408 makes significant changes to the law as it relates to procedures and potential damages, but it maintains the pay transparency in job posting requirements.
Quick Hits
Under SSB 55408, which amends the Equal Pay and Opportunities Act, Washington employers may now list a fixed pay amount instead of a wage range if only one amount is offered, including for internal transfers; postings that are replicated without employer consent are not considered official job postings.
Between the law’s effective date and July 27, 2027, employers have five business days to correct a noncompliant posting after receiving written notice and can avoid penalties if the posting is timely corrected.
The amended law further defines and clarifies two separate remedies, each of which is exclusive: administrative remedies (civil penalties up to $1,000 and statutory damages between $100 and $5,000 per violation) or remedies via private civil actions, including statutory damages between $100 and $5,000 per violation. Each permits statutory damages and considers factors such as willfulness and employer size.
Key Updates to RCW 49.58.110
The key updates to RCW 49.58.110 follow below.
Wage Scale or Salary Range
The wording of the previous statute appeared to require a “wage scale or salary range,” even if all individuals employed in that position had the same pay or the same starting pay. Amended SSB 5408 permits employers that offer only a fixed amount of pay to list only that fixed amount, and they are not required to provide a wage scale or salary range that does not really exist. This also applies for internal transfers where the employer only offers a fixed wage amount.
Definition of “Posting”
Amended SSB 5408 makes clear that a posting does not include a “solicitation for recruiting job applicants that is digitally replicated and published without an employer’s consent.”
Cure Period
For postings between the effective date of Amended SSB 5408 and July 27, 2027, employers must be given the opportunity to correct a job posting that does not meet the requirements of the law. Under the new law, any person may provide “written notice” to the employer that they believe a posting fails to comply with the job pay transparency requirements, and the employer has five (5) business days from the receipt of the written notice to correct the posting and notify any third-party posting entity to correct the posting. The cure opportunity must be provided before the individual may seek any remedy under the law, and if the posting is timely cured, no damages, penalties, or other relief may be assessed.
Damages/Relief
RCW 49.58.110 previously relied on damages sections that arose from the equal pay law as it existed prior to the job posting wage transparency laws. Amended SSB 5408 now further defines and clarifies two separate remedies, each of which is exclusive.
Administrative remedies. Amended SSB 5408 permits an investigation, encourages conference and conciliation, and, if that fails, permits the director to assess a civil penalty of $500 for a first violation and up to $1,000 for repeat violations, or up to ten percent of the damages. In addition to the civil penalty, costs, and other relief for the affected job applicant or employee, the department may “order the employer to pay each affected job applicant or employee statutory damages of no less than $100 and no more than $5,000 per violation.” Amended SSB 5408 provides factors to be considered when assessing the penalty, including the willfulness of the violation or whether it was a repeated violation; the employer’s size; the amount necessary to deter noncompliance; the purposes of the law; and other factors deemed appropriate.
Private civil action. Amended SSB 5408 leaves in place an affected job applicant or employee’s right to bring a private right of action. The new law, however, provides that an affected job applicant or employee may be “entitled to statutory damages of no less than $100 and no more than $5,000 per violation, plus reasonable attorneys’ fees and costs.” The court, in assessing statutory damages, may consider the same factors as the agency.
EEOC Breaks Silence on 2024 EEO-1 Filing Cycle and Plans Shortened Filing Period
After a long silence, the U.S. Equal Employment Opportunity Commission (EEOC) has taken steps to move forward with the 2024 EEO-1 Component 1 data collection by submitting documents for approval to the White House Office of Management and Budget. The proposed 2024 EEO-1 Component 1 Data Collection Instruction Booklet states that the 2024 EEO-1 filing platform will open on May 20, 2025, and close on June 24, 2025.
Quick Hits
The 2024 EEO-1 data collection is set to open on May 20, 2025, and close at 11:00 p.m. (EDT) on June 24, 2025.
The proposed 2024 Instruction Booklet requires filers to indicate their federal contractor status and requires federal contractor employers with fifty or more employees (but with fewer than one hundred employees) to file EEO-1 reports.
The proposed 2024 Instruction Booklet removes the option to provide information about non-binary employees.
Shortened Reporting Period
The proposed 2024 Instruction Booklet provides for a shortened reporting period—down to five weeks—from the platform opening date of May 20, 2025, to the filing deadline of June 24, 2025.
Changes to Reporting by Sex
The proposed 2024 Instruction Booklet eliminates the option to report non-binary employees, stating that the reporting provides “only binary options (i.e., male or female) for reporting employee counts.” This change is tied to Executive Order 14168, “Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.”
Reporting Based on EO 11246 Continues
Despite the rescission of Executive Order 11246 on January 21, 2025, the proposed 2024 Instruction Booklet and sample 2024 EEO-1 report provide that federal contractors with fifty or more employees are still required to file EEO-1 reports for the 2024 cycle.
Conclusion
Based on documents submitted by the EEOC, the 2024 EEO-1 Component 1 data collection site will open on May 20, 2024, and close on June 24, 2025. In addition, the proposed EEO-1 Instruction Booklet eliminates all references to non-binary employees. Due to the shortened filing period, EEO-1 filers may want to consider working now toward gathering the data necessary for the filings.
Employment Law This Week Episode – Non-Competes Eased, Anti-DEI Rule Blocked, Contractor Rule in Limbo [Video, Podcast]
This week, we’re covering the relaxation of state-level non-compete rules, the recent block of Executive Order 14173’s diversity, equity, and inclusion (DEI)-related certification requirement, and a federal appeals court’s decision to pause a challenge to the Biden-era independent contractor rule.
Non-Competes Eased in Kansas and Virginia
Kansas has enacted a law permitting non-competes while setting requirements for non-solicit provisions. Additionally, effective July 1, 2025, Virginia will prohibit non-compete agreements for non-exempt employees.
Federal Contractor DEI Rule Blocked
In a lawsuit brought by Chicago Women in Trades, a federal judge paused a rule from Executive Order 14173 requiring federal contractors to certify that they don’t operate DEI programs that violate anti-discrimination laws, citing unclear definitions of “illegal” DEI programs.
Independent Contractor Rule in Limbo
The U.S. Court of Appeals for the Fifth Circuit paused a challenge to the 2024 independent contractor rule, allowing the U.S. Department of Labor time to consider revising or replacing it. For now, the Biden-era rule remains in effect.
Second Circuit Reinstates Discrimination Lawsuit of Employee Fired for Unauthorized Removal of Cash From Register
The U.S. Court of Appeals for the Second Circuit recently reinstated a former laundromat employee’s discrimination lawsuit against her employer, even though her employment had been terminated for taking cash from the cash register.
The decision in Knox v. CRC Management Co., LLC, No. 23-121 (2d Cir. 2025), underscores the importance of promptly addressing employee complaints, providing training to supervisors, and ensuring policies are reduced to writing and enforced consistently in the workplace.
Quick Hits
The Second Circuit Court of Appeals reversed a district court’s entry of summary judgment that had been granted in favor of a defendant employer and reinstated the plaintiff’s employment discrimination lawsuit, finding that genuine disputes of material fact existed as to each of the plaintiff’s claims and that the plaintiff was entitled to present the claims to a jury.
The plaintiff, a former laundromat employee whose employer had discharged her for removing cash from the register and refusing to return it, filed a lawsuit in federal court alleging discriminatory and retaliatory termination, hostile work environment, refusal to accommodate a disability, and unpaid wages.
The case highlights for employers the value of carefully addressing employee complaints of discrimination and harassment, enforcing workplace policies consistently, and providing training for supervisors.
Background
Natasha Knox, a Black woman of Jamaican descent, was employed as a customer service attendant at three Clean Rite Center laundromats in the Bronx from December 2018 until her employment was terminated in April 2019. During her employment, Knox allegedly experienced derogatory comments from her supervisor. The supervisor allegedly criticized Knox for being “too hood” and “ghetto” to work at Clean Rite. Knox reported these comments to her district lead, who allegedly took no action.
In late January or early February 2019, Knox sustained a broken thumb in a car accident, and in early March, she was instructed by her doctor not to lift more than twenty-five pounds. Knox’s subsequent requests for accommodation in conformance with her doctor’s instruction were allegedly dismissed. One supervisor reportedly told Knox that she “shouldn’t have this job” if she required an accommodation, and her new district lead also made derogatory comments, including that Knox “looked like Aunt Jemima” and “talk[ed] Jamaican” when she became “upset.” Knox further alleged that she was not compensated for extra shifts that she worked at other Clean Rite locations and that she had filed a formal complaint with the new district lead, who did not follow up on her claims.
On April 14, 2019, after taking a taxi to work, Knox took $15 from the cash register to reimburse herself for the taxi fare and placed her taxi receipt in the register, believing she had permission to do so. She was later confronted by her new supervisor, who asked her to return the money—a request Knox refused. Following this incident, the district lead terminated Knox’s employment, citing her removal of cash from the register and her refusal to return it as the reason for the termination.
The Second Circuit Revives Knox’s Claims
Knox filed a lawsuit in the U.S. District Court for the Southern District of New York against Clean Rite and her supervisors. She alleged racial discrimination, failure to accommodate her disability, retaliation, and unpaid wages.
The district court granted summary judgment in favor of the defendants. The district court concluded that Knox had not provided sufficient evidence beyond her own testimony to demonstrate that Clean Rite’s reason for terminating her employment—specifically, her alleged theft of money—was discriminatory. Additionally, the district court determined that Knox’s testimony and sworn affidavit alone were inadequate to establish factual disputes regarding her claims, including those related to unpaid wages.
On April 9, 2025, the U.S. Court of Appeals for the Second Circuit issued a decision reviving the case, holding that Knox had presented sufficient evidence to survive summary judgment on all her claims. In doing so, the court emphasized that Knox had presented evidence of discriminatory comments near in time to her employment termination that could reasonably support an inference of unlawful discrimination. The court also pointed out that Knox’s supervisors had not taken any action in response to her internal complaints of workplace discrimination, which were protected conduct under Title VII of the Civil Rights Act of 1964.
Importantly, the Second Circuit reasoned that Knox had testified in her deposition that other employees had been permitted to take cash from the register to pay for their taxi fares, so long as they left receipts. This, according to the Second Circuit, was sufficient to create an issue of fact concerning whether the reasons provided by Clean Rite were a pretext for unlawful discrimination.
As for the disability discrimination claims, the Second Circuit focused on Knox’s disclosure of her injury and lifting restrictions and the fact that her accommodation request had been denied, even though arguably she could perform other essential functions of the job.
Finally, the Second Circuit held that Knox’s affidavit stating she had been subjected to daily harassment from her supervisor and had worked hours for which she was not paid was sufficient to create an issue of fact relating to her hostile-work-environment and unpaid-wages claims.
Guidance for Employers
The Knox decision provides a helpful reminder to employers of the importance of ensuring that all complaints of discrimination, harassment, and retaliation are taken seriously and investigated promptly. Knox’s complaints to supervisors about racial harassment and failure to accommodate her disability were allegedly ignored, contributing to the Second Circuit’s decision to reinstate her claims.
The Second Circuit’s decision does not alter the “sham affidavit” rule, which prevents a party from creating a genuine issue of material fact by submitting an affidavit that contradicts prior deposition testimony. In Knox’s case, the court found that her affidavit was consistent with her deposition testimony and other evidence presented. This underscores the importance of maintaining consistent and truthful documentation throughout all legal proceedings.
Employers should consider providing regular training to supervisors and managers on antidiscrimination laws, reasonable accommodations, and the proper handling of employee complaints. In Knox’s case, alleged derogatory comments and inconsistent treatment by supervisors played a significant role in the appellate court’s decision. Training can help prevent such behavior and ensure consistency in a respectful workplace.
Finally, employers may want to regularly review and update their antidiscrimination, harassment, and accommodation policies to ensure they comply with current laws and best practices. Clear policies and procedures can help guide employees and managers in handling complaints and accommodation requests appropriately. Relatedly, clear, written policies and procedures concerning items such as expense reimbursement may help reduce or eliminate allegations of selective enforcement, such as those at issue in the Knox case.
Sixth Circuit Upholds Pay Differential in Equal Pay Act Case: Budget Constraints and Market Forces at Play
The U.S. Court of Appeals for the Sixth Circuit recently upheld a jury verdict against a school psychologist who alleged she was paid less than a male colleague in violation of the Equal Pay Act. Notably, the court found that budget constraints and the market forces of supply and demand each provided an independent basis to uphold the jury’s verdict.
Quick Hits
The Sixth Circuit upheld a jury verdict against a school psychologist who alleged Equal Pay Act violations after she was offered a lower salary than the salary paid to a male psychologist two years earlier.
The court upheld the jury verdict, determining that a reasonable juror could conclude, based on the evidence of budget constraints and market forces, that the pay differential was based on a legitimate business reason other than sex.
The case highlights the fine line between legitimate business reasons and discriminatory practices in setting new hire compensation.
On April 2, 2025, a Sixth Circuit panel issued a decision in Debity v. Monroe County Board of Education. The court upheld a magistrate judge’s decision to deny a female school psychologist’s motion for a judgment as a matter of law as to whether the board successfully established its affirmative defense that the pay differential was based on a reason other than sex. The Sixth Circuit further affirmed a magistrate judge’s decision to throw out the jury’s $195,000 damages award for the plaintiff as it was inconsistent with the jury’s finding on liability.
Much of the Sixth Circuit’s decision focused on whether the magistrate judge had properly handled an inconsistent jury verdict in which the appellate court agreed with the magistrate judge’s ultimate conclusion to throw out the damages award.
But the Sixth Circuit additionally found that “a reasonable juror could find that the Board offered” the female school psychologist “a lower salary … for a reason other than sex,” providing an example of how, in some circumstances, budget constraints and market pressures can appropriately influence compensation decisions.
Background
Marina Debity applied for a school psychologist position with Monroe County schools in Tennessee after completing an internship with the district. She alleged she was offered a lower salary than the salary paid to a male psychologist hired two years earlier, who negotiated for his pay. She alleged that when she requested equal pay, the county board of education withdrew her job offer. Debity then brought claims for sex discrimination and retaliation in violation of the Equal Pay Act (EPA), Title VII of the Civil Rights Act of 1964, and the Tennessee Human Rights Act.
Supply and Demand
The Sixth Circuit upheld the jury’s determination that market forces of supply and demand could constitute a legitimate, non-sex-based reason for the pay disparity, an affirmative defense under the EPA. The court’s analysis focused on the testimony of a school district administrator, who testified that when the school hired the previous male school psychologist in 2019, the board was in a “desperate” situation where one of the district’s four psychologists was retiring and another was moving to part-time. This urgency, combined with the lack of applicants, led the board to offer a higher salary. In contrast, Ferguson testified that when Debity applied in 2021, the school already had four full-time psychologists and had not previously employed five.
“It would be reasonable for a juror to conclude that Monroe County had a low demand for psychologists in 2021 with the same supply, one person, to fill the opening,” the Sixth Circuit said. “Therefore, a reasonable juror could believe that market forces of supply and demand caused Debity’s lower offer, not her sex.”
While the Sixth Circuit noted employers “may not use supply and demand as an excuse to discriminate generally by sex just because there are more people from a certain sex applying for a given job,” the school district administrator’s testimony showed there was not this type of “generalized discrimination.” The court said the question of whether Ferguson would have treated a woman applying in 2019 the same as the male psychologist, who was offered more money, was a matter for the jury.
Budget Constraints
The Sixth Circuit further said that an employer’s desire for cost savings can be a legitimate business justification for a pay differential. The school administrator’s testimony showed that the board was “genuinely concerned about the budget.” According to the decision, the administrator “testified that he tried to find enough room in the budget to hire Debity … but could not” because it was a higher priority to hire a full-time teacher at the elementary school.
The court rejected Debity’s arguments that the board could have shifted unused funds from elsewhere, stating that it is not the court’s role to second-guess the board’s budget decisions. “It is irrelevant whether the Board’s budgeting decision was wise or even based on a correct understanding of the facts,” the Sixth Circuit said. “The EPA does not outlaw incompetence—it prohibits discrimination by sex.”
Next Steps
The Debity case highlights the fine line between legitimate business reasons and discriminatory practices in setting new hire compensation. Budget constraints and market forces may, in some situations, be legitimate, nondiscriminatory business reasons that justify certain pay disparities between males and females. In the Debity case, the Sixth Circuit focused on testimony about the low supply of applicants and the immediate need to hire a school psychologist when it hired the male psychologist two years earlier as evidence as to why the male comparator was offered higher pay.
While the Debity decision is a favorable one for employers, employers facing similar market forces and budget limitations when making compensation decisions may still wish to proceed with caution. Employers may want to avoid overreliance on budget constraints and market pressures as vague, general justifications for compensation decisions. Instead, if a pay differential is necessary, despite the employer’s efforts to avoid one, employers may want to keep detailed records of budgetary decisions and the specific circumstances at play.
EEOC Submits Request to Eliminate Optional Disclosure of Non-Binary Data for EEO-1 Reporting
On April 15, 2025, in response to Executive Order 14168, Defending Women From Gender Ideology Extremism and Restoring Biological Truth to the Federal Government, the EEOC filed an Information Collection Request (ICR) with OMB requesting what it classified as a non-substantive change to remove the option for employers to voluntarily report non-binary data for those in their workforce.
In past years, the EEO-1 reporting instructions allowed respondents to provide non-binary data in a narrative form in the comment box of the report. EEOC believes this voluntary option must be removed to comply with Executive Order 14168.
The data collection for 2024 has not yet opened but this may be an indication the Agency is preparing to do so at some point in the near future. Additionally, the ICR is not seeking any changes beyond the current data collection approval period which runs through 2026.
Q1 2025 New York Artificial Intelligence Developments: What Employers Should Know About Proposed and Passed Artificial Intelligence Legislation
In the first part of 2025, New York joined other states, such as Colorado, Connecticut, New Jersey, and Texas,1 seeking to regulate artificial intelligence (AI) at the state level. Specifically, on 8 January 2025, bills focused on the use of AI decision-making tools were introduced in both the New York Senate and State Assembly. As discussed further below, the New York AI Act Bill S011692 (the NY AI Act) focuses on addressing algorithmic discrimination by regulating and restricting the use of certain AI systems, including in employment. The NY AI Act would allow for a right of private action, empowering citizens to bring lawsuits against technology companies. Additionally, the New York AI Consumer Protection Act Bill A007683 (the Protection Act) would amend the general business law to prevent the use of AI algorithms to discriminate against protected classes, including in employment.
This alert discusses these two pieces of legislation and provides recommendations for employers as they navigate the patchwork of proposed and enacted AI legislation and federal guidance.
Senate Bill 1169
On 8 January 2025, New York State Senator Kristen Gonzalez introduced the NY AI Act because “[a] growing body of research shows that AI systems that are deployed without adequate testing, sufficient oversight, and robust guardrails can harm consumers and deny historically disadvantaged groups the full measure of their civil rights and liberties, thereby further entrenching inequalities.” The NY AI Act would cover all “consumers,” defined as any New York state resident, including residents who are employees and employers.4 The NY AI Act states that “[t]he legislature must act to ensure that all uses of AI, especially those that affect important life chances, are free from harmful biases, protect our privacy, and work for the public good.”5 It further asserts that, as the “home to thousands of technology start-ups,” including those that experiment with AI, New York must prioritize safe innovation in the AI sector by providing clear guidance for AI development, testing, and validation both before a product is launched and throughout the product’s life.6
Setting the NY AI Act apart from other proposed and enacted state AI laws,7 the NY AI Act includes a private right of action allowing New York state residents to file claims against technology companies for violations. The NY AI Act also provides for enforcement by the state’s attorney general. In addition, under the proposed law, consumers have the right to opt out of automated decision-making or appeal its results.
The NY AI Act defines “algorithmic discrimination” as any condition in which the use of an AI system contributes to unjustified differential treatment or impacts, disfavoring people based on their actual or perceived age, race, ethnicity, creed, religion, color, national origin, citizenship or immigration status, sexual orientation, gender identity, gender expression, military status, sex, disability, predisposing genetic characteristics, familial status, marital status, pregnancy, pregnancy outcomes, disability, height, weight, reproductive health care or autonomy, status as a victim of domestic violence, or other classification protected under state or federal laws.8
The NY AI Act demands that “deployers” using a high-risk AI system9 for a consequential decision10 comply with certain obligations. “Deployers” is defined as “any person doing business in [New York] state that deploys a high-risk artificial intelligence decision system.”11 This includes New York employers. For instance, deployers must disclose to the end user in clear, conspicuous, and consumer-friendly terms that they are using an AI system that makes consequential decisions at least five business days prior to the use of such system. The deployer must allow sufficient time and opportunity in a clear, conspicuous, and consumer-friendly manner for the consumer to opt-out of the automated process and for a human representative to make the decision. A consumer may not be punished or face any other adverse action for opting out of a decision by an AI system and the deployer must render a decision to the consumer within 45 days.12
Further, any deployer that employs a high-risk AI system for a consequential decision must inform the end user within five days in a clear, conspicuous, and consumer-friendly manner if a consequential decision has been made entirely by or with assistance of an automated system. The deployer must then provide and explain a process for the end user to appeal the decision, which must at minimum allow the end user to (a) formally contest the decision, (b) provide information to support their position, and (c) obtain meaningful human review of the decision.13
Additionally, deployers must complete an audit before using a high-risk AI system, six months after deployment, and at least every 18 months thereafter for each calendar year a high-risk AI system is in use. Regardless of final findings, the deployers shall deliver all audits conducted to the attorney general.
As mentioned above, enforcement is permitted by the attorney general or a private right of action by consumer citizens. If a violation occurs, the attorney general may request an injunction to enjoin and restrain the continuance of the violation.14 Whenever the court shall determine that a violation occurred, the court may impose a civil penalty of not more than US$20,000 for each violation. Further, there shall be a private right of action for any person harmed by any violation of the NY AI Act. The court shall award compensatory damages and legal fees to the prevailing party.15
The NY AI Act also offers whistleblower protections, prohibits social scoring AI systems, and prohibits waiving legal rights.16
Assembly Bill 768
Also on 8 January 2025, New York State Assembly Member Alex Bores introduced the Protection Act. Like the NY AI Act, the Protection Act seeks to prevent the use of AI algorithms to discriminate against protected classes.
The Protection Act defines “algorithmic discrimination” as any condition in which the use of an AI decision system results in any unlawful differential treatment or impact that disfavors any individual or group of individuals on the basis of their actual or perceived age, color, disability, ethnicity, genetic information, English language proficiency, national origin, race, religion, reproductive health, sex, veteran status, or other classification protected pursuant to state or federal law.17
The Protection Act requires a “bias and governance audit” consisting of an impartial evaluation by an independent auditor, which shall include, at a minimum, the testing of an AI decision system to assess such system’s disparate impact on employees because of such employee’s age, race, creed, color, ethnicity, national origin, disability, citizenship or immigration status, marital or familial status, military status, religion, or sex, including sexual orientation, gender identity, gender expression, pregnancy, pregnancy outcomes, and reproductive healthcare choices.18
If enacted, beginning 1 January 2027, the Protection Act would require each deployer of a high-risk AI decision system to use reasonable care to protect consumers from any known or reasonably foreseeable risks of algorithmic discrimination.19 Specifically, deployers would be required to implement and maintain a risk management policy and program that is regularly reviewed and updated. The Protection Act references external sources employers can look to for guidance and compliance, such as the “AI Risk Management Framework” published by the National Institute of Standards and Technology and the ISO/IEC 42001 of the International Organization for Standardization.20
On 1 January 2027, employers deploying a high-risk AI decision system that makes or is a substantial factor in making a consequential decision concerning a consumer would also have to:
Notify the consumer that the deployer has used a high-risk AI decision system to make, or be a substantial factor in making, a consequential decision.
Provide to the consumer a statement disclosing: (I) the purpose of the high-risk AI decision system; and (II) the nature of the consequential decision.21
Make available a statement summarizing the types of high-risk AI decision systems that are currently used by the deployer.
Explain how the deployer manages any known or reasonably foreseeable risks of algorithmic discrimination.
Notify the consumer of the nature, source, and extent of the information collected and used by the deployer.22
New York City Council Local Law Int. No. 1894-A
While the NY AI Act and Protection Act are not yet enacted, New York City employers should ensure they are following Local Law Int. No. 1984-A (the NYC AI Law), which became effective on 5 July 2023. The NYC AI Law aims at protecting job candidates and employees from unlawful discriminatory bias based on race, ethnicity, or sex when employers and employment agencies use automated employment decision-making tools (AEDTs) as part of employment decisions.
Compared to the proposed state laws, the NYC AI Law narrowly applies to employers and employment agencies in New York City that use AEDTs to screen candidates or employees for positions located in the city. Similar to the proposed state legislation, bias audits and notice are required whenever an AEDT is used. Notice must be provided to candidates and employees of the use of AEDTs at least 10 business days in advance. Under the NYC AI Law, an AEDT is:
[A]ny computational process, derived from machine learning, statistical modeling, data analytics, or [AI], that issues simplified output, including a score, classification, or recommendation, that is used to substantially assist or replace discretionary decision making for making employment decisions that impact natural persons.
The NYC AI Law demands audits be completed by an independent auditor who details the sources of data (testing or historical) used in the audit. The results of the bias audit must be published on the website of employers and employment agencies, or an active hyperlink to a website with this information must be provided, for at least six months after the latest use of the AEDT for an employment decision. The summary of results must include (i) the date of the most recent bias audit of the AEDT; (ii) the source and explanation of the data; (iii) the number of individuals the AEDT assessed that fall within an unknown category; and (iv) the number of applicants or candidates, the selection or scoring rates, as applicable, and the impact ratios for all categories.23 The penalties for noncompliance with the NYC AI Law include penalties of US$500 to US$1,500 per violation, and there is no cap on the civil penalties. Further, the NYC AI Law authorizes a private right of action, in court or through administrative agencies, for aggrieved candidates and employees.
Takeaways for Employers
Employers should work to be in compliance with the existing NYC AI Law and prepare for future state legislation.24
Employers should:
Assess AI Systems: Identify any AI systems your company develops or deploys, particularly those used in consequential decisions related to employment.
Review Data Management Policies: Ensure your data management policies comply with data security protection standards.
Prepare for Audits: Familiarize yourself with the audit requirements and begin preparing for potential audits of high-risk AI systems.
Develop Internal Processes: Establish internal processes for employee disclosures related to AI system violations.
Monitor Legislation: Stay informed about proposed bills, such as AB326525 and AB3356,26 and continually review guidance from federal agencies.
Our Labor, Employment, and Workplace Safety lawyers regularly counsel clients on a wide variety of concerns related to emerging issues in labor, employment, and workplace safety law and are well-positioned to provide guidance and assistance to clients on AI developments.
Footnotes
1 Please see the following alert for more information on the proposed Texas legislation: Kathleen D. Parker, et al., The Texas Responsible AI Governance Act and Its Potential Impact on Employers, K&L GATES HUB (Jan. 13, 2025), https://www.klgates.com/The-Texas-Responsible-AI-Governance-Act-and-Its-Potential-Impact-on-Employers-1-13-2025.
2 S. 1169, 2025-2026 Gen. Assemb., Reg. Sess., § 85 (N.Y. 2025), https://www.nysenate.gov/legislation/bills/2025/S1169.
3 A.B. 768, 2025-2026 Gen. Assemb., Reg. Sess., § 1550 (N.Y. 2025), https://www.nysenate.gov/legislation/bills/2025/A768.
4 S. 1169, supra note 2, § 85.
5Id. § 2(b).
6Id. § 2(c).
7 Please see the following alert for more information on state AI laws: Michael J. Stortz, et al., Litigation Minute: State Generative AI Statutes and the Private Right of Action, K&L GATES HUB (Jun. 17, 2024), https://www.klgates.com/Litigation-Minute-State-Statutes-and-the-Private-Right-of-Action-6-17-2024
8 S. 1169, supra note 2. § 85(1).
9 Id. § 85(12) “High-Risk AI System” means any AI system that, when deployed: (A) is a substantial factor in making a consequential decision; or (B) will have a material impact on the statutory or constitutional rights, civil liberties, safety, or welfare of an individual in the state.
10 Id. § 85(4) “Consequential Decision” means a decision or judgment that has a material, legal or similarly significant effect on an individual’s life relating to the impact of, access to, or the cost, terms, or availability of, any of the following: (A) employment, workers’ management, or self-employment, including, but not limited to, all of the following: (i) pay or promotion; (ii) hiring or termination; and (iii) automated task allocation. (B) education and vocational training, including, but not limited to, all of the following: (i) assessment or grading, including, but not limited to, detecting student cheating or plagiarism; (ii) accreditation; (iii) certification; (iv) admissions; and (v) financial aid or scholarships. (C) housing or lodging, including rental or short-term housing or lodging. (D) essential utilities, including electricity, heat, water, internet or telecommunications access, or transportation. (E) family planning, including adoption services or reproductive services, as well as assessments related to child protective services. (F) health care or health insurance, including mental health care, dental, or vision. (G) financial services, including a financial service provided by a mortgage company, mortgage broker, or creditor. (H) law enforcement activities, including the allocation of law enforcement personnel or assets, the enforcement of laws, maintaining public order or managing public safety. (I) government services. (J) legal services.
11 A.B. 768, supra note 3, § 1550(7).
12 S. 1169, supra note 2, § 86(a).
13Id. § 86(2).
14 Id. § 89(b)(1).
15 Id. § 89(b)(2).
16Id. §§ 86(b), 89(a), 86(4).
17 A.B. 768, supra note 3, § 1550(1).
18 Id. § 1550(3).
19 Id. § 1552(1)(a).
20 Id. § 1552(2)(a).
21 Id. § 1552(5)(a).
22 Id. § 1552(6)(a).
23 N.Y.C. Dep’t of Consumer & Worker Prot., Automated Employment Decision Tools (AEDT) – Frequently Asked Questions, https://www.nyc.gov/assets/dca/downloads/pdf/about/DCWP-AEDT-FAQ.pdf.
24 Please see the following alert for more information: Maria Caceres-Boneau, et al., New York Proposal to Protect Workers Displaced by Artificial Intelligence, K&L GATES HUB (Feb. 20, 2025), https://www.klgates.com/New-York-Proposal-to-Protect-Workers-Displaced-by-Artificial-Intelligence-2-18-2025
25 A.B. 3265, 2025-2026 Gen. Assemb., Reg. Sess., (N.Y. 2025), https://www.nysenate.gov/legislation/bills/2025/A3265
26 A.B. 3356, 2025-2026 Gen. Assemb., Reg. Sess., (N.Y. 2025), https://www.nysenate.gov/legislation/bills/2025/A3356
U.S. Department of Education and the Department of Justice Initiate Title IX Enforcement Against Maine
The U.S. Department of Education (“ED”) is seeking to terminate federal education funding of the Maine Department of Education (“Maine DOE”) for noncompliance with Title IX of the Education Amendments of 1972 (“Title IX”). Colleges, school districts, and other regulated entities may learn valuable lessons about the Administration’s approach to federal civil rights compliance by following this story.
On February 21, 2025, the ED’s Office for Civil Rights (“OCR”) launched a directed investigation, alleging that Maine DOE had violated Title IX by allowing boys to compete on girls’ sports teams in Maine. Specifically, OCR alleged that Maine law, which permits student athletes in public school districts to compete on teams according to their gender identity, violates Title IX, citing the Executive Order, “Defending Women from Gender Ideology Extremism and Restoring Biological Truth to the Federal Government.” Shared in a previous client alert, this Executive Order sought to limit the definition of sex under Title IX, and rescinded ED’s guidance protecting LGBTQIA+ students from harassment and discrimination under Title IX..
On March 19, 2025, OCR concluded that Maine DOE was in violation of Title IX, as its public school districts, which receive federal financial assistance, had policies or practices that “allow[ed] boys to participate in girls’ athletics programs and/or den[ied] female students access to female-only intimate facilities.” The speed of the investigation was surprising; previous OCR investigations of alleged civil rights violations often took months, and sometimes years, to complete. In fact, the speed with which OCR here acted has led commenters to question whether the investigation was sufficiently thorough.
On the same day that OCR concluded its directed investigation, OCR proposed a Resolution Agreement requiring Maine DOE and Maine public school districts to fulfill a number of conditions to demonstrate compliance with Title IX.
Under the Resolution Agreement, Maine public school districts would be required to submit an annual certification of compliance with Title IX, and promptly notify OCR of any violations, such as the participation of transgender female athletes in girls’ sports. Under the same agreement, Maine DOE would be required to:
rescind or revise any prior guidance documents or rules which permitted transgender female athletes to participate in girls’ teams and categories;
revoke individual recognitions from transgender female athletes;
award those recognitions and send a letter of apology to cisgender female athletes who received the next highest score or demonstrated the next best performance;
direct to all Maine public school districts that they must not allowing transgender female athletes to participate in any athletic program, access any locker room, or access any bathroom that is designated for females; and
clarify that if that state law conflicts with Title IX, a public school district must comply with Title IX or risk losing its federal funding.
In the intervening weeks, both the Maine Principal’s Association and Maine School Administrative District No. 51 refused to sign the Resolution Agreement, citing that compliance would violate the Maine Human Rights Act (“MHRA”), which prohibits discrimination based on a range of protected characteristics, including sex, sexual orientation, and gender identity. On April 11, 2025, the Maine Attorney General confirmed to ED that the state would not sign the Resolution Agreement.
On April 12, 2025, ED referred its Title IX investigation of Maine DOE to the U.S. Department of Justice (“DOJ”) for further enforcement action and ED initiated an administrative proceeding to terminate Maine DOE’s federal K-12 education funding, including formula and discretionary grants. Notably, under OCR’s current Case Processing Manual, the process allows for a referral to the DOJ or an administrative proceeding to terminate federal funds, not both. On April 16, 2025, the DOJ filed a civil suit against Maine.
Importantly, ED is not the only executive agency that has recently investigated Maine for alleged Title IX. The Department of Agriculture froze funding used for school lunch programs on the basis of alleged violations of Title IX, and Maine has filed its own lawsuit against the Department of Agriculture seeking to stop the freeze. The Department of Health and Human Services conducted its own investigation and, like DOE, concluded that Maine had violated Title IX and referred the matter to the DOJ. The Social Security Administration also terminated a contract with Maine in early March; however, the termination was later rescinded.
While not all jurisdictions have the same gender-based protections as Maine, all entities regulated by the DOE should follow Maine’s experience for indication of OCR and DOE’s approach to that type of investigation. Institutions alleged to have violated civil rights laws should expect speedy agency action, and possibly from multiple agencies.
Old North State Report – April 21, 2025
UPCOMING EVENTS
April 22, 2025
NC Chamber Spring Member Roundtable – Asheville
April 24, 2025
RTAC – Association of Corporate Counsel Spring Reception – (Raleigh)
April 28, 2025
Thinkers Lunch: Rob Christensen
May 13, 2025
NC Chamber Business Summit on Mental Health
June 5, 2025
Triangle Business Journal 2025 State of Health Care in the Triangle
LEGISLATIVE NEWS
SENATE PASSES BUDGET PLAN
On Monday, the North Carolina Senate unveiled Senate Bill 257, their budget plan for state spending, which includes raising pay for teachers and state workers, advancing income tax cuts, and allocating funds for future Hurricane Helene recovery efforts. The GOP’s budget plan, spanning 440 pages, promises to cut out “waste” and “bloated” spending. The proposed budget for the next two years totals $32.6 billion for 2025-26 and $33.3 billion for the following year.
The budget designates $700 million for Hurricane Helene response and an additional $1.1 billion for the state’s “rainy day fund,” which could be used for more Helene aid or other expenses. This adds to the $1.5 billion already spent on recovery since the storm occurred six months ago.
Most state employees would receive a raise of 1.25% next year, along with $3,000 in bonuses over two years. Some employees in specific roles, especially correctional staff and law enforcement, would receive even larger raises with average increases set at 3.3% for teachers, 8.9% for correctional officers, 9.2% for Highway Patrol, and 14.4% for Alcohol Law Enforcement and SBI officers. The budget plan would include a review of state government spending, led by State Auditor Dave Boliek.
Other highlights from the proposal include:
An overall increase in funding for health care, including sizeable investments in the Medicaid Contingency Reserve, reflective of Medicaid expansion.
A $535.5 million investment in a new 500-bed pediatric hospital with UNC Health and Duke Health.
$25 million to reinstate coverage of GLP-1 weight-loss drugs for certain state workers.
Overhauls to NCInnovation’s funding model, asking for the return of $500 million the organization received from the state in 2023.
Additional funds for teacher signing bonuses, mentorship programs, and initiatives to improve reading scores.
Doubling the tax rate for sports betting operators from 18% to 36%.
Allocating $3.5 billion over two years to the State Capital Infrastructure Fund, which finances construction initiatives at universities.
Reducing the income tax rate to 3.49% in 2027 and 2.99% in 2028, with potential for further reductions.
Increasing unemployment benefits to $400 per week.
Establishing a fund for state veterans’ cemeteries within the Department of Military and Veterans Affairs.
Restoring the “Rainy Day” reserves fund to $4.75 billion.
Allocating $110 million for PFAS monitoring through the Department of Environmental Quality.
Designating $1.5 billion in federal funds for rural broadband internet.
Would Repeal the state’s Certificate of Need Law
The Senate passed the budget proposal on Thursday morning with a vote of 30-15, which included four Democrats voting with the Republican majority. The House is expected to release their proposed budget in May, with negotiations between the chambers following thereafter.
Read more be NC Newsline
Read more by WRAL News (Doran) (4/15/25)
Read more by WRAL News (Doran) (4/17/25)
Read more by News & Observer (4/15/25)
Read more by News & Observer (4/16/25)
HOUSE PASSES REINS ACT
The North Carolina House of Representatives has passed House Bill 402, known as the “Regulations from the Executive in Need of Scrutiny (REINS) Act. ” This bill increases legislative control over state agency rulemaking, requiring approval from the North Carolina General Assembly for any regulation with economic impacts over $1 million. The House passed the bill with a 68-44 vote, gaining support from all Republicans and one Democrat.
Representative Allen Chesser (R-Nash) stated that the bill makes lawmakers accountable for significant regulatory decisions, providing citizens with someone to hold responsible. “Right now, we’ve got over 110,000 regulations on the books in North Carolina, and almost 100% of them pass through our current system,” Chesser explained on the House floor. “Very few would cross this threshold to where it comes into our body, where we get to get to review it. What we’re saying is that the people should have someone to hold accountable, and that should be us.”
Bill sponsors in the North Carolina General Assembly claim the REINS Act increases government accountability in regulatory reform, giving more power to the people and their representatives.
Chesser mentioned in committee that the final version is less intrusive than the original draft. However, Democrats opposing the bill raised concerns about possible constitutional issues regarding the separation of powers.
Read more by The Carolina Journal
MORE ACTION ON ENERGY POLICY
In 2021, the General Assembly required the Utilities Commission to take all reasonable steps to reach a 70% reduction in carbon dioxide emissions from electric public utilities in North Carolina by 2030 and carbon neutrality by 2050. Senate Bill 261, passed by the Senate on March 13, would eliminate the interim 70% goal. The bill would also allow public utilities to increase base rates to recapture costs for construction work in process outside the general rate case process. Language similar to Senate Bill 261 was included in the Senate’s proposed budget.
Read more by The Carolina Journal
Read more by NC Newsline
EMPLOYMENT PREFERENCE FOR MILITARY VETERANS COULD EXPAND
A bill to expand hiring preferences for military veterans, their spouses, and dependents in state government received a favorable hearing in the Committee on Homeland Security and Military and Veterans Affairs. House Bill 114 aims to improve current law by:
Removing the requirement that service must relate to a war period.
Including those on active duty.
Including members of the U. S. Armed Forces Reserve.
Including spouses or dependents of qualified individuals.
Representative Charles Smith (D-Cumberland), a co-sponsor, stated that the bill modernizes outdated laws, as veterans currently must have served during wartime, with the Vietnam War defined as the last such conflict. “Time has passed, and so to expand that preference to a greater pool of veterans, it strips away that language [defining the Vietnam War as the nation’s last],” Smith said.
Expanding preferences could help fill job vacancies in the state government. The veteran unemployment rate was 3.7% in March, with 84,900 civilian federal employees in North Carolina, including 28,000 veterans and 33,200 spouses of veterans or active-duty members. A quarter of the VA’s 482,000 employees are veterans.
The bill has been sent to the House Committee on Commerce and Economic Development.
Read more by NC Newsline
HOME GAMING LEGISLATION ADVANCES
House Bill 424 aims to make home card and dice games legal, although some critics worry it could lead to high-stakes gambling. The bill states that North Carolina’s gambling rules do not apply to recreational games in private homes or clubhouses.
The bill’s sponsor, Representative David Willis (R-Union), introduced it after a HOA board complaint about a card game at a public clubhouse. It allows people to play games for money in a private setting, but no mechanical devices can be used, and only personal winnings are allowed.
The bill, which passed a committee on April 1, has new restrictions for charitable game nights, limiting them to 24 per year and no more than two per week. An amendment was suggested to limit high-stakes gambling. The updated bill was approved and sent to the Rules Committee.
Read more by State Affairs Pro
BILL BANNING SOCIAL MEDIA FOR MINORS PASSES HOUSE COMMITTEE
A bill to ban social media for minors under age 14 has passed the House Commerce and Economic Development Committee. House Bill 301 requires parental consent for teens aged 14 and 15 to create social media accounts. The bill holds social media platforms accountable for removing unauthorized accounts and deleting personal data.
Platforms must verify user ages and can face fines up to $50,000 for violations. The NC Department of Justice can investigate and enforce compliance, with proceeds from penalties funding the state’s Civil Penalty and Forfeiture Fund.
The bill’s sponsor, Jeff Zenger (R-Forsyth), pointed out the strong support for the bill from parents of different political views. “One thing that’s been interesting is the overwhelming support from parents across the political spectrum. I didn’t expect such unanimous approval, but it’s been clear that parents are fully behind this.”
Some lawmakers are concerned about enforcement, but Zenger argues that action is necessary for children’s safety.
Read more by The Carolina Journal
Utah, West Virginia, and Wyoming Enact Laws Defining Male and Female
Utah, West Virginia, and Wyoming recently passed laws aligning with recent executive orders issued by President Donald Trump defining sex as binary and immutable.
Quick Hits
Utah, West Virginia, and Wyoming lawmakers recently enacted state laws recognizing only two genders, male and female.
The state legislators acted after President Donald Trump issued an executive order establishing that the federal government’s new policy is to recognize only two sexes, male and female, despite contravening federal law.
The three states restrict transgender and nonbinary individuals from using public school bathrooms and locker rooms that align with their gender identity.
Utah, West Virginia, and Wyoming joined Iowa and other states in passing state laws redefining gender as binary (e.g., male and female only) and immutable, thus attempting to reject governing Supreme Court of the United States case law recognizing gender identity as a protected characteristic under Title VII of the Civil Rights Act of 1964.
The Supreme Court ruled in Bostock v. Clayton County, Georgia that the firing of an employee because of the employee’s sexual orientation or gender identity constituted unlawful sex discrimination under Title VII. Various courts have since applied Bostock to prohibit discrimination on the basis of gender identity by protecting rights to use bathrooms corresponding to gender identity and to use pronouns reflecting one’s gender identity. Despite the fact Bostock remains good law, on January 20, 2025, President Trump signed an executive order to define sex as binary and immutable. The laws in Utah, West Virginia, and Wyoming track the executive order.
Utah Law
On January 30, 2025, Utah Governor Spencer Cox signed a law requiring transgender and nonbinary people to use bathrooms, locker rooms, and showers that correspond with their sex assigned at birth. The new law applies only to government buildings and public schools, but took effect immediately.
The new law defines female as “an individual whose biological reproductive system is of the general type that functions in a way that could produce ova.” It defines male as “an individual whose biological reproductive system is of the general type that functions to fertilize the ova of a female.”
As of September 1, 2024, Utah’s legal code defines sex as being “male or female, at birth, according to distinct reproductive roles as manifested by sex and reproductive organ anatomy; chromosomal makeup; and endogenous hormone profiles.”
West Virginia Law
On March 18, 2025, West Virginia Governor Patrick Morrisey signed into law a bill establishing only two sexes, male and female, under state law. It defines female as “an individual who naturally has, had, will have through the course of normal development, or would have but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produces, transports, and utilizes ova for fertilization.” It defines male as “an individual who naturally has, had, will have through the course of normal development, or would have but for a developmental anomaly, genetic anomaly, or accident, the reproductive system that at some point produces, transports, and utilizes sperm for fertilization.” This law will take effect on June 16, 2025.
The law also states there must be a reasonable accommodation, such as a single-occupancy restroom or changing area, for people who are not willing or able to use the facility assigned to their biological sex.
Wyoming Law
On March 5, 2025, the Wyoming legislature passed a bill that defines sex as being male or female at birth. It defines female as “a person who has, had, will have or would have had, but for a congenital anomaly or intentional or unintentional disruption, the reproductive system that at some point produces, transports and utilizes eggs for fertilization.” It defines male as “a person who has, had, will have or would have had, but for a congenital anomaly or intentional or unintentional disruption, the reproductive system that at some point produces, transports and utilizes sperm for fertilization.”
This bill became law on March 14, 2025, without the governor’s signature. It took effect immediately.
On March 3, 2025, Governor Mark Gordon signed a different bill into law that requires public school students to use bathrooms and locker rooms that align with their sex assigned at birth.
That law took effect immediately.
Next Steps
Amid the changes in federal guidance and state law, Bostock remains good law and prohibits harassment and discrimination based on sexual orientation and gender identity. Further, the U.S. Equal Employment Opportunity Commission’s (EEOC) sex harassment guidelines voted on by the EEOC and issued in April 2024 remains active guidance. The EEOC’s acting chair, Andrea Lucas, has stated she wants to rescind all or part of the earlier guidance related to gender identity, in particular bathroom and pronoun usage, once a quorum exists as the EEOC.
Employers in public schools and government buildings in Utah, West Virginia, and Wyoming may wish to review their policies and practices to ensure employees have safe access to single-sex facilities, as required under the Occupational Health and Safety Act’s general duty clause, and carefully evaluate compliance with all applicable, federal, state, and local laws regarding access to bathrooms, locker rooms, dorms, and showers. The restrictions passed in the states do not apply to private employers in private buildings.