On June 15, 2020, the Supreme Court of the United States issued a landmark civil rights decision, holding that Title VII of the Civil Rights Act of 1964 (“Title VII”)[1] prohibits employers from discriminating on the basis of sexual orientation and gender identity.

Title VII prohibits covered employers, which are generally companies with 15 or more employees, from using specific identifying qualities of an individual—including the individual’s race, color, religion, national origin, and sex—as the basis for making employment-related decisions, such as failing or refusing to hire an individual, terminating an employee, determining an employee’s compensation and/or benefits, or setting other terms, conditions, or privileges of employment.[2] At issue was whether Title VII’s prohibition of discrimination “because of … sex” included discrimination on the basis of sexual orientation or gender identity. Writing for a six Justice majority in Bostock v. Clayton County, Justice Neil Gorsuch explained that an employer who fires an individual for being gay or transgender “fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.”[3]

BACKGROUND

Before the Court’s decision, a little over twenty U.S. states and a number of U.S. localities already had antidiscrimination laws protecting LGBT workers. Many of those laws cover employers with even less than 15 employees. LGBt workers in a number of states, however, had no such protections. Further, until recently, courts had unanimously read “because of … sex” in Title VII as not prohibiting discrimination on the basis of sexual orientation and gender identity. Although many states and local governments have expanded their anti-discrimination laws to extend workplace protections to sexual orientation and gender identity, many have not. LGBT employees in those jurisdictions have been stuck in a reality where, as one court put it, an employee could theoretically “be married on Saturday and then fired on Monday for just that act.”[4]

Despite several U.S. Supreme Court decisions laying the groundwork for extending Title VII’s protections to LGBT employees, the Supreme Court had not previously addressed whether the federal statute covered sexual orientation or gender identity. In the absence of Supreme Court guidance, a split resulted in the federal circuits, with several courts of appeals recognizing that Title VII’s prohibition against “sex” discrimination prohibited discrimination on the basis of sexual orientation and gender identity, while others continued to hold it did not.

To resolve this circuit conflict, the Supreme Court granted review in three cases. The first, Bostock v. Clayton County, involved a man who was fired for being gay after his employer, the Child Welfare Services Coordinator for the Clayton County Juvenile Court System in Georgia, found out about his participation in a gay recreational softball league.[5] The second, R.G. & G.R. Harris Funeral Homes, Inc. v. E.E.O.C., involved a funeral home worker who presented as a male when hired but was fired six years later when she announced her intention to live as a woman.[6] The third, Altitude Express, Inc. v. Zarda, involved a skydiving instructor who, after several seasons with his employer, was fired within days of revealing that he was gay.[7]

The Court’s decision holding that sexual orientation and gender identity are grounds protected by Title VII is significant because it extends Title VII’s protections to all employees in the United States who work for a covered employer.[8]

THE COURT'S DECISION

Writing for the Court, Justice Gorsuch (joined by Chief Justice John Roberts and Justices Ruth Bader Ginsburg, Stephen Breyer, Sonia Sotomayor, and Elena Kagan) assumed, as the employers argued, that the word “sex” in Title VII refers to the biological distinctions between male and female. But that, the Court said, was “just a starting point”: “The question isn’t just what ‘sex’ meant, but what Title VII says about it.”[9] Title VII prohibits an employer from firing an individual based in part on the employee’s sex. And, the Court reasoned, “it is impossible” to discriminate against a person for being gay or transgender without taking the employee’s sex into account.[10] The Court thus concluded that an employer that discriminates against an employee for being gay or transgender “inescapably intends to rely on sex in its decision-making.”[11]

Justice Gorsuch offered several examples to illustrate how decisions based on those characteristics were inextricably tied to sex. In one, he imagined an employer with a policy of firing any employee known to be gay. If an employee comes to an office party with their wife, whether they will be fired hinges entirely on the sex of the employee. So, explained Justice Gorsuch, even if the employer’s “ultimate goal” was to discriminate on the basis of sexual orientation, it must, “along the way, intentionally treat an employee worse based in part on that individual’s sex.”[12]

That was so, the Court held, even if the employer (or the employee) would describe the termination as being based on sexual orientation or transgender status. The Court explained that liability under Title VII does not turn on how one might label an employer’s action. Pointing to its past decisions, the Court noted that an employer’s rule requiring women to pay more into a pension fund than men could not be saved by calling it a “life expectancy” adjustment, nor could a policy against hiring mothers (but not fathers) of young children be defended as one based on “motherhood.”[13]

The Court also held that sex need not be the sole or primary cause of the adverse employment action. Whether another factor is in play—even if it played a more important role—has no significance to the question of whether Title VII liability applies.

Finally, the Court rejected the notion that an employer could escape liability by treating all male and female gay and transgender employees equally. Because Title VII prohibits treating an “individual” differently because of their sex, Justice Gorsuch explained that an employer that fires both a man and a woman for being gay or transgender “doubles rather than eliminates Title VII liability.”[14]

Justice Samuel Alito (joined by Justice Clarence Thomas) and Justice Brett Kavanaugh filed separate dissents. Both dissents accused the Court of legislating, reading into Title VII protections not included in the text as understood when passed in 1964. Although Justice Gorsuch, writing for the Court, acknowledged that the drafters of Title VII likely did not anticipate the Court’s result, the broad language they chose—“because of … sex”—required it: “When the express terms of a statute give us one answer and extratextual considerations suggest another,” he wrote, “it’s no contest. Only the written word is the law, and all persons are entitled to its benefit.”[15]

SEXUAL ORIENTATION AND GENDER IDENTITY DISCRIMINATION UNDER JAPANESE LAW: A COMPARATIVE PERSPECTIVE

Under Japanese law, the Labor Standards Act (LSA) prohibits wage discrimination on the basis of sex, and the Act on Securing of Equal Opportunity and Treatment between Men and Women in Employment (the “Equal Employment Opportunity Act” or EEOA) prohibits all discrimination in working conditions (other than wages) on the basis of sex:

• Article 4 of the LSA prohibits differential treatment in wages on the basis of employees’ sex.
• Article 5 of the EEOA provides that employers shall provide equal opportunities for all persons regardless of sex with regard to recruitment and hiring of employees.
• Article 6 of the EEOA prohibits employers from discriminating against employees on the basis of sex with regard to the following matters:
  • Assignment, promotion, demotion, and training of workers;
  • Loans for housing and other similar fringe benefits;
  • Change in job type and employment status of workers; and
  • Encouragement of retirement, mandatory retirement age, dismissal, and renewal of the labor contract.
• Article 9 of the EEOA prohibits disadvantageous treatment against female employees by reason of marriage, pregnancy, and childbirth.

There are no Japanese statutes, however, that currently provide explicit protection against sexual orientation or gender identity discrimination. In addition, Japanese legal scholars have generally interpreted “sex” in the above provisions relating to sex discrimination to be different from sexual orientation or gender identity. Therefore, employees who claim discrimination on the basis of sexual orientation or gender identity generally have not been successful in pursuing claims of discrimination on the basis of sex under the LSA and the EEOA. Accordingly, these plaintiffs tend to argue that such discriminatory treatment is void because it is contrary to “public order or morality” under Article 90 of the Civil Code or that the action constitutes tort in violation of the spirit of the equal protection clause of the Japan Constitution, Article 14.[16]

But the Japanese government has recently become more conscious about protecting sexual minorities. The Amended Act on Comprehensive Promotion of Labor Measures and Stabilization of Employment of Employees and Enrichment of Their Working Lives, Etc., which came into force on June 1, 2020, requires employers to take measures against harassment by employees in positions of power, which is generally called “power harassment.” The government guidelines[17] state that power harassment includes: (i) physical abuse; (ii) mental or emotional abuse; (iii) deliberately isolating an individual in the workplace; (iv) overworking an employee; (v) giving an employee work that is far below his/her skill level; and (vi) infringement of privacy. The guidelines clearly state that insults about an employee’s sexual orientation and/or gender identity are a type of “power harassment” categorized as (ii) mental or emotional abuse, and that outing of an employee’s sexual orientation and/or gender identity without permission is a type of “power harassment” categorized as (vi) infringement of privacy. In addition, the guidelines also state that an employer should take necessary measures to protect employees’ “sensitive personal information including sexual orientation and gender identity.”

The U.S. Supreme Court’s Bostock decision has been receiving public attention in Japan through reports generated by mass media. It is possible that in the wake of the Bostock decision, plaintiffs in Japan will argue that that the LSA’s and EEOA’s prohibitions on discrimination on the basis of sex include sexual orientation and gender identity discrimination. In addition, it is expected to motivate discussion toward establishing a comprehensive antidiscrimination law that includes sexual orientation and gender identity in employment in the future.

PRACTICAL IMPLICATIONS FOR JAPANESE COMPANIES

Here are a few key takeaways from the decision in Bostock for Japanese companies doing business in the United States:

• Ensure Policies and Procedures Protect LGBT Workers. In light of the U.S. Supreme Court’s decision, companies should revisit their policies and procedures for their U.S. operations to ensure they prohibit discrimination on the basis of sexual orientation and gender identity. This review should include updating employee handbooks and policies, reviewing processes for reporting and investigating allegations related to sexual orientation and gender identity discrimination, and updating Equal Employment Opportunity (EEO) and harassment trainings to include protections for LGBT workers. Companies headquartered outside the United States should be mindful that U.S. companies can face heightened regulatory and litigation risks for workplace discrimination claims, including not only investigations of discrimination allegations by the EEOC but also investigations by state or local fair employment practice agencies as well as individual and class action claims filed by LGBT workers for discriminatory practices.
• Train Employees on Awareness of the Importance of Protecting LGBT Workers. It is not uncommon for companies headquartered outside the United States to have U.S. employees who report to managers in other countries or have their headquarters making decisions about policies and practices for their U.S. operations. In these instances, it is important for those companies to train their managers who oversee U.S. employees or operations on the protections for LGBT workers so they are equipped to navigate the heightened sensitivity surrounding these issues. This is particularly true for companies based in jurisdictions where discrimination against LGBT individuals is not prohibited. Putting aside potential legal risks, many companies with U.S. operations find that having progressive policies protecting and recognizing LGBT workers is good for business. Not only can such policies attract and retain key talent, but some U.S. companies are demanding that their customers have protections for LGBT workers or that they provide diverse teams to service their needs.
• The Court’s Decision Only Applies to Workplace Discrimination Under Title VII. It is important to note that the Court’s decision is fairly narrow in that it does not protect against discrimination on the basis of sexual orientation and gender identity for any purpose, but it could have broader implications. The Court left open the question of whether, for example, employers may have sex-specific restroom or changing room facility policies, which has been a hotly contested issue in the United States, both inside and outside the workplace. Likewise, whether the Supreme Court’s interpretation of “because of sex” to protect LGBT workers applies to other federal statutes that prohibit discrimination because of sex remains unresolved. The decision, however, opens the door to challenges to interpretations of these other U.S. federal antidiscrimination statutes that do not protect sexual orientation and gender identity. Indeed, Justice Samuel Alito wrote a dissent predicting that the Court’s decision is “virtually certain to have far-reaching consequences.” He attached an appendix listing dozens of laws that may be affected,[18] including Title IX of the Civil Rights Act[19] (prohibiting discrimination in education programs), the Fair Housing Act,[20] and the Equal Credit Opportunity Act, [21] and he noted that healthcare benefits “may emerge as an intense battleground.”[22] Foreign companies with U.S. operations with activities potentially affected by these open questions should review their practices with an eye on whether changes are warranted in light of the Court’s decision.

[1] 42 U.S.C. § 2000e et seq.

[2] Employees alleging discrimination under Title VII may file claims with the U.S. Equal Employment Opportunity Commission (EEOC), which can investigate and review evidence of those allegations. If the EEOC finds that the employment policy or practice implicated in the allegation violates Title VII, the EEOC is empowered to file a lawsuit in federal court on the employee’s behalf. If the EEOC decides not to file suit, the agency advises the employee of the employee’s right to do so.

[3] Bostock v. Clayton County, Georgia, 590 U.S. ___, slip op. at 2 (2020).

[4] Hively v. Ivy Tech Community College, 853 F.3d 339, 342 (7th Cir. 2017).

[5] Bostock v. Clayton Cnty, 2017 WL 4456898 (N.D. Ga. 2017); affirmed Bostock v. Clayton Cnty. Bd. of Commissioners, 723 F. App'x 964 (11th Cir. 2018).

[6] Equal Employment Opportunity Comm'n v. R.G. & G.R. Harris Funeral Homes Inc., 100 F. Supp. 3d 594 (E.D. Mich. 2015); summary judgment granted, 201 F. Supp. 3d 837 (E.D. Mich. 2016); reversed, 884 F.3d 560 (6th Cir. 2018).

[7] Zarda v. Altitude Express, Inc., No. 2:10-cv-04334 (E.D.N.Y. 2014); affirmed, 855 F.3d 76 (2d Cir. 2017); reversed on rehearing en banc, 883 F.3d 100 (2d Cir. 2018).

[8] This includes foreign employees legally working in the United States.

[9] Bostock at slip op. at 5 (2020).

[10] Id. at 9.

[11] Id. at 11.

[12] Id. at slip op. at 11.

[13] Id. at slip op. at 14.

[14] Id. at slip op. at 12.

[15] Id. at slip op. at 2.

[16] Article 14 provides in pertinent part, “All of the people are equal under the law and there shall be no discrimination in political, economic or social relations because of race, creed, sex, social status or family origin . . .” Kenpo, Nov. 3, 1946, art. 14. The Japanese Constitution’s guarantee of equal protection, however, does not apply to disputes between private parties (Mitsubishi-Jushi Case, 27 Minshu 1536 (Sup. Ct., G.B., Dec. 12, 1973).

[17] January 15, 2020, MHLW Notification No. 5.

[18] Bostock at slip op. at 44 (Alito, J., dissenting).

[19] 20 U.S.C. § 1681 et seq.

[20] 42 U.S.C. § 3601 et seq.

[21] 15 U.S.C. § 1691 et seq.

[22] Bostock at slip op. at 50-51 (Alito, J., dissenting).