The Department of Justice has filed an amicus brief in a case pending before the U.S. Court of Appeals for the Second Circuit that presents the question of whether the prohibition on employment discrimination on the basis of sex in Title VII of the Civil Rights Act includes discrimination based on sexual orientation. In the brief, the DOJ argues that based on Title VII’s plain text and precedent, the prohibition does not encompass sexual orientation discrimination “as a matter of law” and observes that “whether it should do so as matter of policy remains a question for Congress to decide.”
Since at least 2015, the CFPB has signaled that discrimination on the basis of gender identity and sexual orientation might be a focus of fair lending supervision and enforcement. In a 2016 letter to the organization SAGE (Services & Advocacy for GLBT Elders), Director Cordray described how, in the CFPB’s view, current law provided strong support for the position that the Equal Credit Opportunity Act’s prohibition against discrimination on the basis of “sex” includes discrimination based on gender identity and sexual orientation. More specifically, Director Cordray referenced Title VII cases and noted that Title VII precedents traditionally guide judicial interpretation of ECOA and Regulation B.
He also discussed Equal Employment Opportunity Commission decisions involving alleged employment-related discrimination on the basis of gender identity and sexual orientation in which “the EEOC has laid out its reasoning about how discrimination on these bases necessarily involves sex-based considerations.” He deemed the EEOC’s views of what constitutes sex-based discrimination under Title VII “highly relevant to the similar statutory analysis of what it means to discriminate based on ‘sex’ under ECOA.”
The DOJ’s position in the amicus brief is clearly at odds with Director Cordray’s attempt to use Title VII cases to support the CFPB’s position on the scope of the ECOA’s prohibition against discrimination based on sex. The brief also suggests that once the CFPB is under the leadership of a Director appointed by President Trump, it may retreat from any efforts to extend ECOA protections to sexual orientation. A similar retreat by the EEOC could occur once the majority of EEOC commissioners are Republican appointees. (Although the EEOC’s Acting Chair was appointed by President Trump, a majority of EEOC commissioners are Democratic appointees. In the Second Circuit case, the EEOC filed an amicus brief on behalf of the employee. In its amicus brief, the DOJ observed that the “EEOC is not speaking for the United States and its position about the scope of Title VII is entitled to no deference beyond its powers to persuade.”)
Regardless of the CFPB’s position, companies should be mindful of the fact that numerous state laws already prohibit discrimination in credit transactions on the basis of sexual orientation and gender identity. As a result, companies should continue to consider revising their policies, procedures and fair lending analyses to incorporate discrimination based on sexual orientation.