Separation of powers. Checks and balances. As James Madison put it in The Federalist No. 47, “No political truth is ... stamped with the authority of more enlightened patrons of liberty [than the separation of powers].”1 And as School House Rock described it (equally as eloquently) in its 1979 tune “Three Ring Government:”

Talkin’ about the government and how it’s arranged,

Divided in three like a circus.

Ring one, Executive,

Two is Legislative, that’s Congress.

Ring three, Judiciary.

See it’s kind of like my circus, circus.²

The doctrine of separation of powers dictates that each branch of government must stay within its own lane. But what happens when the executive branch begins to swerve into the legislative lane? In steps the judiciary. In a recent decision from the United States District Court for the Eastern District of Tennessee, guidance issued by the Equal Employment Opportunity Commission (EEOC) was put on hold after the court determined that the federal agency went beyond interpreting existing law and instead created new rights and obligations for employers and employees.

In June 2021, in response to the Supreme Court’s decision in Bostock v. Clayton County, the EEOC issued a Technical Assistance Document targeted at sexual orientation and gender identity discrimination. The EEOC’s Technical Assistance Document was challenged by 20 attorneys general in Tennessee et al. v. U.S. Department of Education et al.³ On July 15, 2022, U.S. District Judge Charles E. Atchley Jr. issued a preliminary injunction temporarily blocking the EEOC from enforcing the Technical Assistance Document.⁴

Below, we trace the EEOC’s actions back to the Bostock decision, noting that the EEOC’s guidance went beyond what Bostock prescribed. We analyze Judge Atchley’s decision and opine on how this preliminary injunction affects discrimination claims based on homosexual or transgender status.

Background: Bostock and the Executive Order

On June 15, 2020, the United States Supreme Court issued its landmark decision in Bostock v. Clayton County, where it held that Title VII’s prohibition on employment discrimination “because of…sex,” encompasses discrimination on the basis of homosexual or transgender status.⁵ We previously wrote about that decision in our Sept. 2020 Tennessee Bar Journal article entitled “Bostock v. Clayton County: An Expansion of Title VII.”⁶ In that article, we highlighted the self-imposed limitations of the Bostock decision, which specifically declined to address sex-segregated bathrooms, locker rooms and dress codes.

On his first day of office, President Biden signed an Executive Order entitled “Preventing and Combating Discrimination on the Basis of Gender Identity and Sexual Orientation.”⁷ In that Executive Order, President Biden directed federal agencies, including the EEOC, to “fully implement statutes that prohibit sex discrimination.”

EEOC’s Technical Assistance Document

Exactly one year after the Bostock decision, the EEOC issued its Technical Assistance Document⁸ wherein it purports to explain “what the Bostock decision means for LGBTQ+ workers (and all covered workers) and for employers across the country.” While Bostock provides the impetus for the Technical Assistance Document, the EEOC goes beyond the decision and takes positions on topics specifically avoided in the Supreme Court’s majority opinion, like dress codes, access to sex-segregated bathrooms and preferred pronoun usage.

The EEOC opines that employers cannot require a transgender employee to dress in accordance with the employee’s sex assigned at birth without running afoul of Title VII. Regarding sex-segregated facilities, the EEOC has also taken the position that employers may not deny an employee equal access to a bathroom, locker room or shower that corresponds to the employee’s gender identity. In other words, if an employer has separate bathrooms, locker rooms or showers for men and women, all men (including transgender men) should be allowed to use the men’s facilities and all women (including transgender women) should be allowed to use the women’s facilities. The Technical Assistance Document also points out that using the wrong pronouns to refer to a transgender employee could contribute to an unlawful hostile work environment.

The EEOC attempted to limit the effect of its Technical Assistance Document. It stated that it “does not have the force and effect of law and is not meant to bind the public in any way.” Instead, it advised that the document is intended merely to provide clarity regarding existing legal requirements. Despite couching its guidance in these terms, the Technical Assistance Document encourages individuals to contact the Commission for assistance in filing a charge of discrimination.

The Lawsuit and Decision

Twenty states sued to invalidate the EEOC’s Technical Assistance Document, contending that it was procedurally and substantively unlawful under the Administrative Procedures Act (APA) and U. S. Constitution. In moving for a preliminary injunction, the plaintiffs argued that the Technical Assistance Document was invalid because it was adopted without adhering to the notice and comment procedures required by the APA.

At the outset, the court recognized that the EEOC’s guidance deems conduct required by state laws to be unlawful sex discrimination under federal law. For example, Tennessee law provides public school students, teachers and employees with a cause of action against a school that “intentionally allow[s] a member of the opposite sex to enter [a] multi-occupancy restroom or changing facility while other persons [are] present.”⁹ This obviously runs contrary to the EEOC’s guidance that employers covered under Title VII must allow an individual to access a bathroom, locker room or shower that corresponds with their gender identity.

Defendants argued that it was improper to review the Technical Assistance Document because it does not constitute final agency action. Here, the issue was whether the Technical Assistance Document sets forth rights and obligations from which legal consequences will flow. Defendants asserted that the guidance documents are non-binding interpretations of Title VII that do not create or alter existing obligations. However, the substance, not the label, the court pointed out, is to be used when determining whether it is a final agency action. The court held that the Technical Assistance Document takes “firm stances” regarding what employer conduct amounts to sex discrimination and uses “mandatory language” to impose obligations on employers. The court concluded that “rather than generally describing best practices for employers, the Technical Assistance Document takes firm positions regarding what Title VII demands of employers.”

The EEOC also argued that Bostock mandated its positions in the Technical Assistance Document. But the court summarily rejected this approach. The court held that defendants ignored the limited nature of Bostock, and instead, attempted to expand Bostock’s scope to advance new interpretations and impose new legal rights and obligations.

Turning to the injunctive relief analysis, the court also determined that plaintiffs were likely to succeed on the merits of their claim. The key issue here was whether the Technical Assistance Document was legislative or interpretive in nature. Legislative guidance is required to have a notice and comment period, but interpretative guidance is not. Here, it was undisputed that the Technical Assistance Document was not subject to a notice and comment period. The inquiry was thus “whether the action in question simply interprets existing law or results in a substantive change to existing law.”

Defendants argued that the Technical Assistance Document was merely an interpretation of the Bostock decision, and thus not subject to notice and comment. But, as the court had already pointed out, the Technical Assistance Document goes beyond Bostock and addresses issues that Bostock “explicitly reserved” for future cases. The court concluded that the EEOC’s action was legislative because it identified and created rights for applicants and employees that had not been previously established by federal law, and it directed employers to comply with those obligations to avoid liability.

Ultimately, the court granted plaintiffs’ motion for preliminary injunction. Under this order, the EEOC is prohibited from enforcing the Technical Assistance Document against the 20 plaintiff states. But this is not a “nationwide” injunction. As the court put it, it “has no way of determining whether the States not before it wish for the challenged documents to be enforced” and the court “will not burden the States that did not join this litigation.”

Takeaways

Judge Atchley’s decision is a reminder that even though the EEOC is the federal agency tasked with interpreting and enforcing Title VII, it cannot create new legal obligations without submitting to notice-and-comment requirements, a clear check on administrative power. While this opinion is not a final decision on the merits, it gives deep insight into how the court may ultimately rule. But keep in mind, the scope of the decision only applies to prevent the EEOC from enforcing this guidance in the 20 plaintiff states. It does not prevent employees from asserting Title VII claims regarding dress codes, pronoun use and access to bathrooms. When those claims arise, courts will be tasked with addressing the questions left open by the Bostock decision. |||

EDWARD G. PHILLIPS is a lawyer with Kramer Rayson LLP in Knoxville, where his primary areas of practice are labor and employment law. He graduated with honors from East Tennessee State University and received his law degree from the University of Tennessee College of Law in 1978 with honors, and as a member of The Order of the Coif. He is a former chair of the Tennessee Bar Association’s Labor and Employment Law Section.

BRANDON L. MORROW is a lawyer with Kramer Rayson LLP in Knoxville. He represents businesses, educational institutions and religious institutions in employment and civil rights related matters. He holds a bachelor’s degree from the University of Tennessee and a law degree from the University of Tennessee College of Law.

NOTES

1. Madison, James, The Federalist Papers : No. 47, accessed July 28, 2022 at https://avalon.law.yale.edu/18th_century/fed47.asp.
2. School House Rock, “Three Ring Government,” accessed Aug. 18, 2022, www.youtube.com/watch?v=tEPd98CbbMk.
3. The lawsuit also challenges guidance promulgated by the Department of Education regarding Title IX. However, because this is an employment law column, we limit our discussion to the EEOC’s Technical Assistance Document.
4. Tennessee et al. v. U.S. Department of Education, et al., No. 3:21-cv-308 (E.D. Tenn. July 15, 2022).
5. 140 S. Ct. 1731, 1738-39 (2020).
6. See Phillips, Morrow, “Bostock v. Clayton County: An Expansion of Title VII,” Tennessee Bar Journal, Sept./Oct. 2020, available at www.tba.org/PhillipsMorrow_BostockClaytonCo.
7. See Exec. Order. No. 13988, 86 Fed. Reg. 7023-25 (Jan. 20, 2021).
8. U. S. Equal Opportunity Employment Commission, “Protections Against Employment Discrimination Based on Sexual Orientation or Gender Identity,” accessed Aug. 18, 2022, available at www.eeoc.gov/laws/guidance/protections-against-employment-discrimination-based-sexual-orientation-or-gender#_ednref6.
9. 2021 Tenn. Pub. Acts, c. 452, § 6.