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Promises, not policies—A Commentary by Ian Ayres '86

The following op-ed originally appeared in the September/October 2006 issue of Yale Alumni Magazine.

Promises, not policies
by Ian Ayres '86

People in the United States strongly support the simple idea that employers should not discriminate against gays and lesbians. In a 2003 Gallup poll, a whopping 88 percent of respondents said that "homosexuals should . . . have equal rights in terms of job opportunities."

But gay rights advocates have made only limited legislative progress on this issue. Only 16 states have prohibited employment discrimination against gays and lesbians. At the federal level, a seemingly modest bill, the "Employment Nondiscrimination Act" (ENDA), has been introduced several times in Congress. All ENDA does is to forbid employers to treat employees differently on the basis of their sexual orientation. Yet it still has not passed.

Business has been far more active. The vast majority of large corporations -- now 462 of the Fortune 500 -- have nondiscrimination policies that explicitly include sexual orientation. But the pretty words of nondiscrimination policies sometimes turn out to be only that. If an employer discriminates against a job applicant because she is gay, it is far from certain that the employer would suffer any legal consequences -- even if the employer has a nondiscrimination policy.

In 1975, AT&T became the first major U.S. corporation to add sexual orientation to its nondiscrimination policy. But in 1986, when Steven Joachim filed a suit claiming sexual orientation discrimination in AT&T's decision to dismiss him, AT&T argued that the policy in its employee handbook did not create a contractual obligation. The Fifth Circuit Court of Appeals agreed -- finding under Texas law that AT&T's "employee handbooks ‘constituted no more than general guidelines,' and did not create a contractual right in the employees."

This same argument that "a policy is not a promise" is still being made today. USA Today, on May 10, 2006, featured the battle of Jennifer Harris, a three-time all-USA Today high school basketball selection, against Penn State and its coach, Rene Portland. Harris alleges she was kicked off the team as part of the coach's harassment of her for appearing to be a lesbian. According to the article, the university found that the coach "creat[ed] a ‘hostile, intimidating, and offensive environment' because of Harris's perceived sexual orientation," fined the coach $10,000, and required her to undergo diversity and inclusiveness training. Nevertheless, the university is defending itself against Harris's lawsuit on the basis that its nondiscrimination policy did not give rise to an enforceable contractual duty:

It is true that Pennsylvania courts have held that the relationship between a student and a private college is generally contractual in nature and that in determining the provisions of such a contract the courts may look at the written guidelines, policies, and procedures distributed to the student over the course of his or her enrollment. However, numerous courts have declined to find that nondiscrimination policies of the type at issue in this case rise to the level of an enforceable contract term.

The right of employees and applicants to sue for discrimination is a cornerstone of our civil rights law. The right to a day in court is not just symbolically important; it is a guarantee that those who are harmed by discrimination will be compensated. Instead of hollow nondiscrimination policies, corporations should adopt nondiscrimination promises that will be backed up by the force of law if an employee is a victim of employer discrimination.

One solution is a certification mark -- a free-market, voluntary label like those of the Underwriters Laboratory for consumer safety or the Orthodox Union for kosher foods. Jennifer Brown, a Quinnipiac law professor, and I have created a symbol we call the "Fair Employment" mark: a simple FE in a circle.

With just a few clicks of the mouse at fairemploymentmark.org, any employer, without paying a fee, can turn its policy into a legally enforceable promise. By signing the licensing agreement, an employer gains the right (but not the obligation) to use the mark and in return promises to abide by the word-for-word guarantees of ENDA.

This license is the first time that private contractors have intentionally taken the language of proposed legislation and inserted it into private agreement. When companies agree to the contract beforehand, a legal precedent can be established even before the law is passed. Some legislators worry that "activist judges" might interpret the statute to go beyond the narrow prohibition of sexual-orientation discrimination. But the certification license helps alleviate this concern. If courts interpret the terms of the contract more broadly than Congress intended, then Congress can revise the terms before the law is ever passed. Companies do test markets all the time. Here's a chance for Congress (with help from companies) to do the same.

Why would any employer take on the potential additional legal liability of an explicit promise? Committing to equality is good business. And displaying a good-housekeeping seal for equal employment rights is a great way to attract both customers and employees. Licensing the mark doesn't require the employers to display the mark on all their products -- or in every market. A company might choose to display it in Connecticut but not Utah. But by signing the license the employer would be committing to legal protections for all its employees.

What about the costs of litigation? Well, employers in the 16 states that independently prohibit sexual-orientation discrimination already may be sued: they face no additional liability. Even in states without such laws, the potential costs to employers who use the Fair Employment mark are insubstantial. Using Government Accountability Office data from the states with statutes on the books, Brown and I have calculated that in an average year, only 17 out of 1 million employees brought claims of sexual-orientation discrimination. Even if an average claim costs $100,000, this would represent an extra cost per employee of only $1.70 per year.

Most important, promising not to discriminate is the right thing to do. Licensing the mark doesn't mean that an employer can't defend lawsuits. It just means that the employer can't tell the court, "We have a right to discriminate against gay and lesbian employees if we feel like it."

Many businesses say they oppose this kind of discrimination. In large numbers, they adopt policies and endorse legislation. Now they have an opportunity to do something that will give their employees genuine protection.

Ayres is the William K. Townsend Professor of Law and a professor in the School of Management. He was recently elected to membership in the American Academy of Arts and Sciences.