MORE TRUMP EFFECT: FIDUCIARY RULE

DELAYED, BLACKLISTING OF GOVERNMENT

CONTRACTORS RULE IS GONE; COURT OF
APPEALS HOLD TITLE VII PROTECTS LBGT
COMMUNITY FROM SEXUAL ORIENTATION
DISCRIMINATION

By: Lawrence P. Postol, Vice President For Legislative Affairs

Lpostol@seyfarth.com

DOL Fiduciary Rule Officially Delayed

On April 4, 2017, the Department of Labor (DOL) issued a final rule

extending by 60 days the applicability date of the final fiduciary regulation

published a year ago (known colloquially as the Fiduciary Rule). Originally, the

effective date for the Fiduciary Rule was April 10, 2017, and now the revised

effective date is June 9, 2017.

The Fiduciary Rule defines who is a fiduciary under the Employee

Retirement Income Security Act of 1974, as amended (ERISA) by reason of

providing investment advice to ERISA plans. The new fiduciary definition also

impacts IRAs because this definition would govern for purposes of determining

whether a transaction involving an IRA violates the prohibited transaction rules

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under the Internal Revenue Code of 1986, as amended. Click here for our prior

alert discussing the Fiduciary Rule.

The DOL also extended the applicability date for the Best Interest Contract

Exemption, the Principal Contract Exemption, and the other revised exemptions

that are companion parts to the Fiduciary Rule by 60 days. Further, the DOL

requires fiduciaries relying on the new and revised exemptions to comply only

with the impartial conduct standards in the exemptions during a transition period

from June 9, 2017, through January 1, 2018. Fiduciaries are not required to comply

with the remaining conditions of these exemptions (i.e., written disclosures and

representations) until January 1, 2018.

This extension is a response to a memorandum from President Trump to the

DOL directing an examination of the Fiduciary Rule to determine whether it may

adversely bear on Americans ability to obtain retirement information and financial

advice. In response to the directive, the DOL proposed a 60-days extension of the

applicability of the Fiduciary Rule and related prohibited transaction exemptions

on March 2, 2017. The DOL received approximately 193,000 comments on this

proposed delay. According to the DOL, 178,000 commenters opposed any delay,

but the DOL chose to delay the effective date anyway.

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President Trump Revokes Government Contracting Executive
Orders And Signs Disapproval Resolution of Blacklisting
Regulations

Today, President Trump issued an Executive Order revoking President

Obamas Blacklisting Executive Orders pertaining to the government contracting

community. The President also signed the joint resolution of disapproval

rescinding the resolutions issued pursuant to President Obamas Executive Order

13678, entitled Fair Pay and Safe Workplaces but popularly referred to as the

Blacklisting Order. Under the Congressional Review Act, once a resolution is

rescinded, the Executive Branch cannot reissue the same or similar regulation

absent legislative authorization.

Today, March 27, 2017, President Trump issued a new Executive Order

titled Revocation of Federal Contracting Executive Orders rescinding the

Blacklisting Executive Orders issued by President Obama. The President also

signed the resolution of disapproval passed by both Houses of Congress,

disapproving the regulations issued pursuant to President Obamas Executive

Order 13678, entitled Fair Pay and Safe Workplaces but more popularly referred

to as the Blacklisting Order. The resolution of disapproval was made pursuant to

the Congressional Review Act (CRA), which permits Congress to pass legislation

rescinding a particular regulation under certain restrictions.

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 Both President Trumps new Executive Order and the rescission resolution

are in line with the Trump Administrations stated goal of rolling back many

Obama-era federal regulations. They also have the effect of rescinding the

paycheck transparency provisions requiring contractors to provide regular

statements disclosing wages and benefits to employees, which were left in place by

Judge Marcia Crones nationwide preliminary injunction blocking the other

elements of the Blacklisting Orders implementing regulations.

Now that the Blacklisting Orders implementing regulations have been

completely rescinded pursuant to the CRA, the Executive Branch is prohibited

from reissuing the same regulations, or promulgating similar ones, without

Congressional approval. The Executive Order itself is also no longer in effect, due

to President Trumps action today to rescind it.

The Blacklisting Order was criticized by the employer community and

employer associations because of the additional financial burdens it imposed on

covered contractors, the risk to reputation and business from public disclosure of

alleged violations before they are proven, and the fact that agencies already had

enforcement mechanisms in place to ensure contractor compliance. The

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Congressional action under the CRA removed these supplementary requirements

for federal contractors and the additional responsibilities given to the contracting

agencies and the Department of Labor.

Seventh Circuit Finds Discrimination on the Basis of Sexual

Orientation Prohibited by the Civil Rights Act

The Seventh Circuit United States Court of Appeals becomes the first

appellate court to hold that discrimination on the basis of sexual orientation is

prohibited as sex discrimination under Title VII. The decision establishes a circuit

split that may ultimately lead to Supreme Court review.

On Tuesday, April 4, 2017, in a landmark en banc decision, the Seventh

Circuit became the first appellate court to decide that discrimination on the basis of

sexual orientation is a form of sex discrimination, forbidden by Title VII of the

Civil Rights Act of 1964.

Background

In reaching this seminal decision, the court reversed the district courts

decision dismissing Kimberly Hivelys suit against her former employer, Ivy Tech

Community College. Hively was an adjunct professor and openly lesbian. She

applied for six full-time positions over the course of five years, and was passed

over each time. In July 2014, her part-time adjunct contract was not renewed. She

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filed a charge with the EEOC claiming she was discriminated against because of

her sexual orientation, and received a right-to-sue letter.

The En Banc Decision

The Seventh Circuit, in an opinion by Chief Judge Wood, largely adopted

the EEOCs rationale presented in the EEOCs 2015 decision in Baldwin v. Foxx,

EEOC Appeal No. 0120133080. The court found that sexual orientation

discrimination was a form of sex stereotyping and thus barred under Title VII. To

reach this conclusion, the court applied the comparative method approach. The

court examined the counterfactual situation in which Hively is a man, but

everything else stays the same: in particular, the sex or gender of the partner. The

court found that Hivelys non-conformity to the female stereotype that she

should have a male partner was cognizable as sex discrimination under the

gender non-conformity line of cases.

The court also adopted Hivelys theory that discrimination based on sexual

orientation is sex discrimination under the associational theory. The court

examined the application of this line of cases, beginning with Loving v. Virginia,

388 U.S. 1 (1967), and found that the Civil Rights Act prohibits discrimination

based on the sex of someone with whom a plaintiff associates. The court noted that

it was inapposite that the Loving line of cases dealt with associational race

discrimination, rather than sex discrimination.

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 In reversing its previous precedent, the court noted both the Supreme Courts

recent marriage equality decisions, as well as the EEOCs action in Baldwin, and

stated that this court sits en banc to consider what the correct rule of law is now in

light of the Supreme Courts authoritative interpretations, not what someone

thought it meant one, ten, or twenty years ago.

The court was unpersuaded by the notion that Congress has not expressly

added the phrase sexual orientation to the list of protected categories under the

Civil Rights Act, while it has used the phrase in other legislation. Instead, the

court noted that the goalposts of Title VII have been moving over the years,

but the key concept no sex discrimination remains.

The Court declined to decide whether there would be an exemption if Ivy

Tech were a religious employer, and whether the meaning of discrimination in the

context of the provision of social or public services might be the same.

A Path To The Supreme Court?

The Seventh Circuit is now at odds with the Eleventh Circuits recent

decision in Evans v. Georgia Regional Hospital, which held that Title VII does not

cover discrimination based on sexual orientation. The Second Circuit also recently

declined to interpret Title VII as covering sexual orientation discrimination, but left

open the possibility that certain allegations regarding gender stereotyping related to

sexual orientation may state a claim.

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 Although a circuit split is thus emerging, it appears that Ivy Tech is not

planning to seek certiorari. It is thus unlikely that this case will be the vehicle for

Supreme Court to resolve the circuit split. However, it is possible that a petition for

certiorari will be filed in Evans. If such a petition is filed it is likely to stress the

circuit split that has emerged with Hively.

Key Takeaways

In light of Hivley, discrimination based on sexual orientation is now

prohibited under Title VII in the Seventh Circuit. However, the issue remains in

flux in the rest of the country.

Absent Supreme Court review or legislative action by Congress, it is likely

that the law will remain unsettled for the near future.

2017 by Lawrence Postol

Mr. Postol is the Vice President for Legislative Affairs on the NOVA SHRM
Board, and a partner in the Washington, D.C. office of Seyfarth Shaw LLP. Mr.
Postols acknowledges that his partners deserve the credit for writing most of this
article, for which he thanks them. If you have any questions about the information
in this article, you may e-mail Mr. Postol at Lpostol@seyfarth.com or call him at
202-828-5385.

Disclaimer: This newsletter does not provide legal or other professional

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