North Carolina's HB 2: The final analysis

This will be my last "analysis" post on the wrongful discharge provisions of North Carolina's HB 2. (I know you are heartbroken!)

I'll continue to post on breaking HB 2-related news as it develops.

Several commenters disagreed with my contention that Charlotte's human rights ordinance, which was amended to include LGBT rights and then nullified by HB 2, would have been unconstitutional or preempted even without the enactment of HB 2. After having reviewed the issue in more detail, I agree that the "validity" issue is not as clear-cut as I had believed.

NC retro postcard.flickrCC.orionpozo

On the day of my "Ignore the Hype" post, I received an email from Charlotte City Attorney Robert Hagemann with his legal analysis attached. Mr. Hagemann gave me permission to publish his email to me and his memorandum, and I'm reproducing the email here in full (with the exception of email addresses):

From: Hagemann, Robert  

Sent: Friday, April 8, 2016 2:22 PM

To: Shea, Robin

Subject: HB 2


Your blog post on HB 2 was brought to my attention.

Regarding fact #1 in which you state that the Williams v. BCBS case made it clear that local governments never had the authority to adopt non-discrimination ordinances, please note that Charlotte never purported to act, like Orange County did, under a local act, a local act that was found by the Williams Court to be in violation of Art. II, Sec. 24 of the NC Constitution. The only possibly relevant discussion in Williams is in the last two paragraphs. But note that the Court simply found that the general grant of the police power was insufficient to authorize the County to establish a private cause of action and issue subpoenas. The City of Charlotte’s public accommodations ordinance did not attempt to create a private cause of action or grant citizens subpoena power.

Attached is a memo from my office responding, among other things, to this issue raised by Rep. Bishop in the attached letter.


Robert E. Hagemann



Here is Mr. Hagemann's memorandum.

My "amended" thoughts are based on my review of Mr. Hagemann's memorandum (which included a copy of a letter that Rep. Dan Bishop (R-Mecklenburg) sent to the Charlotte Mayor on February 1, 2016), careful readings of the North Carolina Supreme Court decisions in Williams v. Blue Cross Blue Shield and King v. Town of Chapel Hill, the Charlotte ordinance "before and after" it was amended in February 2016, and some very helpful commentary from the University of North Carolina School of Government blog:

Pat McCrory.flickrCC.JamesWillamore
N.C. Gov. Pat McCrory: "Can you remind me why I signed that bill?"

1) I agree with Mr. Hagemann and some commenters on this blog that Article II, Section 24 of the state Constitution applies to laws enacted by the state legislature that have "local" application, not to ordinances enacted by municipalities. The Orange County ordinance at issue in Williams was enacted pursuant to enabling legislation enacted by the state General Assembly, and the latter is what was a "local law regulating labor or trade." The Charlotte ordinance, in contrast, was not enacted based on any state-level enabling legislation, and for that reason, the "local law" provision of the state Constitution is not implicated.

2) The Charlotte ordinance (original and amended) was enacted pursuant to N.C. Gen. Stat. Section 160A-174, which allows a city to enact ordinances consistent with its "police powers." I still question whether a non-discrimination ordinance with real penalties falls within a city's police powers. Trey Allen at the UNC School of Government says Charlotte's use of Section 160A-174 as the authority for the amendments to its human rights ordinance is "novel" and an "expansion" of traditional police power -- although he doesn't say the City lacks authority. It seems to me that the backers of HB 2 have at least an argument that the ordinance exceeded the police powers granted to city governments.

"Rock Hill, yes. South Hill, yes. Chapel Hill, no way!"

3) Here is the Charlotte ordinance before it was amended in February, and here it is after. The employment provisions in the amended ordinance say only that the City will not do business with contractors who discriminate based on LGBT (or other EEO) status, or with contractors whose subcontractors and vendors (etc.) discriminate on this basis. In other words, it is similar to an affirmative action requirement. But according to Norma Houston of the UNC School of Government, local governments were not free to impose additional employment requirements on private employer bidders, even before HB 2.

4) Just a reminder that I'm not talking about the bathroom issue, or any aspect of the Charlotte ordinance or HB 2 other than the employment law provisions.  :-)

Cirque de Soleil.flickrCC.ElCollecionistadeInstantes
Cirque de Soleil: "N.C., non-non!"

My conclusion? I look forward to seeing what the courts say about all of this! Thanks to Mr. Hagemann and to those of you who provided thoughtful disagreement and got me to look at the issue more carefully.

Regarding all other aspects of the employment law provisions of the Charlotte ordinance and HB 2, I stand by my previous posts. I realize that reasonable minds can (and do) differ. In any event, it all may become moot if Gov. McCrory gets the General Assembly to repeal the wrongful discharge provisions of HB 2.

Pearl Jam Ten Cover.flickrCC.Najots
Didn't these guys break up in, like, 1994?

Although I'm determined not to get into the bathroom issue, here is this week's G.G. v. Gloucester Co. Sch. Bd. decision from the panel of the U.S. Court of Appeals for the Fourth Circuit. I assume the school system will try to get a rehearing by the full court. Having read the whole thing (including an eloquent dissent from Judge Niemeyer), I'm not convinced that it would automatically invalidate HB 2's provisions as they apply to school bathrooms. Can an interpretation letter from the U.S. Office of Civil Rights can override a duly enacted state statute? I doubt it. On the other hand, does it matter? If the OCR's position is legal, then can't the OCR threaten North Carolina schools with the loss of federal funds if they don't comply with the "federal" interpretation? A loss which, I presume, would be devastating?

"HB 2 is a bad deal. I'll make wonderful deals."

And, finally, I saw yesterday that Donald Trump is on record as believing HB 2 is a bad law. Not sure whether Mr. Trump's opinion helps the opponents of HB 2, or hurts them.

Image Credits: From flickr, Creative Commons license. Vintage North Carolina postcard by orionpozo; photo of Pat McCrory (2008) from James Willamore; photos of famous N.C. boycotters -- Bruce Springsteen by Takahiro Kyono; Cirque de Soleil by Colecctionista de Instantes; Pearl Jam Ten album cover by Najots; Donald Trump photo by Gage Skidmore.

Robin Shea has 30 years' experience in employment litigation, including Title VII and the Age Discrimination in Employment Act, the Americans with Disabilities Act (including the Amendments Act). 
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