Guest Submission — HB2 and the Shifting Landscape of NC Employment Law

The following is a guest submission* by Philip R. Thomas**.

House Bill 2, notoriously dubbed the “bathroom bill,” has been the subject of much controversy. However, one portion of the bill has not been thoroughly examined by the pundits—the new addition to N.C.G.S. § 143-422 (aka, the Equal Employment Practices Act or “EEPA”). Subsection 3 of the EEPA now includes the following language:

This Article does not create, and shall not be construed to create or support, a statutory or common law private right of action, and no person may bring any civil action based upon the public policy expressed herein.[1]

This new addition shifts the landscape of employment law in the State by barring plaintiffs from bringing most state law claims of employment discrimination, instead relegating them to action under federal law.

The Historical Backdrop

North Carolina has long been an employment-at-will state. Thus, generally speaking, in the absence of a contractual agreement establishing a definite term of employment, the relationship is presumed to be terminable at the will of either party without regard to the quality of performance of either party.[2]

However, in the 1985 case of Sides v. Duke Hospital, the North Carolina Court of Appeals began to soften the approach to the longstanding employment-at-will doctrine.[3] There, the court held the plaintiff could maintain a suit for wrongful termination where she alleged that she had been discharged from her nursing position for refusing to commit perjury in a malpractice action against the hospital where she worked. The court held that the words “at will” are not without limit or qualification.[4] The court explained that “[w]hile there may be a right to terminate a contract at will for no reason, or for an arbitrary or irrational reason, there can be no right to terminate such a contract for an unlawful reason or purpose that contravenes public policy.”[5]

For the next four years, courts—both state and federal—applying North Carolina law were hesitant to extend the exception created in Sides. That all changed in 1989 when the North Carolina Supreme Court issued its opinion in Coman v. Thomas Manufacturing Co.[6] In Coman, the plaintiff alleged that he had been fired from his job for refusing to violate federal transportation regulations issued by the Department of Transportation (“DOT”). The North Carolina Administrative Code (“NCAC”) states that DOT regulations also apply to NC highways. Thus, if an individual violates the DOT regulations, they are also in violation of the NCAC. The Court held that the employer’s alleged conduct would be a violation of the public policy of North Carolina.

Coman was the first time the State’s highest court had expressly endorsed the public policy exception to the doctrine of employment-at-will. However, considerable questions remained when it came to the parameters of the so-called “public policy” exception. As one law review article deftly explained:

With the North Carolina Supreme Court’s explicit recognition of the public policy exception to the employment-at-will doctrine in Coman, the principal battlefield in wrongful discharge litigation shifted to the issue of specific acts that would constitute a violation of public policy sufficient to trigger the Sides/Coman exception. Because the parameters of ‘public policy’ for the purposes of this exception had not been clearly set forth in the North Carolina Supreme Court’s Coman opinion, the issue was left open to interpretation and expansion in subsequent judicial opinions. [7]

The debate in subsequent years seemed to center around the notion that an employee should not be allowed to maintain an action under the public policy exception when other adequate remedies existed. The North Carolina Supreme Court put that argument out to pasture in its 1992 holding in Amos v. Oakdale Knitting Co.[8] There, the court held that the availability of an alternative state or federal statutory remedy does not preclude a wrongful discharge claim under the public policy exception to the employment-at-will doctrine.[9] The court’s opinion in Amos was a major shift in the landscape of employment law in North Carolina. Within a matter of weeks, federal district courts called upon to apply state law held that plaintiffs could maintain actions for wrongful discharge in violation of public policy regardless of alternative remedies.[10] State courts were not far behind.

In the years following Amos, our state courts have consistently held that to state a claim of wrongful discharge in violation of North Carolina public policy, a plaintiff must plausibly identify and rely on a specific North Carolina statute or North Carolina constitutional provision as stating North Carolina public policy.[11] Plaintiffs’ attorneys across the State seized upon the opportunity that the Amos opinion presented. Especially ripe grounds upon which to bring their claims was the Equal Employment Practices Act (“EEPA”), enacted in 1977.[12]

The EEPA and Title VII

The EEPA declared that the public policy of North Carolina was to “protect and safeguard the right and opportunity of all persons to seek, obtain and hold employment without discrimination or abridgement on account of race, religion, color, national origin, age, sex or handicap by employers which regularly employ 15 or more employees.”[13] Thus, the EEPA mirrored Title VII, the main federal statute on employment-related nondiscrimination. Unlike Title VII, however, EEPA did not create an independent cause of action.

Under Title VII, a plaintiff cannot file a federal suit for discrimination until after they have filed a charge of discrimination with the Equal Employment Opportunity Commission (“EEOC”). The charge must be filed with the EEOC within 180 days “after the alleged unlawful employment practice occurred.”[14] However, if the plaintiff has “instituted proceedings with a State or local agency with authority to grant or seek relief from such practice,” the limitations period for filing a charge with the EEOC extends to 300 days.[15] Courts have interpreted this statutory scheme to mean a Title VII plaintiff who has instituted proceedings with a state or local agency cannot sustain a federal claim based upon incidents that occurred more than 300 days before the filing of a charge of discrimination.[16]

Once the North Carolina Supreme Court handed down the ruling in Amos, the door was left wide open for plaintiffs to bring claims of discrimination. Indeed, individuals who missed their 180-day deadline to file an EEOC charge under Title VII would often rely upon a state action for wrongful discharge to vindicate similar claims. In North Carolina, the statute of limitations for common law wrongful termination actions under the public policy exception is three years.[17] Thus, under the judicially created exception in Amos, North Carolina businesses went from the certainty provided by a maximum of 300, and more likely 180 days, within which a discrimination suit could be brought against them to the extended period of three years.

Interestingly enough, the EEPA bill as originally proposed would have created a separate state administrative division to hear and resolve complaints. The original bill would have also given this division the power to order reinstatement, back pay, and attorneys’ fees.[18] The division’s orders would have been appealable to or enforceable by the superior court in the county in which the hearing was conducted. The original was shot down in committee because the legislators felt that it was duplicative and unnecessary in light of Title VII.[19] A substitution was adopted by the committee and ultimately enacted[20] by the the General Assembly, which was controlled by an overwhelmingly Democratic majority[21]. We ended up with the version of the EEPA that, until recently, remained in place for almost 40 years.

House Bill 2

With the passage of House Bill 2, potential plaintiffs are now relegated to bringing suit under Title VII for most employment discrimination cases. Additionally, plaintiffs will no longer have the expansive 300-day safe harbor they previously enjoyed. Although bringing a suit under the public policy exception is still a possibility, when it comes to a claim of employment discrimination based on the classes identified in the EEPA, plaintiffs would be smart to go with a federal claim rather than waste time and effort on bringing a state claim. While it’s true the North Carolina Constitution may still be cited as evidence of the state’s public policy, the Constitution is of little benefit to individuals who have been discharged from employment by private employers. Long-standing precedent has established that the North Carolina Constitution can be used only to vindicate deprivation of rights by the government or state officials being sued in their official capacity.[22]

Whether or not House Bill 2 is sound policy remains an open debate, but one thing is certain—without the EEPA to lean on, prospective plaintiffs seemingly lack a suitable alternative source of public policy to rely upon in bringing state law wrongful discharge cases based upon membership in traditional protected classes.

*Guest submissions represent only the opinion of the guest author.

**Philip Thomas is a third-year law student at Campbell University and serves as the President of Campbell Law’s Federalist Society. He is originally from Greensboro and graduated from the University of North Carolina at Charlotte in 2013 with a B.A. in Political Science and a minor in American Studies. During his undergraduate years, he interned for a criminal defense attorney and worked for Carolina Political Consulting. While in law school, Philip has interned for several private law firms. He has also interned for the North Carolina Office of Administrative Hearings, the Co-Chairman of the Senate Appropriations Committee of the General Assembly, and most recently the General Counsel for North Carolina Lieutenant Governor Dan Forest. Philip can be reached at pthomas4004@gmail.com.

[1] 2016 N.C. 2nd Ex. Sess. S.L. 2016-3 (H.B. 2).

[2] Kurtzman v. Applied Analytical Industries, Inc., 347 N.C. 329, 331, 493 S.E.2d 420, 422 (1997), reh’g denied, 347 N.C. 586, 502 S.E.2d 594 (1998).

[3] Sides v. Duke Hospital, 74 N.C. App. 331, 328 S.E.2d 818, disc. rev. denied, 314 N.C. 331, 335 S.E.2d 13 (1985).

[4] Id. at at 342, 328 S.E.2d at 826.

[5] Id.

[6] See 325 N.C. 172, 381 S.E.2d 445 (1989).

[7] Andrew B. Cohen, Wrongful Discharge and the North Carolina Equal Employment Practices Act: The Localization of Federal Discrimination Law, 21 N.C. Cent. L.J. 54, 59-60 (1995).

[8] 331 N.C. 348, 416 S.E.2d 166 (1992).

[9] Id. at 356, 416 S.E.2d at 171.

[10] See Battle v. Perdue Foods, Inc., 1992 U.S. Dist. LEXIS 13769 (E.D.N.C. May 22, 1992); Percell v. International Business Machines, Inc., No. 90-538-CIV-5-D, slip op. at 4 (E.D.N.C. Dec. 8, 1992) (heard upon a motion to reconsider; court reversed ruling and held that action could be maintained for wrongful discharge claim could be based on the public policy of the EEPA despite the availability of Title VII remedies); Royster v. GKN Automotive, Inc., No. 2:91CV00438, slip op. at 2-3 (M.D.N.C. Mar. 18, 1993) (“the North Carolina Supreme Court has essentially created a pendent state claim for wrongful discharge for virtually every employment discrimination suit filed under Title VII”).

[11] See, e.g., Whitings v. Wolfson Casing Corp., 173 N.C.App. 218, 222, 618 S.E.2d 750, 753 (2005).

[12] N.C. Gen. Stat. § 143-422.1 et seq.

[13] Id.

[14] 42 U.S.C. § 2000e–5(e)(1).

[15] Id.

[16] See Webb v. Cardiothoracic Surgery Associates of N. Texas, P.A., 139 F.3d 532, 537 (5th Cir. 1998).

[17] See N.C. Gen. Stat. § 1-52(5) (An action must be brought within three years “. . .[f]or any other injury to the person or rights of another, not arising on contract and not hereafter enumerated”).

[18] S. 459 § 143-416.15-16.

[19] See Minutes, Senate Committee on Judiciary II (June 7, 1977).

[20] 1977 N.C. Sess. Laws, ch. 726, sess. 1.

[21] Of the 170 members of the 1977 General Assembly, 159 of the members were Democrats. See Bill Gilkeson, in Durham Morning Herald, April 24, May 27, 1977.

[22] See Corum v. University of North Carolina, 330 N.C. 761, 788, 413 S.E.2d 276, 293 (1992).

 

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