By Sean Herrmann

In 2017, the North Carolina Supreme Court decided N.C Dept. of Corrections v. Gibson, 308 N.C. 131 (2017). Gibson frequently appears in wrongful discharge in violation of North Carolina public policy (“WDPP”) briefs, especially when the plaintiffs’ claims rely on the North Carolina Equal Employment Practices Act (“NCEEPA”) for their underlying public policy. Gibson adopted Title VII of the Civil Rights Act of 1964’s “evidentiary standards and principles of law insofar as they are not in conflict with [North Carolina]’s statutes and case law.” Attorneys almost always cite Gibson for the “evidentiary standards” bit—they are about to fill ten pages with McDonnell Douglas burden shifting analysis and need a reason for doing so. The “principles of law” language often goes untouched.

But that wasn’t the case in Stasinopoulous v. L.M. Sandler & Sons, Inc. et al, 5:18-cv-245, where the United States District Court for the Eastern District of North Carolina looked to federal principles of law and held that pregnancy-based discrimination qualifies as sex-based discrimination under the NCEEPA.

As background, the plaintiff began working for the defendants in January 2017 as the defendants’ Raleigh Sales and Marketing Manager. On May 5, 2017, the plaintiff told one of the defendants that she was pregnant. Less then two weeks later, the defendants contacted another individual about taking over the plaintiff’s position.

The plaintiff alleged that on June 5, 2017, a defendant told her that the defendants had hired a new Raleigh Sales and Marketing Manager, which meant that the defendants were demoting the plaintiff. The new hire was a male.

Following her leave, the plaintiff returned to work on July 24, 2017. But the defendants assigned her significantly fewer responsibilities and issued her a written warning on July 31, 2017, which the plaintiff contested. The defendants then fired the plaintiff on August 2, 2017.

The plaintiff filed suit and alleged that, among other claims, the defendants decision to fire her was based on her pregnancy and, therefore, violated the North Carolina public policy found in the NCEEPA, which, like Title VII, prohibits sex discrimination. The defendants moved to dismiss, claiming that the plaintiff failed to state a claim upon which relief could be granted—in particular, the plaintiff could not make out a WDPP claim because the NCEEPA does not include “pregnancy” as a protected basis.

In her response to the defendants’ motion, attorney Faith Herndon, who represented the plaintiff, zeroed in on Gibson. Faith argued that “North Carolina courts have repeatedly adopted federal substantive law, including the definition of protected classes and other core principals of discrimination law, in analyzing state discrimination claims.” For example, in N.C. Dept. of Crime Control and Public Safety v. Greene, 172 N.C. App. 530 (2005), the Court of Appeals adopted federal discrimination law principles, like that the age protected must be 40 years or older and the “substantially younger” replacement causal inference. Later, in Johnson v. Crossroads Ford, 230 N.C. App. 103 (2013), the Court of Appeals extended Greene’s holding to a WDPP age discrimination case with the NCEEPA as the underpinning public policy.

Faith then focused on the lack of policy conflicting with the conclusion that Title VII’s definition of “sex” should also apply when interpreting the NCEEPA. She noted that the Legislature could have amended the NCEEPA to exclude pregnancy from sex’s definition, but it had not taken this step. This lack of action, Herndon argued, was made even more compelling by the Legislature’s 2016 amendment to the NCEEPA in the notorious HB2 fiasco, which briefly redefined “sex” as “biological sex.” With HB2, the Legislature acted in response to evolutions of federal principles. It wanted to be more restrictive. However, it took no such action with regard to pregnancy, so the federal principles squarely including “pregnancy” within “sex” discrimination’s definition should apply.

Chief Judge Terrence W. Boyle wrote the court’s opinion, which swiftly denied the defendants’ 12(b)(6) motion on the pregnancy issue. In doing so, the court first set forth the underlying public policy found in the NCEEPA—i.e., to “protect and safeguard the right and opportunity of all persons to seek, obtain and hold employment without discrimination or abridgment on account of . . . sex . . . by employers which regularly employ 15 or more employees.”

The court then turned to Title VII and noted that it was amended in 1978 to “expressly include pregnancy in its definition of sex for the purposes of defining sex discrimination in employment.” Though the NCEEPA was passed in 1977, the court looked to Gibson and explained, the Legislature enacted it with the same purpose as Congress’ in passing Title VII—“the elimination of discriminatory practices in employment.” The court again cited Gibson, explaining that the North Carolina Supreme Court adopted Title VII’s “evidentiary standards and principles of law insofar as they are not in conflict with [North Carolina]’s statutes and case law.”

The court noted that prior federal decisions had expressed that North Carolina would recognize pregnancy-based WDPP claims, but had failed to actually do so. It then concluded: “The Court today is unaware of any North Carolina state statute or case which would conflict with recognizing a claim for pregnancy discrimination in employment in violation of the NCEEPA. Counseled by more recent interpretations by the federal courts, the Court will allow plaintiff’s common law wrongful discharge claim to proceed.”

The court didn’t wait for the Legislature or a state court to explicitly declare that North Carolina sex discrimination includes pregnancy discrimination. Instead, it looked to Gibson and recognized both that federal jurisprudence had evolved to include “pregnancy” in the “sex” definition and that no North Carolina case or statute conflicted with recognizing this definition. Critically, the court responded to the defendants’ argument concerning the Legislature’s failure to amend the NCEEPA as Congress had with Title VII by stating that the General Assembly had not “taken it upon itself to distinguish North Carolina’s public policy from Title VII as amended.”

Gibson is much more than an excuse to talk about burden shifting. In NCEEPA-based WDPP cases, Title VII evidentiary standards and principles of law should apply unless specifically rejected by North Carolina law. The court’s ruling makes sense. The Legislature enacted the NCEEPA to serve the same purpose as Title VII and, as Herndon showed in her allusion to HB2, the General Assembly has acted when it has disagreed with evolving federal principles.

Neither Title VII nor the NCEEPA initially included “pregnancy” as “sex” discrimination. But, of course, a company’s decision to fire a woman because she is pregnant is, in the real world, sex discrimination. Congress acted to reflect reality by amending Title VII. North Carolina does not exist in a vacuum, and Gibson aligns by permitting North Carolina employment discrimination jurisprudence to evolve with the rest of the country unless and until it conflicts with North Carolina public policy.

It’s not hard to see what’s coming. For example, if, or when, courts roundly accept that Title VII’s definition of “sex” includes “sexual orientation,” North Carolina workers and practitioners alike should assume that North Carolina public policy has evolved in the same manner unless our Legislature says otherwise, which it is unlikely to do unless it would like to see a repeat of 2016’s HB2 backlash. However, public comment around HB2’s repeal could provide fodder for those arguing against this potential expansion. Opponents will argue that including sexual orientation conflicts with public policy. When the fight comes, Gibson will be front and center. Without question, the Stasinopoulous decision’s effects will be felt well beyond the realm of pregnancy discrimination.

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Kevin Murphy of Herrmann & Murphy

Kevin Murphy

Sean Herrmann of Herrmann & Murphy

Sean Herrmann

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