Houston, Texas

***UPDATE*** Houston’s controversial equal rights ordinance (commonly referred to as HERO) failed by a wide margin on Tuesday. Houstonians rejected the proposition by a vote of 61% to 39%. Largely conservative opponents pursued an ad campaign arguing that the ordinance would allow sexual predators dressed as women to enter women’s bathrooms, locker rooms and showers. The proposition would have applied to businesses that serve the public, such as restaurants and hotels, private employers, housing, city employment and city contracting. Some analysts have stated that HERO was the impetus behind higher voter turnout, which doubled the last three local elections. It remains to be seen whether the Houston City Council will work on revising the ordinance to address conservatives’ concerns.

***UPDATE*** After the HERO ordinance was passed last May, opponents to the ordinance led a petition drive calling for a referendum or repeal.  After the city disqualified some of the signatures on the opponents’ petition, it determined there were not enough signatures.  Opponents then went to the courts.  On July 24, 2015, after a heated legal battle, the Texas Supreme Court ruled that the Houston City Council had to repeal or put up for public vote the HERO ordinance.  The future of the HERO ordinance is now up to Houstonians.  Voters will decide whether the HERO ordinance stays or goes in the November 3, 2015 Mayoral Election.

On May 28, 2014, the Houston City Council passed the controversial Houston Equal Rights Ordinance (“HERO”) by a vote of 11 to 6.  HERO expands the “protected classifications” beyond those currently provided by federal or Texas state law to include sexual orientation, gender identity, familial status, and marital status.  HERO prohibits private employers from discriminating against employees on the basis of these characteristics, as well as on the basis of sex, race, color, ethnicity, national origin, age, military status, religion, disability, genetic information, and pregnancy.  HERO is scheduled to take effect on Friday, June 27, 2014.

Which employers will HERO cover?  During its first year, HERO will apply to most private employers with at least 50 employees.  However, HERO will cover more employers as time passes.  In its second year, the threshold lowers to 25 employees, and in its third year, the threshold becomes 15 employees.  The term “employee” is defined as “an individual employed by an employer.”  Note that based on this definition, the coverage threshold includes all employees of an employer—not just employees employed in Houston.  Similarly, the threshold includes full-time, part-time, and temporary employees.

Which employers will HERO not cover?  The term “employer” does not include private membership clubs exempt from taxation under Section 501(c) of the Internal Revenue Code, the state, state agencies or political subdivisions, or religious organizations.

What types of conduct will HERO prohibit?  The scope of conduct HERO will prohibit goes beyond the “adverse actions” that federal or Texas law ban.  The types of activity HERO will bar include:

Any intentional act or demonstration of preference or antipathy in making decisions regarding employment that adversely affect an employee’s pay, status, position, or assignment, including opportunities for overtime pay and advancement, and includes decisions regarding recruitment, job application procedures, referrals for employment, selection and hiring, appointment, compensation, promotions, demotions, transfers, retention, layoffs, recalls, training, educational opportunities, and all forms of discipline, including terminations.

See Section 17-61 (emphasis added).  HERO’s anti-retaliation provision appears limited to any person who files a complaint under HERO (and therefore appears not to cover employees who make internal complaints of discrimination).  Particularly confusing and potentially troublesome for employers is HERO’s prohibition against “antipathy.”  Only time will tell how broadly or narrowly this prohibition is interpreted.

How will HERO be enforced?  A person can file a complaint with the Office of the Inspector General at the City Attorney’s office within 180 days of the alleged violation.  See Section 17-62.  If the complaint states a claim that falls within the jurisdiction of the EEOC or the Texas Workforce Commission, the Office of the Inspector General will forward the complaint to the appropriate agency.  The Inspector General will have subpoena authority via the City Council.  If the Inspector General determines that a violation of HERO occurred, he or she shall first engage in conciliation.  If no resolution is achieved, the Inspector General must refer the complaint to the City Attorney’s office for further action.  Note that the Office of the Inspector General will likely only be able to investigate complaints of discrimination arising from protected classifications that federal or Texas law do not presently cover.

Will HERO provide any civil remedies?  No.  HERO does not create a private cause of action for employees nor does HERO expand any civil remedies that federal or Texas law currently provide.  See Section 17-63.

What are the penalties for not complying with HERO?  Any person who violates the antidiscrimination provisions under HERO commits a Class C misdemeanor criminal offense, punishable in municipal court by a fine of between $250.00 and $500.00 per violation.  See Section 17-64.  Each day of a continuing violation is a separate violation.  The aggregate of all fines relating to the same complaint shall not exceed $5,000.00.  A person prosecuted for a violation of HERO will be entitled to a trial by jury in municipal court.  Note that because HERO uses the term “person” rather than “employer” in the criminal penalties section, it appears managers and supervisors may be personally liable for violations of HERO.

What immediate impact will HERO have on my business?  Although HERO carries the potential for a Class C misdemeanor and a fine of up to $5,000.00, HERO does not, in its current form, create a private cause of action for applicants or employees.  Also, the fine is paid to the City of Houston, not the aggrieved employee.  As current federal and Texas law already provide an avenue for employees to sue employers for discrimination in federal or state court, HERO likely will not result in increased lawsuits against employers.  Having said that, employers may notice an uptick in litigation costs depending on how aggressive the Office of Inspector General is at investigating complaints, seeking subpoenas, and pressuring reconciliation.

As an employer, what should I do to ensure compliance with HERO?  Because many national or regional employers have operations in states that already prohibit discrimination on the basis of sexual orientation, gender identity, family status, and marital status, those employers may already have sufficient policies in place that address these classifications.  In any event, all covered employers should review and revise their personnel policies to include these four characteristics, and should ensure that Human Resources professionals, managers and supervisors are trained on them.