Tuesday, February 9, 2016

Legislated Discrimination Is Terrible for Business

My home state in West Virginia is struggling.  The economy is struggling because two of the state's main industries -- coal and natural gas -- are facing falling production (coal) and low prices (gas). Severance taxes for the state account for approximately 13% of the budget, and both are down dramatically. Tax revenues for the state were down $9.8 million in January from the prior year and came up $11.5 million short of estimates.  For the year-to-date, the state collected $2.29 billion, which is $169.5 million below estimates. Oddly enough, state sales and income taxes for January both exceeded estimates, but not enough to offset other stagnation in the state.  

The state has long been known as a coal state, and that industry has dominated the legal and political landscape.  West Virginia has been criticized for having a legal system that is "anti-business," with the United States Chamber of Commerce finding stating that West Virginia is the 50th ranked state in terms of the fairness of its litigation. (See PDF here.) CNBC (with input from the National Association of Manufacturers) also ranked West Virginia last in terms of business competitiveness, so the starting point is not good.  

Now, the West Virginia legislature is considering the state's Religious Freedom Restoration Act, which many (including me) see as about legalizing specific forms of discrimination, and not promoting or supporting religion.  And some religious groups agree.  As the Catholic Committee of Appalachia’s West Virginia Chapter explains: 

We appreciate the background of 1993 federal act with the same name, and the history leading up to it, with its pertinence to protecting Native American sacred lands and religious practices from governmental infringement. With the U.S. Supreme Court’s decision that RFRA would only be applicable to federal actions, we can recognize, also, the value of an argument for versions of a law to be passed at the local level. However, the primary motivation behind West Virginia’s bill #4012, and others like it, seems not to be the protection of legitimate religious exercises, but securing the ability of religious groups to discriminate against marginalized populations on the basis of religious convictions.

Just as important for purposes of this post, many West Virginia businesses oppose the bill.  Local Embassy Suites and Marriott hotels representatives spoke out against the bill, and the Charleston (WV) Regional Chamber of Commerce and Generation West Virginia, along with several city mayors, have opposed the bill, as well.  They have good reason.  When the state of Indiana passed a similar bill, Indianapolis promptly lost as many as twelve conventions and estimates around $60 million.  Ouch. As one mayor said, West Virginia legislators need to "Get out of the way." 

Morgantown, home to my institution, was the state’s second city to pass an LGBT non-discrimination ordinance in February 2014. West Virginia University’s faculty senate also unanimously yesterday approved a resolution condemning the bill. And there was a chance to make clear the intent of the bill was not intended to be used as a way to discriminate against someone based sexual orientation through a proposed amendment making that clear. Unfortunately, the amendment was deemed “not germane.”

Beyond coal, natural gas, chemicals, and timber, tourism is one of our state's main industries. It's also a great one. From whitewater rafting to skiing to hiking, the state is a great place for outdoor activities.  Craft breweries and a few great local restaurants are helping make the state a destination.  Unfortunately, the debate about this bill, especially in the wake of the backlash in Indiana, is hurting the state's ability to make build up it's tourism industry by making many people feel unwelcome.  

It's really too bad as a local restaurant, Atomic Grill, made international news for how they responded to comments about their waitresses and has been lauded for their response to other intolerance in their restaurant.  

I don't like this bill because, to me, it's either a tautology or an attempt to discriminate through legislation.  But beyond that, it's stupid, terrible way to promote business in the state.  We spend enough time trying to get people to come visit -- and when people do, they almost always like it. It really is a great place in so many ways.  At a time when the entire state is looking at 4% budget cuts across the board -- when we need to be building bridges to broader audiences -- the state's legislature is screwing around with bills that have zero economic upside and reinforce stereotypes about the people of our state.   

Being pro-business means being pro-consumer, which really means being pro-people.  This bill is none of those.  We need to do better, and it's disappointing our time and our money are being wasted like this.  

https://lawprofessors.typepad.com/business_law/2016/02/legislated-discrimination-is-terrible-for-business.html

Current Affairs, Jobs, Joshua P. Fershee, Law and Economics, Religion | Permalink

Comments

Thanks for this post. Josh. I am interested in your responses to the questions below. As someone with a strong commitment to equality and a strong religious faith, I am still working through some of these questions myself and would be interested in your thoughts:

1.Where do you stand on discrimination by churches – e.g. a pastor/church objects to marrying a same-sex couple or a church refuses membership to a same-sex couple? Are churches simply a special category and exempt from your line of reasoning?

2.What is your opinion on religious non-profits, including religious schools, which discriminate on the basis of sexual orientation? I believe there are at least a few ABA-accredited law schools that openly discriminate on the basis of sexual orientation (or at least on the basis certain sexual conduct). Should those schools lose their accreditation? Lose their non-profit status?

3.With for-profit businesses, do you think there should be any type of balancing between the religious interest of the defendant and the interest in the provision of the good or service by the plaintiff/the availability of the good or service elsewhere? For example, do you think the law should force a religious wedding photographer to create art (the photographs) against his will (or pay a large fine) of a same-sex marriage ceremony when there are dozens of other qualified, reasonably priced photographers in town who are willing to do the job?

Posted by: Haskell Murray | Feb 9, 2016 2:22:50 PM

Thanks for the comment, Haskell. I’ll try to answer all of this

1.Where do you stand on discrimination by churches – e.g. a pastor/church objects to marrying a same-sex couple or a church refuses membership to a same-sex couple? Are churches simply a special category and exempt from your line of reasoning?

I find it appalling and offensive, but completely within their rights, as long as it is restricted to how they choose to worship. I find the church businesses that serve outside the membership to be more problematic.

Thus, I think churches have the right (and should keep the right) to marry only those they wish in the way they wish to do so. I also think, though, that if they open their doors to a public broader than their membership, they become subject to the laws of the state. Thus, have whoever you want (and only those people) in your church. Hold wedding for those folks. But if you rent your chruch to others for non-member purposes, you open the door to everyone.

2.What is your opinion on religious non-profits, including religious schools, which discriminate on the basis of sexual orientation? I believe there are at least a few ABA-accredited law schools that openly discriminate on the basis of sexual orientation (or at least on the basis certain sexual conduct). Should those schools lose their accreditation? Lose their non-profit status?

Again, I find it offensive and appalling, but I do have a healthy appreciate for the First Amendment. I don’t read the ABA’s current standards to allow open and active discrimination active as to sexual orientation (I agree conduct is less clear.) The Standards allow for religious preferences, it seems, giving the same latitude to private institutions that would be granted to other private actors. ABA Standard 205 provides:

(a) A law school shall not use admission policies or take other action to preclude admission of applicants or retention of students on the basis of race, color, religion, national origin, gender, sexual orientation, age, or disability.

(b) A law school shall foster and maintain equality of opportunity for students, faculty, and staff, without discrimination or segregation on the basis of race, color, religion, national origin, gender, sexual orientation, age, or disability.

(c) This Standard does not prevent a law school from having a religious affiliation or purpose and adopting and applying policies of admission of students and employment of faculty and staff that directly relate to this affiliation or purpose so long as (1) notice of these policies has been given to applicants, students, faculty, and staff before their affiliation with the law school, and (2) the religious affiliation, purpose, or policies do not contravene any other Standard, including Standard 405(b) concerning academic freedom. These policies may provide a preference for persons adhering to the religious affiliation or purpose of the law school, but may not be applied to use admission policies or take other action to preclude admission of applicants or retention of students on the basis of race, color, religion, national origin, gender, sexual orientation, age, or disability. This Standard permits religious affiliation or purpose policies as to admission, retention, and employment only to the extent that these policies are protected by the United States Constitution. It is administered as though the First Amendment of the United States Constitution governs its application

Interpretation 205-2 provides:

So long as a school complies with Standard 205(c), the prohibition concerning sexual orientation does not require a religiously affiliated school to act inconsistently with the essential elements of its religious values and beliefs. For example, Standard 205(c) does not require a school to recognize or support organizations whose purposes or objectives with respect to sexual orientation conflict with the essential elements of the religious values and beliefs held by the school.

That said, it does seem to me that if one would pull accreditation for certain behavior related to gender or race, then there is a strong argument the same should apply for sexual orientation. Still there is a tension here, and I don’t have a great answer.

As to non-profit status, my friend and colleague Elaine Waterhouse Wilson was quoted in an article in Tax Analysts after the Obergefell decision:

When the Supreme Court in 1983 upheld the Fourth Circuit's decision that the IRS acted properly in revoking the exempt status of Bob Jones University, it said a declaration that a given institution isn't charitable "should only be made where there can be no doubt that the activity involved is contrary to a fundamental public policy," West Virginia University professor Elaine Waterhouse Wilson told Tax Analysts. The Court noted in Bob Jones its Brown v. Board of Education decision, an "unbroken" line of cases after Brown regarding racial discrimination in education, and other events, including passage of the Voting Rights Act of 1965, Wilson said.

When the IRS retroactively revoked Bob Jones University's exemption in 1976, there had been "over 20 years of post-Brown judicial, executive, and congressional action all furthering the same goal," she said.

As such, it’s unlikely we’re at the point where the IRS would go there, but because it is the educational context (not the church itself), I think one could make a good argument. I wouldn’t put my efforts here because I think more good can be done in other places, but it wouldn’t upset much, either, if the IRS decided not to extend tax-exempt status to schools that actively discriminate against anyone.

3.With for-profit businesses, do you think there should be any type of balancing between the religious interest of the defendant and the interest in the provision of the good or service by the plaintiff/the availability of the good or service elsewhere? For example, do you think the law should force a religious wedding photographer to create art (the photographs) against his will (or pay a large fine) of a same-sex marriage ceremony when there are dozens of other qualified, reasonably priced photographers in town who are willing to do the job?

I think that people in for-profit businesses discriminate (or at least want to) all the time, but they generally keep their tongues. It seems to me there are ways in which one could filter their clients, if it’s so important to the business owners, in a way that doesn’t put a fine point on the discrimination. That is, a photographer could require interviews and detailed descriptions of all events they do, and accept or deny clients on the basis. They don’t need to say why the accept or reject a client. If a client lied, the refusal to perform would be because of the lying, not because of the sexual orientation of the clients. I am not saying this is acceptable behavior, but it’s also not behavior I would try to combat via the law.

I think many for-profit businesses who want to refuse to serve gays are doing so in way that allows them to tell people what they are doing. They are not just avoiding serving gay couples – they are seeking an opportunity to shame gay couples. I see no value in protecting that as a “right” any more than I would for the same behavior toward interracial or interfaith couples.

Posted by: Joshua Fershee | Feb 11, 2016 2:27:26 PM

Amen, Josh. You are singing my song. While I haven't read the West Virginia bill, I agree that "[b]eing pro-business means being pro-consumer, which really means being pro-people."

Posted by: joanheminway | Feb 11, 2016 3:21:51 PM

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