Bathroom Bill Abolishes Common Law Claims

House Bill 2, otherwise known as the “Bathroom Bill” enacted March 23, 2016, by North Carolina’s General Assembly in a special legislative session, does not affect employees’ rights under federal law. It does, however, abolish the right of employees to assert state common law claims of wrongful discharge from employment based on race, sex, national origin, religious or handicap discrimination.

For many years, North Carolina courts have allowed employees to assert common law claims of wrongful discharge in violation of the state’s public policy, set forth in N.C. Gen. Stat. § 143-422.2(a), prohibiting discrimination based on race, religion, color, national origin, sex or handicap. Last week, the General Assembly amended that statute by inserting the word “biological” before “sex.” They also mandated that the statute not be construed to create or support a statutory or common law private right of action and that “no person may bring any civil action based upon the public policy expressed herein.”

The statutory amendment does not affect the obligations of employers to comply with federal anti-discrimination law, but it removes a significant weapon from the arsenal of employees who believe they are victims of discrimination. Previously, by asserting a claim for discrimination under the common law of wrongful discharge, employees could avoid federal law’s dollar limitation on compensatory and punitive damages, including damages for emotional injuries. Federal law limits such damages to $300,000 for the largest employers, with lower limits for smaller employers. It was on a North Carolina state law wrongful discharge claim that an Asheville-area therapist recently obtained a $3.6 million verdict for post-traumatic stress disorder.

Additionally, employees who previously asserted state law claims for wrongful discharge due to unlawful discrimination had up to three years in which to file suit. Now that employees can no longer assert such claims under state law, they must file charges of discrimination with the Equal Employment Opportunity Commission within 180 days of the alleged discrimination in North Carolina and within 300 days in South Carolina. Employees who fail to file such a charge in time are barred from bringing suit.