General Assembly Restores Wrongful Discharge Claims

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Charles E. Johnson
Robinson Bradshaw Publication
Oct. 3, 2016

After abolishing lawsuits for wrongful discharge from employment based on discrimination, North Carolina’s General Assembly voted in July to restore such claims – but with a shorter, one-year statute of limitations. House Bill 169 – which removes statutory language prohibiting wrongful discharge actions based on race, religious, color, national origin, age, sex or handicap discrimination – was enacted on July 18, 2016.

House Bill 169 strikes a sentence from controversial House Bill 2 that abolished the right of employees to bring common law claims for wrongful discharge based on violations of the North Carolina Equal Employment Practices Act. Enacted March 23, 2016, in a special legislative session, HB2 also prohibits municipalities from enacting their own anti-discrimination ordinances, limits proscriptions on sex discrimination to “biological” sex, and requires governmental authorities and schools to designate restrooms and changing facilities based on “biological” sex. The amendment in House Bill 169 does not affect these other provisions of HB2.

For many years, North Carolina courts allowed employees to assert common law claims of wrongful discharge in violation of the state’s public policy, set forth in the Equal Employment Practices Act, N.C. Gen. Stat. § 143-422.2(a), prohibiting discrimination based on race, religion, color, national origin, age, sex or handicap. Courts have construed the act consistently with the federal bans on employment discrimination in Title VII of the Civil Rights Act of 1964, the Age Discrimination in Employment Act and the Americans With Disabilities Act.

By inserting the word “biological” before “sex” in the Equal Employment Practices Act, HB2 appears to narrow the range of wrongful discharge claims available under state law as compared with claims under federal law because some courts have construed Title VII’s prohibition on sex discrimination to apply to discrimination based on sexual stereotyping, gender identity and sexual orientation, as well as “biological” sex. The language and circumstances of the adoption of HB2 make clear the General Assembly’s intent to eliminate any protections otherwise available under state law to lesbian, gay, bisexual and transgender employees. Put another way, the public policy of North Carolina does not prohibit discrimination against LGBT employees.

House Bill 369 also imposes a one-year statute of limitations for wrongful discharge actions under the public policy prohibiting employment discrimination. Before HB2, employees who asserted such state law claims for wrongful discharge had up to three years from the date of their discharge to file suit. The three-year statute of limitations allowed employees who missed their 180-day deadline for filing a charge with the federal Equal Employment Opportunity Commission to pursue wrongful discharge claims in state court.

The one-year statute of limitations not only knocks two years off the time in which employees may file wrongful discharge suits, but raises procedural issues for employees and their attorneys. With a three-year statute of limitations, employees could file a charge under federal law and wait for the EEOC to complete its investigation and issue a right-to-sue letter. Then, employees could bring suit simultaneously under federal and North Carolina law.

But many EEOC investigations do not conclude within one year. Thus, to comply with the one-year statute of limitations, employees will have to consider bringing suit under state – rather than federal – law when the EEOC has not yet concluded its investigation. Employees could later seek to add claims under federal law after the EEOC has issued a right-to-sue letter. Alternatively, employees could ask the EEOC to issue a right-sue-letter before concluding its investigation.

Attorneys for employees often seek to assert both state and federal law claims for discriminatory discharge because state law does not cap compensatory and punitive damages, while federal law limits such damages to $300,000 for the largest employers with lower limits for smaller employers. On the other hand, federal anti-discrimination law, unlike North Carolina law, awards attorneys’ fees to employees who prevail on their discrimination claims.

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