On June 15, 2020 the U.S. Supreme Court (SCOTUS), in Bostock v Clayton County, Georgia (Bostock) ruled that firing an employee for being homosexual or transgender constitutes discrimination based on the employee’s sex in violation of Title VII of the Civil Rights Act.
Bostock is an employment case in which SCOTUS determined that disparate treatment of homosexual or transgender individuals is sex discrimination. Both the Equal Credit Opportunity Act (ECOA) and the Fair Housing Act (FHA) prohibit discrimination based on sex. How long will it be before we see a lending discrimination case based on the disparate treatment of homosexual or transgender individuals? Action could also be taken by regulators.
SCOTUS reasoned that firing an employee based on the employee’s sexual orientation is discrimination based on sex because the employer’s treatment of the employee is based on traits that the employer would have tolerated if the employee was of a different sex. For example, an employee is fired because he is a man who is either attracted to other men or identifies as female, the employer has discriminated against him for traits or actions it would tolerate in an employee who is a woman (i.e., attraction to men or female identification). As a result, in the majority’s view, the employer has fired the employee based on the employee’s sex.
- ECOA states it is “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract).”
- FHA declares it is “unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.”
- The Consumer Financial Protection Bureau’s website and its publication Helping Consumers Understand Credit Discrimination state, “Currently, the law supports arguments that the prohibition against sex discrimination also affords broad protection from discrimination based on a consumer’s gender identity and sexual orientation.”
- Several state laws already prohibit discrimination in credit transactions on the basis of sexual orientation.
Every financial institution should assure that ECOA and FHA policies and procedures prohibit discrimination based on sexual orientation.