A Project of The Annenberg Public Policy Center

Spinning ENDA


House Speaker John Boehner announced his opposition to a bill that would prohibit workplace discrimination based on sexual orientation or gender identity with a statement from his spokesman saying the bill “will increase frivolous litigation and cost American jobs, especially small business jobs.” But the facts suggest there’s not as much to these claims as Boehner lets on.

Boehner’s office points to a Congressional Budget Office forecast that says the legislation, the Employment Non-Discrimination Act (ENDA), would lead to a 5 percent bump in discrimination cases — which is about 5,000 new cases per year. But it does not say what percentage of them may be deemed “frivolous.”

A report released by the General Accounting Office in July found “relatively few employment discrimination complaints based on sexual orientation and gender identity” in states that have already enacted laws prohibiting such discrimination. A study by the Williams Institute at UCLA found workplace complaints based on sexual orientation were made at about the same rate as complaints based on race or gender.

As for Boehner’s claim that ENDA would “cost American jobs, especially small business jobs,” that may well be the outcome in some isolated cases, but the law specifically applies only to companies with 15 or more employees — which exempts nearly 90 percent of all small businesses (and nearly a third of those employed in businesses with under 500 employees).

Most large companies already have policies prohibiting discrimination based on sexual orientation, and a Williams Institute study found that most of the top 50 Fortune 500 companies state that diversity policies are “good for their business” and “improving their bottom line.” Notably, neither the U.S. Chamber of Commerce nor the National Small Businesses Association is opposing ENDA.

ENDA — a bill which has been unsuccessfully proposed for years — gained some momentum on Nov. 4 when 61 senators — 52 Democrats and seven Republicans — voted to move forward with debate on it. Supporters’ enthusiasm was tempered, however, when Speaker Boehner immediately announced his opposition to the bill, which makes it unlikely to advance in the House.

Explaining the speaker’s opposition, Boehner spokesman Michael Steel said, “The Speaker believes this legislation will increase frivolous litigation and cost American jobs, especially small business jobs.”

Asked for backup for the claims, Steel pointed to a report on the bill from the nonpartisan Congressional Budget Office, which estimates ENDA would cost $47 million, mostly for the Equal Employment Opportunity Commission to hire 110 new employees to handle additional discrimination cases. Specifically, the CBO projects the law would increase the EEOC’s caseload of about 100,000 cases by 5 percent (so an additional 5,000 cases per year). The CBO does not say what percentage of those cases could be deemed “frivolous.”

Steel stated to us via email: “We are concerned the bill creates a new right of action based on vague, undefined language that does not exist elsewhere in federal non-discrimination law. It will undoubtedly lead to an increase in lawsuits, as indicated by the CBO report.”

That has not been the case, relatively speaking, in the states that have already passed laws prohibiting discrimination based on sexual orientation. On July 31, the Government Accountability Office released a report that found “the administrative complaint data reported to us by states for 2007 through 2012 show relatively few employment discrimination complaints based on sexual orientation and gender identity.”

A 2011 study by the Williams Institute found that rates of filing administrative complaints based on sexual orientation were very similar to those based on race or gender — about three to six for every 10,000 workers in that protected class.

“Is there going to be a flood of complaints? We haven’t seen that,” Brad Sears, executive director of the Williams Institute, and one of the authors of the study, told us in a phone interview. “It’s been in line with other bases of discrimination.”

As for the claim that ENDA will “cost American jobs, especially small business jobs,” Steel said that is based upon the cost to companies to defend against lawsuits.

“Obviously, many private employers will face additional costs as well, and those costs will lead to job losses. (Especially for small businesses that cannot afford the legal fees),” Steel wrote to us in an email.

Certainly there could be economic cost to some companies to defend themselves against complaints of discrimination based on sexual orientation or gender identity. But Steel’s claim about its effect “especially” on small businesses comes with a significant qualifier: The bill specifically applies only to companies with 15 or more employees (see page 22). That exempts about 87 percent of all small businesses (those with under 500 employees). Nearly a third of all those employed in small businesses are employed in businesses with fewer than 15 employees.

Most large businesses already have such discrimination policies. According to the Human Rights Campaign, a chief proponent of ENDA, 88 percent of Fortune 500 companies have sexual orientation non-discrimination policies and 57 percent have gender identity non-discrimination policies.

A 2011 study by the Williams Institute looked at the statements issued by the top 50 Fortune 500 companies and top federal government contractors when adopting non-discrimination policies, and most reported the policies were “good for their business” and “improv[ed] the bottom line.”

Williams Institute, October 2011: Overall, we find that almost all of top 50 Fortune 500 companies and the top 50 federal government contractors (92%) state that, in general, diversity policies and generous benefit packages are good for their business. In addition, the majority (53%) have specifically linked policies prohibiting sexual orientation and gender identity discrimination, and extending domestic partner benefits to their employees, to improving their bottom line.

While Steel cited the cost of defending against discrimination lawsuits as the basis for loss of jobs, ENDA proponents argue there is also a cost to workplace discrimination. A 2007 study conducted by the Level Playing Field Institute, a San Francisco-based nonprofit, estimated annual losses of $64 billion associated with losing and replacing more than 2 million workers who leave their job each year due to unfairness and discrimination (of any kind, not just on the basis of sexual orientation or gender identity). We could find no economic analysis that explored the number of jobs that might be gained or lost specifically due to ENDA.

Business groups that look out for the interests of small businesses — the U.S. Chamber of Commerce, the National Small Business Association, the Business Roundtable and the National Federation of Independent Business — all have taken a neutral position on ENDA.

“We have talked about it, but it’s not one of the things at the top of our list that we’re really concerned about,” NSBA spokeswoman Molly Brogan Day told us in a phone interview.

Correction, Nov. 7:  The original version of this story referred to the National Small Business Association (NSBA) by the incorrect name.

— Robert Farley