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INSIGHT: Masterpiece Cakeshop: Workplaces Will Be Healthier if Employers Fully Understand the Decision, the Law, and the Complexities of the Issues

June 22, 2018, 2:00 PM

On June 4, 2018, the Supreme Court issued its decision in Masterpiece Cakeshop, Ltd. and Jack C. Phillips v. Colorado Civil Rights Commission. The Court, in a 7-2 opinion authored by Justice Anthony Kennedy, held that the Colorado Civil Rights Commission (the “Commission”) displayed religious bias when it rejected a shop owner’s religious objection to making a wedding cake for a same-sex wedding. The Commission’s religious bias violated the shop owner’s constitutional right to the free exercise of his religion. The Commission was required to give the shop owner’s beliefs “neutral consideration.”

Employees may see only the headline that the cake maker won his case. This snippet may lead some to conclude that the Court agreed with his constitutional arguments that he had the right to refuse to make the cake. However, the Court did not address the question of whether the cake maker has a protected right to refuse to make cakes for same-sex weddings. That question was never reached by the Court.

Moving forward, employers may face questions from their employees about this case. Employees may incorrectly assume that they can now adjust their service obligation to customers whenever they want on the basis of their religious beliefs. Employers may also face questions about a manager’s obligation to ensure all customers are treated equally without regard to whether they are in a protected category. Lastly, employers may be concerned that managers may display religious bias when they receive religious-based requests for workplace accommodation. Employers should be prepared to address these questions from employees. The best way to do this is to understand what happened in this specific case, the current state of the law, and the complexities of the issues.

Facts of the case

This case began when a same-sex couple attempted to order a custom wedding cake from Masterpiece Cakeshop for their upcoming wedding celebration. The owner of the shop and cake designer refused to design the cake because it was for a same-sex wedding, based on his religious belief that marriage is between a man and a woman. The couple complained to the Commission, which enforces the state’s anti-discrimination laws. The couple argued that the cake shop was not legally allowed to refuse them services the shop would otherwise provide to someone of a different sexual orientation. The owner, on the other hand, argued that forcing him to design a cake for the wedding violated his right to free speech and right to practice his religion. The Commission sided with the couple. It held that Masterpiece Cakeshop was a business open to the public and, as such, was subject to the state’s public accommodations law. The state’s public accommodations law states that a business cannot treat a customer differently on the basis of sexual orientation. By refusing to design a cake for the couple’s wedding, the owner was thereby treating the couple differently on the basis of their sexual orientation. Thus, the business violated state law.

The legal arguments presented to the Supreme Court

The cake shop and cake maker appealed the decision all the way to the U.S. Supreme Court.

Their arguments were twofold. First, they argued that compelling the cake maker to create a cake for a same-sex marriage violated his rights under the free speech clause of the First Amendment of the U.S. Constitution. He argued that creating cakes is his artistic expression and therefore a form of speech. Compelling him to create “a rainbow-layered [wedding] cake” would be “ordering [the cake maker] to express or celebrate what he cannot in good conscience support.” (Brief for Petitioner at 17, 22, Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).)

Second, they argued that compelling the owner to create the cake violated his right to practice his religion under the free exercise clause of the First Amendment. They argued that making a cake for a wedding makes him an “active participant” in that wedding; therefore, the law cannot compel the cake maker to participate in an event his religion condemns, such as same-sex marriage. While the business would sell pre-made products to same-sex couples to use for whatever event they wish, the owner would not design a cake for a same-sex wedding.

The Commission and the couple responded to these arguments before the Supreme Court by citing legal precedent establishing that “discrimination is entitled to no constitutional protection.” (Brief for Respondent Colorado Civil Rights Commission at 15, Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).) They argued that the right to practice one’s faith and the right to free speech did not include the right to discriminate. If the business was allowed to refuse service on the basis of sexual orientation, then what was to stop other businesses from refusing services to other groups of people on the basis of their race, national origin, disability, etc. “[A] family portrait studio could enforce a ‘no Mexicans’ policy. A banquet hall could refuse to host events for Jewish people. A hair salon could turn away a lesbian woman who wants a new hair style because she will be attending a special event,” the brief stated. They also argued that designing a cake was neither a form of speech nor an act of participating in the wedding, challenging the owner’s constitutional arguments.

The law

Public accommodations laws in the United States forbid businesses open to the public from refusing to serve a customer on the basis of a protected category. They are important to businesses across the country and intersect with employment law. Federal laws requiring public accommodations began with the passage of the Civil Rights Act of 1964, which was passed primarily to eradicate racial segregation. Federal law prohibits businesses, such as restaurants, hotels and motels, and retail stores, from denying services to customers based on their membership in certain protected categories, including race, color, religion, or national origin. (42 U.S.C. § 2000a. There are similar prohibitions under the public accommodation provisions of the Americans with Disabilities Act.)

Although neither sex, nor sexual orientation, is currently a protected category under federal public accommodations law, 20 states and the District of Columbia include sexual orientation in their public accommodations statutes. Colorado is among those states.

Masterpiece Cakeshop is not the first time freedom of religion and freedom of speech collided with our nation’s public accommodations law.

Similar arguments were used by businesses in opposition to racial integration. For example, in 1964, in Katzenbach v. McClung, the Supreme Court held that public accommodations law required a family-owned barbecue restaurant in Alabama to serve black customers and white customers equally by allowing both races to eat in the same dining area. (379 U.S. 294 (1964).) A few years later the Supreme Court upheld Katzenbach and ruled in favor of a customer who was refused service at a restaurant because the restaurant owner’s religious faith supported racial segregation. The Supreme Court upheld the lower court’s rejection of the store owner’s argument that forcing him to treat black customers the same as white customers was unconstitutional because “it ‘contravenes the will of God’ and constitutes an interference with the ‘free exercise of the Defendant’s religion.’” (Newman v. Piggie Park Enters., Inc., 390 U.S. 400 (1968).)

In Katzenbach the Court highlighted the congressional intent behind public accommodations law. The law was intended to encourage interstate business because segregated areas “sold less interstate goods because of discrimination, that interstate travel was obstructed directly by it, that business in general suffered and that many new businesses refrained from establishing there as a result of it.” Perhaps the same market arguments still apply today, as businesses and states that do not enforce protections for LGBTQ customers may hinder rather than help commerce.

Despite this legal precedent, the U.S. Supreme Court’s past decision on same-sex marriage caused confusion when the Court was faced with Masterpiece Cakeshop. The Supreme Court specifically noted the potential that there might be difference of opinion regarding same-sex marriage in its decision of Obergefell v. Hodges, which legalized same-sex marriage under federal law in 2015. (135 S. Ct. 2584 (2015).) Chief Justice John Roberts referenced this conflict in oral arguments for Masterpiece Cakeshop: “the racial analogy obviously is very compelling, but when the Court upheld same-sex marriage in Obergefell, it went out of its way to talk about the decent and honorable people who may have opposing views.” (Transcript of Oral Argument at 73, Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).) In his majority opinion, Justice Kennedy discussed this conflict, noting that “religious and philosophical objections to gay marriage are protected views and in some instances protected forms of expression.” (Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).) There is no similar case holding protecting opposition to interracial marriage or racial integration, thereby causing confusion as to whether same-sex marriage, and thereby sexual orientation, is somehow different from other protected categories.

Justice Sonia Sotomayor, who along with Justice Ruth Bader Ginsburg dissented from the majority in Masterpiece Cakeshop, weighed in on the conflict found in Obergefell during oral argument. “Counsel, the problem is that America’s reaction to mixed marriages and to race didn’t change on its own. It changed because we had public accommodation[s] laws that forced people to do things that many claimed were against their expressive rights and against their religious rights.” (Transcript of Oral Argument at 100, Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).)

The decision

As noted above, the Court did not address whether the shop owner’s cake design was a form of speech or whether the couple’s request was forcing him to “participate” in their wedding. The Court also did not address the broader question of whether the couple’s protections against discrimination under Colorado public accommodations law took precedence over a business owner’s religious belief that marriage is between a man and a woman.

Instead, the Court held that the Commission did not provide “neutral and respectful” consideration of the business owner’s religious objections and displayed “impermissible hostility” toward his beliefs. The Court cited two aspects of the record to support its conclusion. First, the Court highlighted comments by members of the Commission during an open hearing, which it described as disparaging of the owner’s beliefs. For example, during one hearing the commissioner stated:

“I would also like to reiterate what we said in the hearing or the last meeting. Freedom of religion and religion has been used to justify all kinds of discrimination throughout history, whether it be slavery, whether it be the [H]olocaust, whether it be—I mean, we—we can list hundreds of situations where freedom of religion has been used to justify discrimination. And to me it is one of the most despicable pieces of rhetoric that people can use to—to use their religion to hurt others.” (Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).)

In addition to the Commission’s comments, the Court pointed to other situations in which the Commission had upheld other bakers’ conscience-based objections to providing service to customers who sought to create cakes that expressed religious disapproval of same-sex marriage. By upholding those objections and dismissing Masterpiece Cakeshop’s objections, the Court held that the Commission’s ruling impermissibly “elevates one view of what is offensive over another and itself sends a signal of official disapproval of [the cake maker’s] religious beliefs.”

Notably, while protecting the business owner’s right to a fair adjudication, the Court also went out of its way to emphasize the need to protect customers like the couple:

“Our society has come to the recognition that gay persons and gay couples cannot be treated as social outcasts or as inferior in dignity and worth. For that reason the laws and the Constitution can, and in some instances must, protect them in the exercise of their civil rights. The exercise of their freedom on terms equal to others must be given great weight and respect by the courts.” (Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).)

Ultimately, the Court concluded that the Commission did not fairly and impartially adjudicate the case. Thus, the Court held “the Commission’s treatment of [the cake maker’s] case violated the State’s duty under the First Amendment not to base laws or regulations on hostility to a religion or religious viewpoint.”

The emerging protected class: Sexual Orientation

It is important for employers to see this case in the context of recent LGBTQ jurisprudence, as this case comes at a time when two U.S. courts of appeal recently ruled that sexual orientation is a protected category under existing federal workplace anti-discrimination laws. In other words, courts are requiring employers to treat their employees equally, regardless of sexual orientation.

While some states include sexual orientation in their workplace discrimination laws, not all do. And while the Equal Employment Opportunity Commission (EEOC), the agency responsible for enforcing federal employment laws, has held that federal law prohibits discrimination against employees based on their sexual orientation, the question of whether sexual orientation is protected under federal law remains the subject of debate among the federal courts of appeal.

In February 2018, the Second Circuit became the second federal appellate court to hold that sexual orientation discrimination is prohibited by existing federal law. (Zarda v. Altitude Express, Inc., 883 F.3d 100 (2d Cir. 2018) (en banc).) The Seventh Circuit reached the same conclusion in 2017. (Hively v. Ivy Tech Cmty. Coll. of Indiana, 853 F.3d 339 (7th Cir. 2017) (en banc).) Based on these rulings, employees in New York, Connecticut, Vermont, Illinois, Indiana, and Wisconsin may bring claims for discrimination and harassment in the workplace under Title VII based on their sexual orientation. However, the Eleventh Circuit came to the opposite conclusion in 2017, leaving employees without such protections in Alabama, Georgia, and Florida. (Evans v. Georgia Reg’l Hosp., 850 F.3d 1248 (11th Cir. 2017), cert. denied, 138 S. Ct. 557 (2017).)

In Zarda, the Department of Justice (DOJ) filed an amicus brief on behalf of the federal government arguing that sexual orientation is not protected by workplace discrimination laws. This assertion added even more confusion for employers because the DOJ’s position stands in direct opposition to the stance of the EEOC. Indeed, a month before the DOJ filed its brief in Zarda, the EEOC argued that sexual orientation discrimination claims from employees “fall squarely within Title VII’s prohibition against discrimination on the basis of sex.”

These differing interpretations of federal law, like the underlying constitutional questions raised in Masterpiece Cakeshop, remain questions that eventually will be answered by the Supreme Court.

Justice Kennedy acknowledged as much by ending the Court’s opinion by stating:

“The outcome of cases like this in other circumstances must await further elaboration in the courts, all in the context of recognizing that these disputes must be resolved with tolerance, without undue disrespect to sincere religious beliefs, and without subjecting gay persons to indignities when they seek goods and services in an open market.” (Masterpiece Cakeshop, Ltd. v. Colorado Civil Rights Com’n, No. 16-111, 2018 BL 196091, __S.Ct.__ (2018).)

Until the Supreme Court weighs in, the degree to which discrimination based on sexual orientation will be covered by state and local public accommodations laws and whether discrimination based on sexual orientation in employment is prohibited under federal law will remain the subject of dispute in the courts.

What are businesses to do now?

This decision left employers wondering what they should take away from this case.

First, the best thing an employer can do when faced with a media-grabbing decision like Masterpiece Cakeshop is to fully understand the decision and the applicable public accommodations and employment laws in the jurisdiction(s) where they operate.

Second, if you are an employer that runs a business open to the public, then you have an obligation to follow state and federal public accommodations laws and ensure customers are treated equally across protected categories. Masterpiece Cakeshop did not change this obligation for businesses. Nor did it make room for an employee to refuse to serve a customer or treat a customer differently on the basis of sexual orientation. Managers and business owners have an obligation to ensure customers are treated equally.

Third, if an employee requests a religious accommodation, such as time out of the day to pray, permission to divert from the workplace uniform, or to not be required to engage in providing services to support a same-sex wedding, that request should be given adequate consideration. Such a request should be evaluated, and the employer should identify some potential alternative accommodations. Before acting on the request, the employer should also assess whether the request would conflict with other workplace or public accommodations laws or potentially create a hostile work environment for other employees. The process by which the request is considered can be as important as the ultimate decision from the employer regarding whether it can accommodate the request.

Fourth, employers should keep an eye on sexual orientation as an emerging protected category. Employers may create an internal policy prohibiting sexual orientation discrimination in the workplace, protecting both employees and customers. State law may also prohibit such discrimination, depending on the location of the business. Lastly, the Supreme Court may soon weigh in on whether it agrees with the EEOC and Second and Seventh Circuits that sexual orientation is covered by federal employment laws or whether the analysis of the Eleventh Circuit and the DOJ is correct. Since sexual orientation is emerging as a protected category, it is important for employers to train their workforces to ensure employees treat co-workers and customers fairly and respectfully, regardless of sexual orientation.

Finally, employers and businesses should establish a reporting mechanism that allows both employees and customers to bring concerns about unfair treatment to the business owners’ attention. Such a reporting structure will allow business owners to address and potentially resolve any issues that might arise in their workforces or between their employees and their customers.

The takeaway?

The intersection between public accommodations and equal treatment on the one hand, and religious freedom and expression on the other, will continue. As a result, business owners and employers will need to tread carefully to make sure all employees and partakers in their services are treated with respect.

Author Information

Denise Visconti and Emily Haigh are attorneys at Littler Mendelson P.C. Denise is based in San Diego and Emily is based in New York City. Both are employment law litigators. Denise also regularly counsels clients on sexual orientation and gender identity related issues in the workplace. Emily regularly trains managers on anti-discrimination laws.

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