Commentary

Virginia Values Act Would Absolutely Cripple Businesses

By Hans Bader | January 30, 2020 | 4:46pm EST
This businessman is ready for rainy weather. (Photo credit: TOLGA AKMEN/AFP via Getty Images)
This businessman is ready for rainy weather. (Photo credit: TOLGA AKMEN/AFP via Getty Images)

The so-called “Virginia Values Act” has been approved by key committees of the Virginia legislature, aided by blatantly inaccurate claims. The VVA will revolutionize Virginia discrimination law, turning what once was a pro-business state into an anti-business state, in key areas of employment law. The media is not reporting this. It has only reported on the fact that the VVA will add “sexual orientation” and “gender identity” to state discrimination laws.

But the legislation changes Virginia’s discrimination law as a whole, for discrimination cases of all kinds — not just discrimination against gay and transgender people. For example, it provides for unlimited punitive and compensatory damage awards against companies that lose any type of discrimination lawsuit. It also expands state employees’ ability to sue the state of Virginia for money, which will come at a cost to taxpayers.

Yet, the Senate bill containing the Virginia Values Act, SB 868, claimed it has no cost. That’s breathtakingly dishonest. The bill’s Impact Statement describes its “Fiscal Impact Estimates” as “None” and says the VVA “presents no fiscal impact to Executive branch agencies.”



 

The VVA also directly imposes costs on the state of Virginia by greatly expanding the administrative grievance process for discrimination claims. So it clearly does have a cost.

The VVA passed the Virginia Senate Committee on General Laws by a 12-to-0 vote, with two Republicans abstaining, on Wednesday. And the House version of the bill, HB 1663, passed the House Committee on General Laws by a 16-to-6 vote on Tuesday, with all Democrats voting in favor of it. These lopsided votes suggest it will likely pass the legislature as a whole.

The VVA creates a disturbing conflict of interest. It empowers the state attorney general to sue not just private employers, but also public employers — including the state itself — for discrimination. But it is the attorney general’s job to represent state agencies, not to sue them.

The lopsided votes in favor of the VVA are surprising given that it contains provisions that have been rejected in other states not just by conservatives, but even by liberals. For example, Washington State is a liberal bastion where Democrats control all three branches of the government. Yet Washington law, unlike the VVA, does not impose punitive damages in discrimination cases, only compensatory damages. (Punitive damages can be 70 times the size of a compensatory damage award).

Amazon chose to locate new facilities in Virginia rather than Washington State in 2018, apparently based on the assumption that Virginia had a better business climate than Washington. Maybe it did back then. But if the VVA is enacted, that will no longer be the case.

Indeed, the VVA is at least as anti-business as the discrimination statutes of anti-business states that other companies in Virginia fled from, such as California. Like California law, the VVA awards  unlimited punitive and compensatory damages against employers. But it is more hostile to employers than California law, because it subjects employers to civil penalties as well, in lawsuits brought by the state attorney general.

The VVA is also more anti-business than California law in the way it awards attorney fees.  Under the VVA, the court can only “award a prevailing plaintiff reasonable attorney fees and costs.” Not a prevailing defendant — like a business that was found not guilty by a jury. So if the plaintiff brings a totally groundless lawsuit, and forces an innocent business to spend $250,000 defending itself, the business is not reimbursed a penny for its legal expenses under the VVA.

By contrast, in California, the employer can be awarded its legal expenses if it shows the lawsuit was groundless. That’s because California’s Fair Employment and Housing Act provides that an employer is entitled to be compensated for its legal bills if “the court finds the action was frivolous, unreasonable, or groundless when brought, or the plaintiff continued to litigate after it clearly became so.” (That is the same standard used by the U.S. Supreme Court in federal civil-rights cases).

The VVA lacks even these minimal protections against groundless lawsuits brought to extort money from employers.

Hans Bader practices law in Washington, D.C. After studying economics and history at the University of Virginia and law at Harvard, he practiced civil-rights, international-trade, and constitutional law. He also once worked in the Education Department.



 

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