Fifty major companies, including Microsoft Corp., Google Inc. and S&P Global Inc., urged a New York federal appeals court Monday to embrace sexual orientation protection under civil rights laws, arguing that discrimination against gay and lesbian workers “takes a heavy toll” on bottom lines.

The companies, in their amicus brief, joined more than a dozen groups that are backing the employee in the case, now pending before the full U.S. Court of Appeals for the Second Circuit in New York.

Other groups that wrote briefs supporting the plaintiffs in the case—Zarda v. Altitude Express—include the U.S. Equal Employment Opportunity Commission, the American Civil Liberties Union and several women's and LGBT rights organizations. Distinct from the other arguments, the companies made the business case for protecting its gay and lesbian workers against discrimination. Freedom for All Americans organized the companies' amicus brief.

“There is no truth to the notion that laws forbidding sexual orientation discrimination are unreasonably costly or burdensome for business,” the brief, filed by a team from Quinn Emanuel Urquhart & Sullivan, said. “To the contrary, recognizing that Title VII prohibits sexual orientation discrimination as a form of sex discrimination would strengthen and expand benefits, such as the ability to recruit and retain the top talent; to generate innovative ideas by drawing on a greater breadth of perspectives, characteristics, and experiences; to attract and better serve a diverse customer base; and to increase productivity among employees that feel valued, comfortable and respected.”

The Second Circuit is poised to take up the dispute, for a second time, in the wake of a recent federal appeals court ruling in the U.S. Court of Appeals for the Seventh Circuit that said discrimination against employees on the basis of sexual orientation violates the Civil Rights Act. That ruling was hailed a landmark decision by gay rights advocates. A three-judge panel in the Eleventh Circuit, ruled that the Civil Rights Act does not include protections for gay or bisexual employees.

In the Second Circuit case, Donald Zarda, a skydiver, filed suit against his former employer Altitude Express arguing that he was fired from his job because he disclosed his sexual orientation to a client. The district court ruled for the employer and held that Title VII does not protect against discrimination based on sexual orientation. A three-judge panel of the Second Circuit upheld the ruling. The full court's decision to rehear the case voided the panel opinion.

The EEOC, similar to many of the friend-of-the-court arguments, said sexual orientation should fall under federal civil rights protections that do not allow discrimination against sex. The agency, charged with enforcing Title VII Civil Rights laws, said the claims against the company involve gender-based stereotyping and gender-based discrimination.

Observers and studies show in recent years major companies have already adopted workplace policies that protect gay workers. In the courts, however, the decisions have been split.

Paul Smith / Featureflash

The brief filed by the major companies, many of which technology-based companies, cites studies that show positive economic outcomes, including better productivity and maintaining diversity on staff. Such measures could help companies take advantage of the “$900 billion” in buying power estimated among the LGBT community in the United States. Other companies that signed the brief included Dropbox Inc., Ben & Jerry's, Edelman, Kickstarter and Levi Strauss & Co.

The companies' amicus brief noted that in a survey of the top 50 Fortune 500 companies and the top 50 federal government contractors, the majority of the companies connect policies prohibiting sexual orientation discrimination with a better bottom line. It also argued that a patchwork of state and local regulations around the country puts some companies in a difficult position. Clarity on a federal level would be helpful for business, lawyers for the companies argued.

“The failure of nondiscrimination protections to include LGBT employees takes a heavy toll on businesses' bottom lines and, in the aggregate, hurts economic growth,” Quinn Emanuel's Todd Anten wrote in the brief. “The U.S. economy could save as much as $8.9 billion by protecting and welcoming LGBT employees in the workplace—more than any other country.”

The Human Rights Campaign, which provides an equality index to examine whether employers protect LGBT workers, shows in its annual reports that most Fortune 100 companies adopted policies to provide equal protections for gay and lesbian workers.

The 2017 report saw the largest increase in businesses in the history of the survey, 515 employers, earning perfect scores. Businesses offering transgender inclusive health care coverage also jumped from 511 to 647 companies over the year.

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