This is the first of two columns discussing U.S. Supreme Court decisions from the 2016-17 term impacting labor and employment law. This month we review rulings pertaining to protections for transgender individuals; the standard of review of a district court's decision to enforce or quash an Equal Employment Opportunity Commission (EEOC) subpoena; whether priority rules for Worker Adjustment and Retraining Notification (WARN) Act creditors apply in the context of a structured dismissal of a bankruptcy proceeding; and whether a state court rule that disfavors arbitration agreements violates the Federal Arbitration Act (FAA). While three of these cases did not arise in the labor and employment context, their dispositions have implications for employers.

Transgender Protections

In Gloucester County School Bd. v. G.G. ex rel. Grimm, 137 S. Ct. 369 (2016), the Supreme Court put off a major decision on transgender rights. The court remanded the case to the Fourth Circuit in the wake of the Trump administration's rescission of Obama-era guidance concerning protections for transgender students in public schools.

In Grimm, a local school board banned a transgender student who identified as male from using boys' restrooms at his high school. The student sued the school board for discrimination under Title IX of the Education Amendments Act of 1972, which prohibits discrimination on the basis of sex under any education program or activity receiving federal financial assistance. The Department of Education's regulations implementing Title IX permit the provision of separate toilets “on the basis of sex.” Since the student was biologically female, the district court concluded the school board's requirement that he use the girls' restrooms did not amount to discrimination under Title IX.

The Fourth Circuit reversed, finding the Department of Education's interpretation of its own regulation in an opinion letter dated Jan. 7, 2015 was entitled to deference under Auer v. Robbins, 519 U.S. 452 (1997). The opinion letter concluded that, if a school opts to separate students in restrooms on the basis of their sex, a school generally must treat transgender students consistent with their gender identity. In Auer, the court held an agency's interpretation of its own ambiguous regulation should be given controlling weight unless the interpretation is plainly erroneous or inconsistent with the regulation or statute. Because the language of the regulation at issue was susceptible to more than one plausible reading—with the phrase “on the basis of sex” potentially alluding to either biological sex or gender identity—the Fourth Circuit deferred to the Department's interpretation.