“Virginia Values Act” Devalues Virginia

by Hans Bader

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, housing, and public accommodations law. The media is not reporting this. It has reported only 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 blatantly false. The bill’s Impact statement describes its “Fiscal Impact” as “None” and says the VVA “presents no fiscal impact to Executive branch agencies.”

That is nonsense. The lawsuits authorized by the VVA are very costly. The VVA requires the state to pay more damages for discrimination, and makes it liable for more types of discrimination. That obviously costs money. A discrimination lawsuit by a single employee can easily cost a government employer hundreds of thousands of dollars, simply for emotional distress, even when punitive damages are not available. Class action discrimination lawsuits cost the government many millions.

The VVA also directly imposes costs on the state of Virginia by greatly expanding the administrative grievance process for discrimination claims.

The VVA passed the Virginia Senate Committee on General Laws by a 12-to-0 vote, with two Republicans abstaining, on January 29. And the House version of the bill, HB 1663, passed the House Committee on General Laws by a 15-to-6 vote on January 28, with all Democrats voting in favor. 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, in lawsuits brought by the Attorney General, it subjects employers to civil penalties as well.

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 is an attorney living in Northern Virginia. This post was originally published in Liberty Unyielding.