LaRock: SOGI Laws Signal End For Woman Owned Business Exemptions

larock_daveAt face value, Senator Adam Ebbin’s proposed SB 12 in the 2016 session of the Virginia General Assembly seeks to redefine the prohibitions to discrimination spelled out in the Virginia Constitution and Virginia laws to include the terms Sexual Orientation and Gender Identity (SOGI). This action would wreak havoc on the distinctions between sexes that Virginia currently makes, particularly in the administration of woman-owned businesses. As Ebbin’s bill makes rabid headway in the Virginia legislature (as of February 1st, it has already passed the Senate by a vote of 25-15), it is becoming critical that Virginians understand the impact that proposals like these will have on our business environment.

SOGI laws ignore biological identity as designated at birth. Instead, deciding who falls into classifications of sex would be arbitrary and self-defined. If, for example, a biological male would assert that he is a female for the purposes of seeking preferential business treatment, it would be legally impossible for a state worker to question this assertion – not even a birth certificate could be drawn to bear to establish an individual’s “true” sex.

Revising policy to rely on a person’s perceived sex in Virginia would create unmanageable situations; for example, incarcerated men could self-identify as women and demand to be moved to women’s facilities or even to have state-funded gender-reconstructive surgery performed on taxpayer’s dime. The complications imposed by SOGI laws on the DMV and vital records, use of school facilities, school athletics and medical records, just to name a few, would impose some extraordinary challenges.

Furthermore, passing SOGI protections would hinder business development in Virginia by undermining both the Dillon Rule and Employment-at-Will. These proposed SOGI laws circumvent the letter and intent of the Dillon Rule by effectively forming policies that are more restrictive than the Virginia Constitution. SOGI laws go counter to Employment-at-Will laws by triggering The “Public policy exemption” to Employment at-Will which applies to discharge in violation of the state’s public policy doctrine. Virginia case law states that if a public policy is in place to protect a specific class, this protection must be applied in the business world even if the law doesn’t explicitly grant that protection in the private sector. This would block even a private employer from terminating an employee on the basis of gender identity or sexual orientation.  Certain businesses and employers such as daycare centers or churches would be devastated by this form of regulation.

Perhaps the hardest hit by SOGI laws, though, would be woman-owned businesses. If Virginia’s government is no longer allowed to factor in biological reality when verifying that a woman-owned business is actually woman-owned, the classification itself will become meaningless and the Commonwealth’s attempt to help these businesses will collapse.  

To understand the effect of SOGI policy on woman-owned businesses in Virginia, one need only look at the failing federal model for managing these set-aside programs.

Why is the federal effort to give woman-owned business a boost riddled with fraud? Quoting Margot Dorfman, CEO of the U.S. Women’s Chamber of Commerce from PR Newswire, “The U.S. Women’s Chamber of Commerce was alarmed to find the GAO reported that more than 40% of woman-owned set-aside contracts were awarded to ineligible firms in FY 2012 and 2013”. The outlook for improvement is not good, quoting the same article, “…the GAO report also reveals the US Small Business Administration (SBA) is doing very little to prevent ineligible firms from attesting their status as woman-owned in the federal database of contractors…”

This is not rocket science. Enforcement of federal woman-owned programs is impossible given federal policy which ignores biological realities of the words woman and female, ie. The U.S. Department of Justice says, “Gender identity is the individual’s internal sense of being male or female”. Similarly, The U.S. Office of Personnel Management reference materials say: “Gender identity is the individual’s internal sense of being male or female.”  Recent audits of federal woman-owned businesses have uncovered massive fraud and waste of hundreds of millions of taxpayer dollars and a failure to meet goals of stimulating development of woman-owned businesses. The federal government’s misguided SOGI policies make it virtually impossible to limit fraud in these programs.

In contrast, Virginia woman-owned business participation without SOGI laws or government policies is soaring. Recently, the results of research on woman-owned businesses in Virginia were released in an Associated Press article on November 5, 2015. Economist Christine Chmura said, “ Woman-owned businesses (in Virginia) are increasing at four times the pace of total firm growth in the state, adding employees at nine times the pace of total employment growth in the state, and account for 36 percent of all firms in Virginia. In terms of revenue, woman-owned firms in Virginia will generate an estimated $57.2 billion this year…”   

The challenges to enforcement of eligibility of woman-owned firms could be amplified tenfold by policies like Senator Ebbin’s. SOGI laws at the federal level act to prevent a reality-based evaluation of the sex of business owners. A 2014 report from the (US) Small Business Administration said federal agencies handed out more than $400 million to ineligible firms in 2013 alone. If owners are permitted to simply identify as women, eligibility enforcement will become meaningless.

Keep in mind, businesses thrive when rules are clear and uniform. Frivolous claims of discrimination against Virginia businesses, schools, and governments would abound if these ridiculously under-defined terms were brought into law.

SB 12, Governor McAuliffe’s Executive Order 1, and Attorney General Herring’s Advisory Opinion 14-080 are all closely involved in running this short sighted anti-business play in Virginia by seeking to advance SOGI laws and policies.

If there is a method behind this social re-engineering it could be that Governor McAuliffe is trying to crowd out or set aside programs targeted at helping women to make room for new incentives directed at increasing the number of gay and transgender-owned businesses in Virginia.

Common sense observation makes it clear SOGI laws act as a deterrent to business development, waste taxpayer dollars, and would infringe on rights of the vast majority of Virginians if passed.


Delegate Dave LaRock represents the 33rd House of Delegates district.