Fifth Circuit Interprets Title VII's National Security Exception

Practical Law Legal Update 3-527-1725 (Approx. 5 pages)

Fifth Circuit Interprets Title VII's National Security Exception

by PLC Labor & Employment

Key Litigated Issues

In Toy v. Holder, the key litigated issues were whether a worker's sex discrimination claims under Title VII were barred by:

Title VII's national security exception, which excludes employment actions based on national security considerations from the definition of unlawful employment practice.
The US Supreme Court's decision in Department of the Navy v. Egan that courts may not review decisions to grant or deny access to sensitive information made by the executive branch of the government.

Background

Bobbi-Anne Toy was employed by DynCorp, an independent contractor, to work as a data and intelligence analyst at an FBI regional office in Beaumont, Texas. While there, she received commendations and positive reviews and was given a conditional offer of employment with the FBI. After the director of the Beaumont office changed, however, the new director made several complaints about Toy, including that she had:

Participated in undercover operations without approval.
Falsely held herself out as an FBI employee.

Although Toy denied these allegations, her direct supervisor revoked her access to the Beaumont office and purported to revoke her security clearance. In addition, DynCorp terminated Toy's employment, and the FBI revoked her conditional offer of employment.

Toy sued the federal government under Title VII's sex discrimination provisions, alleging that the FBI's revocation of her building access was tantamount to termination and was motivated by her sex. Although the suit was brought against the federal government rather than her employer, Toy argued, and the government did not dispute, that she was an FBI employee for purposes of Title VII because her work was controlled by FBI personnel.

The government argued in response that, under a statutory exception to Title VII, it is not unlawful for an employer to terminate an employee where the employee's position, or access to the premises where the position is performed, is subject to a security-related requirement under a statute or executive order (EO) that administers a national security program (42 U.S.C. § 2000e-2(g)).

The district court granted the government's motion to dismiss, concluding that Toy's claims were barred by:

Title VII's national security exception.
The executive branch's power to revoke access to secure information as outlined in Egan.

Outcome

On April 29, 2013, the US Court of Appeals for the Fifth Circuit issued a decision affirming the district court and holding that:

The national security exception to Title VII applies where granting or revoking access to the premises of a secure location is related to national security, and therefore Toy's Title VII claims are barred by this exception.
Egan only applies to security clearances and therefore does not bar Toy's Title VII claims.

Title VII's National Security Exception

The Fifth Circuit explained that Title VII's national security exception applies where granting access to the premises of a secure location is related to national security. Noting that the case clearly involved "access to the premises" under this exception, the Fifth Circuit further explained that the key question in this case is whether that access is subject to any applicable statute or EO that administers a national security program. The Fifth Circuit interpreted "national security program" to mean any set of regulations related to matters of national security, provided that there is a specific statute or EO requiring or implementing these regulations.

In Toy's case, the Fifth Circuit identified two security-related EOs that pertained to her building access, including:

EO 12829, which establishes the National Industrial Security Program and states that federal contractors are subject to the same security requirements as members of the executive branch.
EO 12968, which provides that agencies may grant or deny, in their discretion, facility access approvals where employees might be exposed to classified information inadvertently.

In light of these national security programs, the Fifth Circuit concluded that Title VII's national security exception applied to Toy's building access revocation, and that review of her Title VII claims is therefore barred.

Executive Control of Access to Classified Information

The Fifth Circuit also held that Egan does not bar Toy's claims because it applies only to security clearances. In Egan, the US Supreme Court held that protection of classified information is committed to the broad discretion of the agency responsible for it, and that courts may not review decisions to grant access to sensitive information made by the executive branch.

Although the district court concluded that a security clearance is essentially identical to building access, the Fifth Circuit rejected this reasoning, noting that:

Unlike building access, which may be revoked by a supervisor, security-clearance decisions are made by specialized groups of persons and pursuant to processes that permit deliberate and predictive judgments.
No court has extended Egan beyond security clearances.

Given the different protocols, processes and level of oversight related to security clearance and building access decisions, the Fifth Circuit concluded that Egan does not bar Toy's claims.

Practical Implications

As the first federal circuit court decision to address the scope of the national security exception under Title VII, Toy v. Holder helps to clarify for employers the circumstances in which the exception will operate to bar workers' Title VII claims. Although Toy sued the federal government, the Fifth Circuit's holding also appears applicable to government contractors when an employee's access to the premises of a secure location is related to national security. In defending Title VII cases, government contractors should consider asserting Title VII's national security exception as a defense, if supported by the facts of the case.

Fifth Circuit Interprets Title VII's National Security Exception | Practical Law