This is a RUSH transcript from "The O'Reilly Factor," October 27, 2009. This copy may not be in its final form and may be updated.

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BILL O'REILLY, HOST: In the "Unresolved problem segment" tonight: There's a huge controversy in New Mexico involving a hotel owner and Spanish-speaking employees. Protesters are angry, accusing 63-year-old Larry Whitten of discriminating against Hispanic workers at his hotel in Taos. Whitten fired employees who wouldn't follow his rules, which include no speaking Spanish in front of him and even Anglicizing their names, asking, for example, Marcos to call himself Mark. The hotel boss is defending his management style and denying any racism.

Joining us now from Chicago is a woman who's very upset about this, attorney Jennifer Smetters.

There's no — there's no doubt this is reprehensible. You don't ask an American citizen whose name is Marcos to change his name to Mark. That's degrading, demeaning. It is unacceptable.

JENNIFER SMETTERS, ATTORNEY: Absolutely.

O'REILLY: However, the law, in some of these things, is on this guy Whitten's side, because he has the right, according to the Equal Employment Opportunity Commission, Jennifer, that he can say, "You've got to speak English, because my business is going to suffer if you don't." What say you?

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SMETTERS: Right. Well, you are correct there. I think we do agree about this gentleman's behavior. And the EEOC does say that an employer can conduct his business in a certain way and have an English-only standard. However, there are exceptions to that rule, and I believe exceptions to the rule apply here. One, there has to be a safety issue for the English-only, and also there's an exception that says — has to go to efficiency of the business. Now, what we have here is a gentleman who doesn't want anything but English spoken in his presence. To me, that says he has a cultural bias. It's not about efficiency.

O'REILLY: Well, he says — he says he doesn't want Spanish in his presence because he doesn't understand the language, and he fears that the employees are being disrespectful. But let me — let me read you the EEOC's ruling, because this is fascinating to me. This is really interesting.

"Some situations in which business necessity would justice an English-only ruling include communications with customers," — and certainly in a hotel, that would be the case — "co-workers" — he's a coworker, even though he's the owner. He's a coworker. — "or supervisors who only speak English." He's obviously a supervisor, so...

SMETTERS: Here is the thing.

O'REILLY: Go ahead.

SMETTERS: Communication with him — if they're communicating with him, I don't think his employees would be so offensive as to communicate with him in another language. They want to express a thought. They're going to communicate in the proper way. But if they're not communicating with him — he just doesn't want Spanish spoke — to have any Spanish in front of him, because he is afraid of what they're saying.

Look, I'm an employer. People — people are going to talk about their boss behind their back or sometimes in front of them, quite frankly. This man cannot be the moral police for his employees, and at the same time really cut to the core of their personal integrity by asking them to change their name.

O'REILLY: We don't — we agree on that.

SMETTERS: And by the law — he shows a bias.

O'REILLY: Look, he says that he isn't bigoted because he hires Hispanics.

SMETTERS: No.

O'REILLY: That's what he says. I'm just saying what he says. He says he's not a bigot, because he hires Hispanics. He pays them well. He treats them well. And since all this controversy, he's had to lay off — 11 people have lost their jobs. That's what he says.

SMETTERS: The controversy, Bill — but Bill, here is the controversy. The controversy is, this man came in, bought a hotel, in which these employees — and some of them were family members — had been working there for a long time. Came in and said, "This is the way I'm going to run things." And there's no basis for it but his own personal preference. And I think that's where the EEOC has a little bit of wiggle room here to say, "Now, wait a minute, sir. Are you expressing a cultural bias here? And are you having hiring and firing decisions, employment decisions on the basis of national — their national origin?" And I think there is a national origin...

O'REILLY: Well, they have to prove that. And I don't know. I don't know what the guy is doing. I just found it fascinating that, look, there's no excuse, and I think he's going to get in big trouble by, as we said, telling a guy named Marcos, "Hey, your name is now Mark." That's — you can't — no.

SMETTERS: We wouldn't tolerate that from IBM or any other company.

O'REILLY: That should not be tolerated in the United States. Should not be tolerated.

SMETTERS: Absolutely.

O'REILLY: OK? So he can't defend it. He can't defend it. It's indefensible. But he can defend: "I'm the owner of the hotel. I employ these people, so obviously, I'm not bigoted, because I wouldn't hire them in the first place if I were. And I want an English-only, because I believe that my business will be better run with English, which is the language of America, being spoken."

SMETTERS: But he...

O'REILLY: I think he — I don't know if he's going to get in trouble for that. I'll give you the last word.

SMETTERS: With all due respect, he's gone on the record. There was a YouTube statement that he made, saying he doesn't mind if his employees speak Spanish with other Spanish customers. Just not in front of him. I think that's a bias.

O'REILLY: All right. Counselor, thanks very much. We appreciate it.

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