Two things. First, if they knew he was gay when they hired him what's the problem? Secondly, if they are receiving any tax dollars they have to follow the law.
they thought he meant happy, turns out this was one big misunderstanding.
things got out of hand when he said pass me a fag. it's a communication thing. also, they aren't receiving your tax dollars per se, in a sense your money is certainly allocated in a lump fashion, not heterogeniusously spent in proportion sense.