In a groundbreaking ruling released recently, Unknown v. Anthony Foxx, the U.S. Equal Employment Opportunity Commission confirmed that allegations of sexual orientation discrimination necessarily state a claim of sex discrimination under Title VII of the Civil Rights Act of 1964 (Title VII).

In doing so, the EEOC acknowledged that Title VII does not explicitly list sexual orientation as a prohibited basis for employment actions. According to the EEOC, however, this is not the end of the inquiry. Rather, the agency clarified that “Title VII’s prohibition of sex discrimination means that employers may not ‘rely upon sex-based considerations’ or take gender into account when making employment decisions” (internal citations omitted). The EEOC went on to find that “sexual orientation is inherently a ‘sex-based consideration.’ ” Consequently, sexual orientation discrimination is sex discrimination.

This decision is not altogether surprising after the EEOC’s 2012 ruling in Macy v. Holder. In that case, the EEOC found that Title VII’s prohibition on sex discrimination extends to prohibit discrimination based on transgender status, gender identity and gender transitioning. In addition, long before this ruling, the U.S. Supreme Court held in Price Waterhouse v. Hopkins that Title VII bars not just discrimination because of biological sex, but also gender stereotyping. However, the Unknown decision was still not issued without objection, as only three of the five commission members approved the ruling.

What this means for employers

As discussed above, Title VII does not explicitly list sexual orientation as a protected characteristic. In addition, several courts have held that Title VII does not in fact prohibit sexual orientation discrimination or harassment on the basis of sexual orientation. Only the U.S. Supreme Court could issue a definitive decision on this issue.

However, EEOC decisions are typically given a fair to significant amount of deference by federal courts, so employers could very well start to see a shift in the way courts are evaluating allegations of sexual orientation discrimination. Similarly, state human rights agencies and state courts may begin to consider the EEOC’s ruling in their investigations and determinations.

To minimize associated risk, employers would do well to assume that sexual orientation will be treated as a protected characteristic going forward and modify their policies, practices and training accordingly. Employers should likewise prepare for an influx of sexual orientation discrimination claims as plaintiffs’ attorneys begin to test how federal and state courts will respond to the EEOC’s ruling.