On July 28, 2016, the United States Court of Appeals for the Seventh Circuit, unequivocally reaffirmed that Title VII of the Civil Rights Act of 1964 does not prohibit discrimination based on sexual orientation. In Hively v. Ivy Tech Community College, the Court made clear that, while it does not condone employment discrimination based solely on who an employee dates, loves or marries, Title VII nevertheless provides no protection for sexual orientation discrimination.

In Hively, Plaintiff Kimberly Hively filed a charge of discrimination with the Equal Employment Opportunity Commission ("EEOC"), claiming that she had been blocked from full-time employment without just cause on the basis of her sexual orientation. Hively had begun teaching as a part-time adjunct professor at Ivy Tech Community College in 2002. According to Hively, she had the necessary qualifications for a full-time employment and had never received a negative evaluation, but the college refused even to interview her for any of the 6 full-time positions for which she applied between 2009 and 2014. Moreover, the college did not renew her part-time employment contract in July 2014. Hively alleged that the college's actions constituted discrimination on the basis of sexual orientation. After exhausting her administrative remedies at the EEOC, Hively filed her Title VII claim in the U.S. District Court. The college's defense was that Title VII does not apply to claims of sexual orientation discrimination. The District Court agreed with the college and dismissed Hively's case.

Rather than make short shrift in affirming the dismissal of Hively's case, the Court felt that an in-depth analysis was warranted in light of the EEOC's 2015 decision inBaldwin v. Foxx, where it concluded sexual orientation is inherently a "sex-based consideration." The EEOC came to the conclusion for three primary reasons. First, it found that sexual orientation discrimination necessarily entails treating an employee less favorably because of the employee's sex. Second, it constitutes a form of associational discrimination on the basis of sex as an employer orientation discrimination necessarily entails treating an employee less favorably because of the employee's sex. Second, it constitutes a form of associational discrimination on the basis of sex as an employer discriminates against lesbian, gay or bisexual employees based on who they date or marry. Third, sexual orientation discrimination is a form of discrimination based on gender stereotypes in which employees are harassed or punished for failing to live up to societal norms about appropriate masculine and feminine behaviors, mannerisms, and appearances.

The Seventh Circuit began its analysis by reviewing the U.S. Supreme Court's rationale in the 1989 case of Price Waterhouse v. Hopkins, where the Supreme Court declared that Title VII protects employees who fail to comply with typical gender stereotypes. In Price Waterhouse, when Plaintiff Ann Hopkins failed to make partner in the accounting firm, the partners advised her that her chances would be improved the next time if she would "walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry." The Supreme Court stated that this type of gender stereotyping constituted discrimination on the basis of sex in violation of Title VII.

Following Price Waterhouse, gay, lesbian, bisexual and transgender employees began to frame their Title VII sex discrimination claims in terms of discrimination based on gender non-conformity and not sexual orientation. For the last 25 years, courts have struggled to distinguish between gender norm discrimination, which is prohibited, and sexual orientation discrimination, which is not cognizable under Title VII. In short, the Seventh Circuit recognized that the distinction between gender non-conformity claims and sexual orientation claims had "created an odd state of affairs in the law in which Title VII protects gay, lesbian and bisexual people," but only to the extent that they meet society's stereotypical norms about how gay men or lesbians look or act (i.e. not in conformance with usual gender stereotypes or norms). On the other hand, gay or bisexual people who do conform to gender stereotyped norms in dress and mannerisms usually lose their claims for sex discrimination.

However, the Seventh Circuit, recounting the various opportunities that the Supreme Court has had to interpret Title VII as prohibiting sexual orientation discrimination and the many chances that Congress has had to amend Title VII to expressly prohibit such discrimination, noted that neither the Supreme Court nor Congress had taken any action to expand the interpretation of or amend Title VII to cover discrimination on the basis of sexual orientation. Reluctantly, the Court concluded that, while the writing may be on the wall for change in that our society cannot condone a legal structure where employees can be harassed, demeaned, fired or otherwise discriminated against solely based on who they date, love or marry, writing on a wall is not enough, and Title VII does not apply to claims of sexual orientation discrimination like those alleged by Hively.

Employers should bear in mind, as the Seventh Circuit noted, that, although Title VII may not provide protection against discrimination on the basis of sexual orientation, employees may have protection under various state and local antidiscrimination laws. In Illinois, the Illinois Human Rights Act prevents sexual orientation discrimination. Both the Cook County Human Rights and City of Chicago Human Rights Ordinances prohibit discrimination based on sexual orientation and gender identity. However, the Seventh Circuit noted that more than half of the states in the U.S. do not have such state protections.