Executive Summary: While the Seventh Circuit definitively has held that sexual orientation discrimination is discrimination “because of sex” and, therefore, a violation of Title VII of the Civil Rights Act of 1964, as amended (as reported by these authors on April 25, 2017), the other Circuits continue to debate this issue. Specifically, (as previously reported by these authors on April 3, 2017), the Second Circuit in Christiansen v. Omnicom and Eleventh Circuit in Evans v. Georgia Regional Hospital held they were bound by prior precedent that sexual orientation is not protected by Title VII, despite their skepticism as to whether that precedent remains good law. On April 18, 2017, the Second Circuit reaffirmed that position in Zarda v. Altitude Express. The Zarda court emphasized that absent action by the Second Circuit sitting en banc, it was bound by Simonton v. Runyon, which 17 years ago held that sexual orientation is not protected by Title VII. In a rare move, the Second Circuit has granted rehearing en banc limited to the issue of whether “…Title VII of the Civil Rights Act of 1964 prohibit[s] discrimination on the basis of sexual orientation through its prohibition of discrimination ‘because of…sex.’”

Background: Zarda was a skydiving instructor. In 2010, he told a female client that he was gay. She told her boyfriend, who complained to Zarda’s employer, Altitude Express. Altitude Express terminated Zarda’s employment and Zarda sued, claiming he was terminated because of his sexual orientation in violation of, inter alia, Title VII.

The U.S. District Court for the Eastern District of New York (EDNY) granted summary judgment on Zarda’s Title VII claim. The EDNY held both that Title VII does not prohibit sexual orientation discrimination and that Zarda had failed to establish a gender stereotyping claim under Price Waterhouse v. Cooper. However, just before the EDNY ruled on summary judgment, the Equal Employment Opportunity Commission (EEOC) issued its decision in Baldwin v. Foxx that sexual orientation discrimination is discrimination “because of sex” within the meaning of Title VII. On that basis, Zarda moved for reconsideration. The court denied the motion, noting that Baldwin is contrary to Simonton’s binding precedent. Zarda’s trial proceeded on his state law claims, and the jury found for the former employer.

Zarda appealed to the Second Circuit, in relevant part, on the grounds that Simonton should be overturned. However, the Second Circuit in Christiansen had already held that absent an en banc decision by the court to the contrary, Simonton remained binding. Therefore, while the Zarda court acknowledged the Seventh Circuit’s decision in Hively, it “decline[d] Zarda's invitation to revisit [Second Circuit] precedent.” Moreover, unlike in Christiansen, the Zarda court declined to remand the case on a sex stereotyping theory because Zarda had not challenged summary judgment on that claim. Thus, the Zarda court acknowledged that “Zarda may receive a new trial only if Title VII's prohibition on sex discrimination encompasses discrimination based on sexual orientation – a result foreclosed by Simonton.”

On May 25, 2017, Zarda got the second chance he was seeking. The Second Circuit granted en banc review of his appeal on the limited question of whether sexual orientation discrimination is included in Title VII’s proscription of discrimination “because of sex.” Oral argument is set for September 26, 2017. If this question is answered in the affirmative, Simonton will be overruled, marking another victory for the LGBTQ community. Given the strongly worded concurring opinion in Christiansen advocating for the Second Circuit to do so, and the given the infrequency with which the Second Circuit grants en banc review, this seems likely.

It should also be noted that a petition for rehearing en banc in Christiansen remains pending before the Second Circuit (as reported by these authors on May 8, 2017).

Bottom Line: Since the Seventh Circuit’s decision in Hively, the Circuits have been split on the issue of whether Title VII protects sexual orientation and have been faced with the decision of whether prior precedent excluding sexual orientation from Title VII’s protection should be upheld. A decision by the Second Circuit in favor of Zarda would result in two of the eleven Circuits recognizing a cause of action for sexual orientation discrimination under Title VII. While many states, cities and counties have enacted laws prohibiting sexual orientation discrimination in employment, a large number have not done so. Consequently, the Circuit court decisions on this issue are of great significance to employers and the LGBTQ community, particularly in the Circuits covering states where no such protections presently exist.

It is more important than ever for employers operating in multiple states to be cognizant of the varying state and federal laws when it comes to LGBTQ discrimination. As a general and practical matter, it is recommended that all employers, irrespective of the status of the law in the state(s) in which they operate, have policies and procedures in place to prohibit discrimination against and harassment of employees based on sexual orientation, gender identity, gender expression and transgender status. Additionally, employers should put in place complaint procedures that employees can use to notify the employer if they experience such discrimination or harassment. All complaints should be thoroughly investigated and resolved.