Last Tuesday, in Hively v. Ivy Tech Community College, the Seventh Circuit Court of Appeals (with jurisdiction over the courts in Illinois, Indiana and Wisconsin) became the first federal circuit to explicitly rule that sexual orientation is covered by Title VII of the Civil Rights Act of 1964. In so doing, the Seventh Circuit created a split with every other court of appeals that has addressed the issue to date, thereby teeing the issue up for a possible showdown in the US Supreme Court.

Title VII makes it unlawful for employers to discriminate on the basis of a person’s race, color, religion, sex, or national origin. Though the US Supreme Court has held that situations involving same-sex harassment (Oncale v. Sundowner Offshore Services) or failure to conform with gender stereotypes (Price Waterhouse v. Hopkins) could constitute sex discrimination under Title VII, it has not addressed the issue of whether sexual orientation is a protected status under Title VII. And, until Hively, every appeals court to consider whether Title VII prohibits sexual orientation discrimination, which is not explicitly set forth in the statute, had ruled it outside the statute's reach. In fact, just 2 weeks ago in Christiansen v. Omnicom Group, Inc., the Second Circuit Court of Appeals (Connecticut, New York and Vermont) held that Title VII does not prohibit anti-gay bias. [Christiansen followed Evans v. Georgia Regional Hospital from the Eleventh Circuit (Alabama, Florida and George), which concluded that termination for homosexuality is not prohibited under Title VII.] Hively is a remarkable victory for LGBTQ advocates as it can be seen as a declaration from a bipartisan group of judges that anti-gay workplace discrimination is clearly illegal under federal law.

Despite the uncertainty regarding the ultimate fate of the split here, there are several actions employers should take now.

Impact and Takeaways for US and Multinational Employers

1. Watch out for new claims: Employees in Illinois, Indiana and Wisconsin may now bring Title VII sexual orientation claims against employers. Companies should review all affected non-discrimination policies.

2. Consider the myriad ways sex discrimination (a few examples below) based on sexual orientation could play out and train your managers accordingly.

  • Failing to hire an applicant because she is a lesbian.
  • Denying an employee a promotion because he is gay or straight.
  • Discriminating in terms, conditions, or privileges of employment, such as denying spousal health insurance benefits to a female employee because her legal spouse is a woman, while providing spousal health insurance to a male employee whose legal spouse is a woman.

3. The tide is changing. The EEOC takes the position that Title VII sex discrimination encompasses discrimination on the basis of sexual orientation and gender identity, regardless of any state and local laws that suggest otherwise. Almost half of all states and many cities already prohibit discrimination based on sexual orientation and/or gender identity. And, we now have the first appellate level decision recognizing sexual orientation discrimination as being prohibited by Title VII. Moreover, even in states where sexual orientation is not explicitly protected, many cases proceed successfully when pled that the discrimination occurred based on an individual’s failure to conform to gender stereotypes. It seems undeniable that the collective social conscious is moving toward more workplace protections for LGBTQ, as well as fostering and embracing diversity of all types. Thus, while the fate of the interpretation of Title VII is unknown, for talent attraction reasons and beyond, we see many employers taking a holistic view of diversity and inclusion that goes beyond just pure legal requirements.

4. Consider the impact on your expatriate employee population. Title VII expressly provides for extraterritorial application so it is important to think through the implications for US citizens living overseas, particularly in countries that make homosexuality illegal.

5. Review your US policies and Global Code of Conduct. Do your US policies include sexual orientation as a protected categry, and if so, are your managers trained accordingly? How do you address discrimination, including on the basis of sex, in your Global Code of Conduct while being mindful of cultural and legal differences globally? Consult with counsel to determine the best approach for your organization.