The 7th U.S. Circuit Court of Appeals, in deciding Hively v. Ivy Tech Community College on April 4, 2017, became the first federal appellate court to conclude that Title VII of the Civil Rights Act of 1964 prohibits workplace discrimination based on sexual orientation. On Feb. 26, the full 2nd Circuit followed suit, ruling in Zarda v. Altitude Express, Inc., that the estate of a deceased skydiving instructor could pursue a claim for sex discrimination under Title VII against his employer, which allegedly fired him because of his sexual orientation.

The conflict among the courts created by the Zarda decision, like the Hively case before it, potentially sets the stage for the Supreme Court to resolve the issue of whether Title VII prohibits sexual orientation discrimination.

The Case

Donald Zarda, who passed away during the case, was an openly gay skydiving instructor who often engaged in tandem skydives, which require hip-to-hip and shoulder-to-shoulder proximity between instructor and student. Zarda sometimes advised female clients of his sexual orientation to put them at ease before a tandem dive. After one such disclosure, and allegedly because of it, Zarda’s employer fired him.

Zarda then filed a sex discrimination claim in a New York federal court under Title VII of the Civil Rights Act of 1964, alleging that his employer discharged him based on impermissible sex stereotyping. He contended that his male coworkers regularly joked about being strapped to women in tandem dives, but that he was fired because he was honest about his sexual orientation and did not fit the “male macho stereotype.” For decades, federal courts have rejected sexual orientation discrimination claims, holding that Title VII does not prohibit sexual orientation discrimination. Consistent with this precedent, the district court dismissed Zarda’s Title VII sex discrimination claims.

A three-judge panel of the 2nd Circuit affirmed, concluding that it was bound by the court’s precedent that Title VII does not protect sexual orientation. Zarda’s estate then asked for rehearing by the full 2nd Circuit. The Equal Employment Opportunity Commission and the Department of Justice squared off on opposite sides, with the EEOC supporting the employee and the DOJ supporting the employer. By a 10-3 majority, the full court reversed the dismissal of Zarda’s claim and held that sex discrimination includes discrimination based on sexual orientation.

What Does Discrimination “Because of ... Sex” Mean?

In deciding whether Title VII prohibits sexual orientation discrimination, the court was guided by the text of Title VII, and in particular, by the phrase “because of ... sex.” The question before the court was “whether an employee’s sex is necessarily a motivating factor in discrimination based on sexual orientation.” The court concluded that sexual orientation discrimination “is motivated, at least in part, by sex and is thus a subset of sex discrimination.”

The court rejected the argument that it was not “even remotely plausible” in 1964 that Title VII was understood to prohibit sexual orientation discrimination. Like the 7th Circuit did in Hively, the 2nd Circuit cited with approval the Supreme Court’s decision in Oncale v. Sundowner Offshore Servs., Inc., in which the Supreme Court recognized that same-sex sexual harassment violated Title VII, and in which Justice Scalia wrote that “male-on-male sexual harassment was assuredly not the principal evil Congress was concerned with when it enacted Title VII. But statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.”

The court also viewed the relationship between sexual orientation and sex “through the lens of gender stereotyping” which “provides yet another basis for concluding that sexual orientation discrimination is a subset of sex discrimination.” The court observed that “sexual orientation discrimination is almost always invariably rooted in stereotypes about men and women.” The court concluded that “sexual orientation discrimination is predicated on assumptions of how persons of a certain sex can or should be, which is an impermissible basis for adverse employment actions.”

Finally, the court said its conclusion that sexual orientation discrimination is a subset of sex discrimination “is further reinforced by viewing this issue through the lens of associational discrimination.” Relying on longstanding precedent, including the Supreme Court’s landmark decision in Loving v. Virginia striking as unconstitutional Virginia’s ban on interracial marriage, the Zarda court held that sexual orientation discrimination is illegal associational discrimination, because “an adverse employment action that is motivated by the employer’s opposition to association between members of particular sexes discriminates against an employee on the basis of sex.”

What Lies Ahead for Employers?

Many employers already have workplace policies prohibiting discrimination on the basis of sexual orientation or gender identity. For employers without such policies and with employees in the jurisdiction of the 2nd Circuit (New York, Connecticut and Vermont) and 7th Circuit (Illinois, Indiana and Wisconsin), it is an opportune time to consider updating anti-discrimination and harassment policies and training, because discrimination based on sexual orientation now is prohibited by federal law in the 2nd and 7th Circuits. Such a change may be advisable for all employers, as many state and local governments throughout the country, including those in New York, also prohibit such discrimination. And the availability of gender stereotyping claims may subject employers to potential liability for discrimination against gay, lesbian and transgender employees.

The most significant impact of Zarda, however, will be felt if the case makes it to the Supreme Court. The effect of a similar ruling there would expand beyond the boundaries of Title VII and potentially impact interpretations of other federal laws barring sex discrimination, including Title IX (federally funded educational programs), the Equal Pay Act, the Affordable Care Act, the Fair Housing Act and the Equal Credit Opportunity Act.