On April 4, 2017, the U.S. Court of Appeals for the Seventh Circuit broke new legal ground by ruling that Title VII of the Civil Rights Act of 1964, which prohibits sex discrimination in employment, also forbids sexual orientation discrimination. Hively v. Ivy Tech Community College, No. 15-1720 (7th Cir. 2017) (en banc). The ruling means that employers in Illinois, Indiana, and Wisconsin must ensure that their policies and practices avoid sexual orientation discrimination, regardless of what state law says.

Until yesterday, every federal appeals court to consider the issue—including the Seventh Circuit itself—had held that Title VII did not prohibit sexual orientation discrimination. More than 25 years ago, however, the Supreme Court, in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989), held that Title VII prohibits discrimination based on sex stereotypes, leading several appellate courts to hold that an employee who is harassed or disciplined for not conforming to traditional gender norms (such as a woman perceived to be acting “mannish” or refusing to wear makeup) may have a sex discrimination claim under Title VII. In some cases, gay and lesbian plaintiffs succeeded on such claims.

This case represents a major shift in employment law. The plaintiff, Hively, a college instructor, claimed that she was denied promotions and ultimately terminated because she is a lesbian. The majority ruled that because “discrimination on the basis of sexual orientation is a form of sex discrimination,” her case could proceed. Indeed, the court described as “paradigmatic sex discrimination” Hively’s claim that “if she had been a man married to a woman … and everything else had stayed the same, Ivy Tech would not have refused to promote her and would not have fired her.” Echoing the Supreme Court in Price Waterhouse, the majority wrote that because sexual orientation discrimination “is based on … assumptions about the proper behavior for someone of a given sex,” it necessarily takes “the victim’s biological sex … into account.”

Judge Richard Posner joined the majority opinion but wrote a separate concurrence arguing that the court should have candidly acknowledged that it was updating Title VII. Just as it has taken courts and society “a considerable while” to realize that sexual harassment and gender stereotyping are forms of sex discrimination, Posner wrote, “the compelling social interest in protecting homosexuals … from discrimination justifies an admittedly loose ‘interpretation’ of the word ‘sex’ in Title VII to embrace homosexuality.” Three dissenting judges argued the majority was legislating from the bench, thwarting clear congressional intent that “sex” referred only to gender and not to sexual orientation.

Hively will not be the last word on this subject. For example, as the majority noted, the employer here did not invoke Title VII’s exemption for religious institutions. More generally, given the circuit split created by the decision, the Supreme Court is likely to address the issue. Until then, however, employers in Illinois, Indiana, and Wisconsin should update their non-discrimination policies and ensure that their supervisors and human resources departments understand the increased risk. Because Illinois and Wisconsin already prohibit sexual orientation discrimination in employment, the greatest effect of the Seventh Circuit’s decision will be felt in Indiana. But in all three states, and perhaps across the nation, the spotlight placed on the issue will likely lead to an increase in discrimination claims.