On April 4, 2017, the 7th U.S. Circuit Court of Appeals became the first federal appellate court to conclude that workplace discrimination based on sexual orientation is sex discrimination and violates Title VII of the Civil Rights Act of 1964. The full court’s groundbreaking decision in Hively v. Ivy Tech Community College of Indiana conflicts with its sister circuits and sets the stage for the Supreme Court to resolve the issue.

Background

Title VII prohibits workplace discrimination “because of … sex.” 42 U.S.C. § 2000e-2(a). For decades, courts have held that “because of … sex” does not include sexual orientation. Many courts have held that discrimination based on gender stereotyping is actionable, but have faced increasing difficulty distinguishing between gender-stereotyping and sexual orientation claims. Then in 2015, the Supreme Court recognized that the U.S. Constitution protects the right of same-sex couples to marry. The 7th Circuit observed in Hively, that these decisions create “a paradoxical legal landscape in which a person can be married on Saturday and then fired on Monday for just that act.”

The Case

As the court noted, Kimberly Hively is openly lesbian. She also is a math teacher. Ivy Tech Community College denied her application for a full-time position at least six times. Representing herself, she sued Ivy Tech, alleging that it discriminated against her because of her sexual orientation. Following longstanding precedent, the trial court dismissed Hively’s complaint based on Ivy Tech’s argument that sexual orientation is not a protected class under Title VII. A three-judge panel of the 7th Circuit affirmed, concluding that Title VII’s prohibition of sex discrimination referred only to the “traditional notion of sex.”

Hively then asked for rehearing by the full 7th Circuit. By an 8-3 majority, the full court reversed the dismissal of Hively’s case and held that sex discrimination includes discrimination based upon sexual orientation. The 7th Circuit opinion relies heavily on Justice Scalia’s decision in Oncale v. Sundowner Offshore Servs., Inc., in which the Supreme Court held that same-sex sexual harassment was actionable as sex discrimination under Title VII. The court cited with approval Justice Scalia’s observation in Oncale that “male-on-male sexual harassment in the workplace 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.” Based on Justice Scalia’s reasoning, Title VII’s legislative history from the mid-1960s and subsequent attempts to amend the statute had little persuasive value. “It is neither here nor there” that Congress “may not have realized or understood the full scope of the words it chose” when it prohibited discrimination on the basis of “sex.”

The court reasoned that, had Hively been a man involved in a relationship with a woman, the employer would not have refused to promote her or fire her; “[t]his describes paradigmatic sex discrimination.” Next, the court borrowed the theory of “associational discrimination” from cases dealing with prohibitions on interracial marriage. In those cases, changing the race of one partner in the marriage “made a difference in determining the legality of the conduct.” So, too, is this the case with gender in a gay or lesbian relationship. Finally, the court surveyed the Supreme Court’s decisions “in the area of broader discrimination on the basis of sexual orientation” — most relevant, the Supreme Court’s same-sex marriage cases.

The 7th Circuit acknowledged that its own precedents and the decisions of virtually all other federal courts of appeal have reached a different conclusion about whether sexual orientation discrimination violates federal law. However, it held that recent Supreme Court rulings required it to consider “what the correct rule of law is now in light of the Supreme Court’s authoritative interpretations, not what someone thought it meant one, ten, or twenty years ago.” It remains to be seen whether Hively is at the leading edge of a reinterpretation of discrimination law or if other courts will regard it as an aberrant decision.

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 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 7th Circuit. Such a change may be advisable for all employers as many state and local governments throughout the country also prohibit such discrimination. And the availability of gender stereotyping claims — based on what the 7th Circuit describes as a “confused hodge-podge of cases” — may subject employers to potential liability for discrimination against gay, lesbian and transgender employees.

The most significant impact of Hively, 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.