This week the LGBT community and its supporters won an important case in the Second Circuit Court of Appeals. In Zarda v. Altitude Express, the Court ruled that Title VII’s ban on sex discrimination extends to same-sex, or “anti-gay,” discrimination. In that case, Donald Zarda, a gay skydiving instructor, alleged he was unlawfully fired after a customer complained about him disclosing his same-sex orientation.

The gay rights community has argued for some time that Title VII’s protections based on “sex” includes the subset of sexual orientation. The door was opened to this argument in Justice Scalia’s 1998 opinion in Sundowner v. Oncale, where he noted that statutory protections protect not just the “principal evil” behind the law but, also, “comparable evils.” Courts have been split since then on how, and to what extent, Title VII protections apply in the LGBT area.

Federal agencies are divided as well. At the Court’s invitation, the EEOC filed an amicus brief in Zarda citing three different reasons why sexual orientation discrimination is barred by Title VII. The EEOC argued that sexual orientation discrimination is (1) necessarily discrimination “because of” sex; (2) prohibited associational discrimination; and (3) a form of sex stereotyping. The Department of Justice, however – without an invitation from the court – filed an amicus brief making contrary arguments. This created an unusually direct clash between federal agencies, prompting one judge to observe during oral argument how “awkward” it is to have the federal government on both sides. The DOJ, under Attorney General Jeff Sessions, argued that the EEOC’s theories lack merit, and that it should be left to Congress, not the courts, to expand Title VII’s protections. The Second Circuit rejected the DOJ’s arguments.

The Zarda decision is being lauded by gay rights activists as a significant step towards equal rights. It is drawing equally passionate criticism from opponents, including President Trump’s administration.

Employers should pay close attention to this evolving area. Companies within the Second Circuit – Connecticut, New York, and Vermont – are bound by Zarda, and should ensure that policies are updated accordingly. Outside the Second Circuit, employers should keep current on the law of their jurisdiction(s). For instance, the Seventh Circuit has similarly ruled that Title VII protects gay workers. But, the Eleventh Circuit has held it does not.

Employers may see an increase in same-sex discrimination claims as employment litigation becomes the next battleground over LGBT rights. Companies may wish to broaden their policies to prohibit same-sex harassment as a preemptive measure against such lawsuits. And, employers should monitor their workplaces to proactively identify and address internal problems. Companies should also consider how same-sex protections fit into their ethics, values, and corporate culture.