In a landmark decision issued on April 4, 2017, the U.S. Court of Appeals for the Seventh Circuit held in Hively v. Ivy Tech Community College of Indiana, No. 15-1720 (en banc) that discrimination in employment based on one's sexual orientation is prohibited by Title VII of the Civil Rights Act of 1964. In particular, the Court held that discrimination on the basis of sexual orientation is a form of unlawful sex discrimination.

Kimberly Hively, an openly gay individual, brought a Title VII sex discrimination claim against her former employer, alleging that she was not promoted and her teaching contract was not renewed because she is a lesbian. The U.S. District Court for the Northern District of Indiana dismissed Hively's case, citing Seventh Circuit precedent that sexual orientation was not protected under Title VII. A three-member panel of the Seventh Circuit affirmed the dismissal on the basis of past precedent. However, the Seventh Circuit then took the unusual step of reconsidering the decision en banc, which means that all of the active Seventh Circuit judges would participate. In an 8 to 3 decision, the en banc panel voted to overrule past precedent and find that sexual orientation was protected by Title VII.

Notably, the Seventh Circuit expressly reserved for a different case whether or when religious institutions may make employment decisions based on sexual orientation. The Seventh Circuit also expressed no opinion on the propriety of considering sexual orientation in the provision of social or public services.

Takeaways and Considerations

The Seventh Circuit is the first federal appellate court to hold that sexual orientation is protected by Title VII. Until now, every other federal court of appeals has declined to find that sexual orientation is protected by Title VII. Most recently, in March 2017, the Eleventh Circuit expressly declined to recognize sexual orientation as being protected by Title VII. Now that there is a split in the Circuit Courts on this issue, the Supreme Court may step in to definitively decide the question.

The Seventh Circuit's extension of Title VII's protections to sexual orientation applies in Illinois, Indiana and Wisconsin only. But employers should keep in mind that many state and local laws governing fair employment practices, including in Illinois and Wisconsin, expressly prohibit discrimination based on sexual orientation.