On Monday, the U.S. Court of Appeals for the Second Circuit (which covers Connecticut, New York, and Vermont), became the second federal appellate court to explicitly hold that federal law prohibits employment discrimination based on sexual orientation. In April, 2017, U.S. Court of Appeals for the Seventh Circuit (which covers Illinois, Indiana, and Wisconsin) issued a landmark decision in the case of Hively v. Ivy Tech. In that decision, the 7th Circuit became the first federal appeals court to find that Title VII (which prohibits sex discrimination in employment) prohibited discrimination based on sexual orientation. In these decisions, both the Second and Seventh circuits overruled prior circuit precedent that held that Title VII did not explicitly prohibit discrimination based on sexual orientation.

In Zarda v. Altitude Express, Inc., Donald Zarda, a skydiving instructor, brought the case against his prior employer, Altitude Express, Inc., alleging he was terminated due to his sexual orientation. Zarda worked for Altitude in the summer of 2010. As part of his job, he regularly participated in tandem skydives, where he would be strapped hip-to-hip with clients. Given the close proximity to clients, Zarda sometimes told female clients about his sexual orientation to lessen any concerns they might have.

In June of 2010, before a tandem jump, Zarda told a female client that he was gay “and had an ex-husband to prove it.” Zarda stated the comment was meant to preempt any discomfort the client might have. However, the client alleged that Zarda inappropriately touched her and disclosed his sexual orientation to excuse his behavior. The client complained to Altitude which, consequently, terminated Zarda. Zarda denied the allegation, however, and insisted he was fired because of his reference to his sexual orientation.

In holding that Title VII prohibits discrimination based on sexual orientation, the full panel of the Second Circuit found that “sexual orientation discrimination is motivated, at least in part, by sex and thus a subset of sex discrimination.” In addition to citing the 7th Circuit decision as support, the court based its decision on several factors:

  1. Sexual orientation is defined by one’s sex in relation to the gender to which the individual is attracted;
  2. Sexual orientation discrimination is based on a perceived failure to conform to stereotypes of how the genders are supposed to behave; and
  3. Title VII prohibits “associational” discrimination when an employer’s decision is based on an employee’s relations with a third party who is in a protected class. Therefore, because an employer’s opposition to an employee’s sexual orientation is based on the employee’s association with someone of the same sex, discrimination based on sexual orientation is prohibited under Title VII.

With this decision, employers in Second Circuit states should be aware that, effective immediately, employees may bring claims of sexual orientation discrimination under federal law. However, this decision will likely not result in too substantial a change, as, similar to Illinois, state laws in New York, Connecticut, and Vermont already prohibit discrimination based on sexual orientation. Nonetheless, a stark circuit split is developing on this issue that ultimately will need to be resolved by the Supreme Court. Other circuits have recently reaffirmed prior case-law holding that Title VII does not protect against sexual orientation discrimination.

Another notable facet of this decision is that numerous employers, such as Microsoft Corporation, Ben & Jerry’s, Google Inc., and Spotify filed an amicus brief supporting the position that Title VII should be interpreted to prohibit sexual orientation discrimination, even though this interpretation obviously broadens employer’s potential exposure to discrimination claims. This signals wide spread recognition among much of the corporate world that sexual orientation discrimination cannot be tolerated.

While this decision, similar to the Hively decision, does not specifically address issues of gender identity discrimination, much of the court’s reasoning that sexual orientation discrimination is indistinguishable from “sex stereotyping” discrimination would presumably apply to discrimination against employees based on gender identity. In fact, the Seventh Circuit has applied the similar reasoning from Hively in holding that Title IX prohibits discrimination of transgender students with respect to restroom access. Therefore, employers are best-advised to ensure anti-discrimination policies fully encompass gender identity.