On April 5, 2017, in a landmark decision, the US Court of Appeals for the Seventh Circuit, sitting en banc, held that Title VII of the Civil Rights Act of 1964 bars discrimination on the basis of sexual orientation. Hively v. Ivy Tech Community College of Indiana, No. 15-1720, 2017 WL 1230393 (7th Cir. Apr. 4, 2017), is the first decision in which a federal circuit court interpreted Title VII to bar disparate treatment on the basis of sexual orientation. In contrast, the Second and Eleventh Circuits had previously declined to extend Title VII protection to sexual orientation. This circuit split increases the likelihood that the Supreme Court—with the newest associate justice, Neil Gorsuch, on the bench—will resolve the issue.

Title VII prohibits employers from discriminating against employees on the basis of race, color, religion, sex or national origin. Title VII does not, however, expressly prohibit sexual orientation discrimination. Although the Equal Employment Opportunity Commission has taken the position that sexual orientation discrimination is a form of sex discrimination, prior to Hively, courts had declined to extend Title VII protection to the victims of discrimination on the basis of their sexual orientation.

The plaintiff in the new Seventh Circuit case, Kimberly Hively, was a part-time professor at Ivy Tech Community College. Between 2009 and 2014, she unsuccessfully applied for at least six full-time positions at the school. In 2014, Ivy Tech declined to renew her contract for part-time work. Believing that she was the subject of discrimination based on her sexual orientation, Hively, who is openly gay, filed a charge of discrimination with the EEOC. The charge read, in relevant part, "I believe I am being blocked from fulltime employment . . . based on my sexual orientation."

Hively brought a pro se action against Ivy Tech in the US District Court for the Northern District of Indiana after the EEOC issued her a right-to-sue letter. In her complaint, Hively alleged that, despite meeting all the qualifications for the teaching job and never receiving a negative review, Ivy Tech refused even to interview her for the full-time positions for which she had applied. She stated that she was "[d]enied full time employment and promotions based on sexual orientation in violation of Title VII." Ivy Tech moved to dismiss on the grounds that sexual orientation is not a protected class under Title VII. Relying on Seventh Circuit precedent, the District Court dismissed Hively's case, with prejudice.

Hively, now represented by counsel, appealed to the Seventh Circuit. The Seventh Circuit panel affirmed the District Court's decision, holding that the Seventh Circuit "has undeniably declared that claims for sexual orientation are not cognizable under Title VII."

A majority of the active judges constituting the Seventh Circuit voted to rehear the case. By an 8-3 vote, the court overturned the panel's decision. The court acknowledged that prior cases from the Seventh and other circuits had indeed held that Title VII's prohibition against sex discrimination did not extend to sexual orientation because "Congress had nothing more than the traditional notion of 'sex' in mind when it voted to outlaw sex discrimination." The court also recognized that the Supreme Court has not directly addressed the issue. The court noted, however, that several Supreme Court opinions, including Price Waterhouse v. Hopkins and Oncale v. Sundowner Offshore Services, Inc., have expanded the definition of "sex" in Title VII to protect individuals from gender stereotyping and same-sex sexual harassment.

Against this backdrop, the court considered Hively's arguments that Title VII prohibits employers from discriminating on the basis of their employees' sexual orientation. Hively first argued that, if she were a man and married to a woman, Ivy Tech would not have refused to consider her for the full-time positions or terminated her part-time contract. The court noted that "[t]his describes paradigmatic sex discrimination," in that Hively was arguing that "Ivy Tech is disadvantaging her because she is a woman." The court pointed out, "Hively represents the ultimate case of failure to conform to the female stereotype . . .: she is not heterosexual." The court concluded that there is no difference between gender nonconformity claims, which courts have found fall under Title VII, and sexual orientation claims.

The court also addressed Hively's second argument that an action "based on sexual orientation is sex discrimination under association theory." The court noted that this theory is based on the Loving v. Virginia line of cases, which recognizes "that discrimination on the basis of the race with whom a person associates is a form of racial discrimination." The court stated that the language of Title VII does not draw any distinction between the different types of discrimination it addresses. "This means that to the extent that the statute prohibits discrimination on the basis of the race of someone with whom the plaintiff associates, it also prohibits discrimination on the basis of the national origin, or the color, or the religion, or (as relevant here) the sex of the associate." As such, the court concluded that "a person who alleges that she experienced employment discrimination on the basis of her sexual orientation has put forth a case of sex discrimination for Title VII purposes."

Following the Hively decision, employers in the Seventh Circuit and in those jurisdictions that expressly bar discrimination against sexual orientation by statute must take steps to ensure that their employees are aware that sexual orientation is a federally protected class. These measures should include administering appropriate training for employees and contractors, as well as updating language in human resources documents and companies policies, as necessary. Meanwhile, employers in other parts of the country should monitor this area of the law for further developments closer to home, and, of course, whether the Supreme Court accepts Hively or another case to decide whether Title VII bars discrimination on the basis of sexual orientation. If so, it could be Justice Gorsuch's first opportunity to to interpret the civil rights statutes and weigh in on the rights of members of the LGBT community and to interpret the civil rights statutes.

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