Last spring, we reported that the Seventh Circuit Court of Appeals (which hears appeals from Illinois, Indiana, and Wisconsin federal trial courts) had become the first federal appellate court to conclude that Title VII’s sex discrimination prohibition also precludes discrimination based on sexual orientation. On February 26, 2018, the Second Circuit Court of Appeals, ruling en banc, became the second appellate court to hold that Title VII bars discrimination based on sexual orientation, explicitly reversing prior Circuit authority to the contrary.

In Zarda v. Altitude Express, a former tandem skydiving instructor alleged he was fired after a customer and her boyfriend complained following his disclosure to her that he was gay. (His estate pursued the case after he died in a base-jumping incident.) Numerous employers representing a diverse range of business interests – from finance to technology to telecommunications – along with legal aid, civil and gay rights organizations, and labor unions, supported the claimant’s estate in the appeal, arguing as friends of the court that sexual orientation discrimination is opprobrious to business interests and civil rights. The Trump administration, on the other hand, weighed in (through the Department of Justice) that Title VII was not intended to provide protections to gay workers, thus rejecting the Obama administration’s policy (and an Obama-era EEOC decision holding) that sex discrimination includes sexual orientation discrimination. (In an interesting twist, the EEOC filed an amicus brief at the court’s request arguing that sexual orientation is inextricably linked to gender, thus creating a split even within Trump-administration agencies on the contours of sexual orientation discrimination.)

The Second Circuit, which hears appeals from Connecticut, New York, and Vermont federal trial courts, held that “sexual orientation discrimination is motivated, at least in part, by sex and is thus a subset of sex discrimination.” The court reached this result on three grounds. First, “sex is necessarily a factor in sexual orientation” in that homosexuality and bisexuality cannot be defined without identifying the employee’s own sex and the sex of those to whom he or she is attracted. Second, “sexual orientation discrimination is predicated on assumptions about how persons of a certain sex can or should be” – sex stereotyping – “which is an impermissible basis for adverse employment actions.” Finally, sexual orientation discrimination is a form of associational discrimination in that it is motivated by an employer’s opposition to romantic association between particular sexes, which in itself is discrimination based on the employee’s own sex.

Zarda extends the Circuit split on this issue. One month before the Seventh Circuit ruled in favor of extending Title VII’s protections, the Eleventh Circuit Court of Appeals concluded it was bound to follow prior authority unless and until overruled by a clearly contrary opinion of the Supreme Court or the Circuit sitting en banc; the Supreme Court declined to hear the appeal in that matter. With a second appellate decision now breaking with prior authority, the Supreme Court may be more likely to hear an appeal in order to conclusively resolve the issue.

Even before such a resolution, employers in all jurisdictions, including those outside the Second and Seventh Circuits, should be mindful that conduct directed at an employee because of his or her sexual orientation can enhance or support claims based on plainly actionable grounds such as sex discrimination. (See, for example, our report on a recent First Circuit decision that, without explicitly reversing precedent rejecting sexual orientation discrimination, nonetheless affirmed a verdict in favor of a female employee who was harassed due to her gender and sexual orientation, finding hers to be a “sex-plus” discrimination case.) Employers are encouraged to review their policies and internal practices to ensure they comport with binding local law.