On Tuesday, the Seventh Circuit jumped into the Title VII sexual orientation discussion with both feet. In Hively v. Ivy Tech Community College of Indiana, a full-court reversed an earlier three judge panel decision, finding that discrimination based solely upon the employee’s sexual orientation is sex discrimination prohibited by Title VII. As the opinion recognizes, this finding goes not only against the Seventh Circuit’s own past rulings, but also against opinions from almost all the other Circuits (1^st, 2^nd, 3^rd, 4^th, 5^th, 6^th, 8^th, 10^th and 11^th). In fact, two Circuits, the 11^th and the 2^nd, had ruled exactly the opposite in the past month.

So how did the Seventh Circuit come to this point? 

The majority opinion begins by pointing out that it does not have the power to amend Title VII, so it must look at whether the statute’s current language can be interpreted to include sexual orientation as protected. The Court pointed out that although the EEOC already has interpreted Title VII to prohibit sexual orientation discrimination, it is not bound by that agency’s position. Instead, the Court noted that while Congress may have had a certain definition of “sex” in mind when the law was passed, courts have expanded and adopted other definitions over the years—including to cover same-sex workplace harassment and discrimination based on failure to comply with gender stereotypes.

Ivy Tech did not renew the contract of Kimberly Hively, one of the professors. Hively alleged that the non-renewal was because she is a lesbian.  She offered two theories under which her sexual orientation discrimination claim should be covered under Title VII and the full Seventh Circuit agreed with both. First, under the comparative method a court would ask would the same decision have been made if she had been a man. Hively argued that if she had been a man married or living with a woman, as opposed to a woman married or living with a woman, she would not have been terminated. The Court agreed that such comparative analysis would show sex discrimination. The Court went on to note that by being a lesbian, Hively failed to comply with the female stereotype in America by not being heterosexual. While other courts (and even the Seventh Circuit panel in its earlier opinion) had held that there was a distinct line between a gender non-conformity claim and one based on sexual orientation—the Hively majority opinion concluded that no line exists —it is all sex discrimination.

Hively’s second theory was that discrimination based upon sexual orientation should be prohibited based on an associational theory. In Loving v. Virginia the Supreme Court ruled that restricting the freedom to marry solely because of racial classifications violates the Equal Protection Clause. Since the Court recognized that protection for race, then Title VII should also prohibit discrimination on the basis of national origin, color, religion or the sex of the person associating with an employee.

Finally, the Seventh Circuit discusses how their decision must be considered against the backdrop of recent Supreme Court decisions striking down statutes prohibiting homosexual intimacy (Lawrence v. Texas), statutes excluding same-sex partners from the definition of spouse (United States v. Windsor) and prohibiting same-sex marriage (Obergefell v. Hodges). The Court recognized that there is contrary authority to their current stance, but stated “this court sits en banc to consider what the correct rule of law is now in light of the Supreme Court’s authoritative interpretations, not what someone thought it meant one, ten, or twenty years ago.”  The Court concluded that it is “common-sense reality that it is actually impossible to discriminate on the basis of sexual orientation without discriminating on the basis of sex.”

Judge Posner has an interesting concurring opinion that delves deeper into how history and time should cause changes in statutory interpretation. The dissent follows the other circuits in holding that the courts should not change the scope of Title VII—that is up to Congress.

So what is an employer to do?

As noted in the opinion itself, this decision is currently an outlier among the federal circuits. However, it sets up a split that will almost surely have to be decided by the Supreme Court. The decision again shows that there is a fine line (one that the Seventh Circuit refused to recognize) between discrimination against someone because they do not meet a gender-stereotype and discrimination based on sexual orientation. Employers should remind everyone that all employees, male or female, should be treated equally in the workplace. We will likely be receiving clearer instructions on the definitions of claims under Title VII, but until that time, it is better to be safe than sorry.