As employers head into 2020, the most closely-watched federal employment law issue is whether Title VII of the Civil Rights Act of 1964’s prohibition against discrimination “on the basis of sex” includes sexual orientation and gender identity. Although twenty-five states, including California, New York, Illinois, Massachusetts and Rhode Island, currently have laws protecting employees from sexual orientation and gender identity discrimination, there is currently no federal protection from such discrimination.

On October 8, 2019, the United States Supreme Court heard oral arguments on three combined cases involving these critical issues. In Zarda v. Altitude Express, the Second Circuit Court of Appeals ruled in favor of a skydiving instructor who claimed he was terminated because he was gay. In Bostock v. Clayton County, the Eleventh Circuit Court of Appeals reaffirmed its precedent that Title VII does not prohibit discrimination based on sexual orientation. In R.G. & G.R. Funeral Homes v. EEOC, a case involving the termination of a male employee after he declared he would transition to dressing as a female and undergo sex re-assignment surgery, the Sixth Circuit Court of Appeals held that Title VII prohibits gender identity discrimination.

Proponents argue that “on the basis of sex” necessarily includes sexual orientation and gender identity, and a determination that such types of discrimination are prohibited by Title VII is consistent with the Supreme Court’s prior decisions finding same-sex harassment and sex-based stereotypes to be illegal under Title VII. Opponents argue that the inclusion of sexual orientation and gender identity in Title VII is the purview of Congress, not the Supreme Court.

Legal pundits have observed that the oral arguments reflected a closely divided Court with Justice Neil Gorsuch being the likely swing vote in a 5-4 decision. The Supreme Court is not expected to issue its decision until late June 2020. A decision holding that sexual orientation and gender identity are protected categories under Title VII will likely have far-reaching implications and will undoubtedly increase the number of administrative charges and lawsuits filed asserting such discrimination.