The U.S. Supreme Court issued a landmark decision on Monday, June 15, in the case of Bostock v. Clayton County, ruling that the prohibitions against discrimination “because of sex” contained in Title VII of the Civil Rights Act of 1964 (Title VII) extend to protect gay and transgender employees against workplace discrimination. Justice Neil Gorsuch delivered the opinion of the Court with Justices Alito and Kavanaugh each issuing dissenting opinions. In each of the three consolidated cases upon which this opinion was rendered, an employee had been terminated from employment for being gay or transgender.

The three employees brought suit in three different jurisdictions. In one case, the Eleventh Circuit ruled that Title VII’s protections did not prohibit employers from firing employees for being gay, and dismissed the lawsuit. In the other two cases, the Second Circuit and Sixth Circuit ruled that Title VII did provide the alleged protections and had permitted the cases involving those two employees to proceed. These inconsistent rulings, therefore, set the following question before the Court:

Is it legally permissible under Title VII’s language prohibiting discrimination “because of sex” for an employer to take an adverse action against an employee merely because the employee is gay or transgender? 

The Supreme Court, in a 6-3 ruling, answered no; it is not permissible.

Title VII makes it “unlawful…for an employer to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual…because of such individual’s race, color, religion, sex, or national origin.” 42 U.S.C. § 2000e-2(a)(1). This decision revolves around the meaning of the word “sex” within the statute. Justice Gorsuch found that “homosexuality and transgender status are inextricably bound up with sex.” Title VII uses the “but-for” test to establish causation, meaning a particular outcome would not have occurred “but-for” the alleged cause.

The Court further reasoned that in the Title VII context, an employer cannot avoid liability simply by pointing to other factors that influenced the employer’s challenged decision, so long as the plaintiff’s sex was one “but-for” cause of the decision. In essence, the Court ruled that an employer who makes a decision based on an employee’s sexual orientation or gender identity necessarily is making a decision that discriminates because of that employee’s “sex.”

In reaching its decision, the Court rejected the employers’ argument that this outcome could not have been intended by the legislature when it passed Title VII in 1964, and the Court instead focused on the broad plain text of the statute as written.

What does the Supreme Court’s decision mean for employers?

• Employers should carefully evaluate their employment policies and procedures to ensure that sexual orientation and gender identity are categories upon which discrimination and harassment are prohibited in the workplace.
• Employers should ensure that their managers are implementing investigation procedures and issuing disciplinary action for any employee who violates such policies and procedures.
• Employers should consider additional training for management employees, especially in those states where sexual orientation and gender identity have not previously been recognized as protected categories.
• This decision comes just three days after the U.S. Department of Health and Human Services (HHS) issued a final rule determining that sex discrimination under Section 1557 of the Affordable Care Act does not apply to cases of discrimination based on gender identity. At this time, it is unclear what impact the Supreme Court’s ruling will have on the enforcement and interpretation of Section 1557, but challenges to the final rule issued last week by HHS are a virtual certainty.
• Although Justice Alito in his dissent warned that the majority’s interpretation of Title VII will impact questions under Title IX of the Higher Education Act of 1972, 20 U.S.C. §1681 (Title IX), relating to access to facilities for transgender students – such as bathrooms, locker rooms, and dormitory assignments – and will also affect the analysis for transgender athletes, the Court did not address these issues. The Court explained specifically that those questions were not before the Court, and that the only question at issue was whether an employer who fires an employee for being gay or transgender has discriminated against that person “because of such individual’s sex.”
• For colleges, universities and other educational institutions, the Title IX implications will be very important. Last month, the Department of Education took enforcement action against school districts in Connecticut for allowing transgender high school students to participate in girls’ athletic events, using analysis that is in considerable tension with today’s Supreme Court’s opinion.
• The Court also left open the question of how this ruling may intersect with protecting religious liberties of employers along with a host of other potential employment law implications.

These are issues that will undoubtedly be the topics of future litigation around the country.