On February 26, 2018, the Second Circuit Court of Appeals rendered an en banc decision in Zarda v. Altitude Express that significantly expands employees’ rights under Title VII of the Civil Rights Act of 1964. Ten judges joined at least in part in the majority decision and held that sex discrimination under Title VII encompasses discrimination based on sexual orientation. Three judges dissented and would not have extended Title VII protection to sexual orientation. This decision came 11 months after the Eleventh Circuit declined to recognize sexual orientation as a protected category under Title VII in Evans v. Georgia Regional Hospital and 10 months after the Seventh Circuit disagreed, holding that sexual orientation is covered by Title VII, in Hively v. Ivy Tech Community College.

The 69-page Zarda majority opinion, written by Chief Judge Katzmann, was guided primarily by the text of Title VII—specifically the phrase “because of . . . sex”—as well as relevant precedent. Under Judge Katzmann’s analysis, the critical inquiry to the court was whether sex is a “motivating factor” in discrimination based on sexual orientation. In concluding that sexual orientation discrimination is motivated, at least in part, by sex, and is thus a subset of sex discrimination, the court considered the question from three separate perspectives: (1) sexual orientation as a function of sex; (2) gender stereotyping; and (3) associational discrimination. Notably, these three perspectives mirror the U.S. Equal Employment Opportunity Commission’s analysis in Baldwin v. Foxx, which was decided in July of 2015.

1. Sexual Orientation as a Function of Sex

In examining sexual orientation as a function of Title VII’s protected characteristic of “sex,” the court considered the sex-dependent nature of sexual orientation discrimination. The court concluded that because one cannot define a person’s sexual orientation without identifying that person’s sex, sexual orientation is necessarily a function of sex. It further held that sexual orientation is a function of both a person’s sex and the sex of those to whom that person is attracted. The decision thus rejected the contention that sexual orientation is not dependent on sex and that employers discriminating on the basis of sexual orientation can do so without reference to sex. The court explained that if that were the case, employers would be able to rebut a discrimination claim by merely characterizing their actions using alternative language. Notably, the court mentioned that Title VII instructs courts to examine motives of employers, not just the words used by employers. Judge Katzmann reasoned that courts must therefore look beyond an employer’s stated reason for a decision (e.g. that the employee was gay, not because he was a man) to determine whether the employer was actually motivated by sex.

The court also rejected the argument that no one could have understood Title VII to encompass sexual orientation discrimination at the time Title VII was adopted. Judge Katzmann explained that other forms of discrimination that were not specifically listed in Title VII are now uniformly recognized as violations of Title VII, such as sexual harassment and hostile work environment claims. The court reasoned that Congress could not anticipate the full spectrum of employment decisions that would be directed at protected categories at the time it drafted Title VII, so it falls to the courts to give effect to the broad language Congress used in drafting the statute.

The court also employed the Supreme Court of the United States’ “comparative test” for determining whether an employment practice constitutes sex discrimination, which examines whether an employee’s treatment would have been different “but for” his or her sex. Specifically, Judge Katzmann reasoned that a woman who is subjected to an adverse employment action because she is attracted to women would have been treated differently if she had been a man who was attracted to women. As such, the court concluded that sexual orientation is a function of sex, and by extension, sexual orientation is a subset of sex discrimination.

2. Gender Stereotyping

Next, the court considered gender stereotyping and concluded that sexual orientation discrimination is invariably rooted in stereotypes about men and women. Gender-based stereotypes were deemed impermissible bases for employment decisions under Title VII by the Supreme Court in Price Waterhouse v. Hopkins in 1989. The Zarda court determined that stereotypes about homosexuality are directly related to stereotypes about proper roles of men and women, e.g., “’real’ men should date women.” Judge Katzmann therefore concluded that “when, for example, ‘an employer . . . acts on the basis of a belief that [men] cannot be [attracted to men], or that [they] must not be,’ but takes no such action against women who are attracted to men, the employer ‘has acted on the basis of gender.’” The court reinforced this finding by pointing to the “unworkability” of prior Second Circuit precedent, which held that sexual orientation discrimination was not a product of stereotypes; numerous lower court decisions had strained to distinguish between gender stereotypes that support an inference of sex discrimination and those that indicate sexual orientation discrimination.

3. Associational Discrimination

Lastly, the court held that the Second Circuit’s well-established prohibition against associational race discrimination required a finding that associational discrimination based on sexual orientation is prohibited by Title VII. The court concluded that there was no basis for the Second Circuit to recognize a violation of Title VII for associational discrimination based on race but not sex. The court explained that its holding is consistent with Title VII’s text and the reasoning set forth in Price Waterhouse. Judge Katzmann determined that if a male employee is married to a man and his employment is terminated because the employer disapproves of same-sex marriage, the employee can claim that he has suffered associational sex discrimination.

Concurrences and Dissents

Several of the concurring opinions in Zarda took the position that the majority decision was unnecessarily lengthy and/or that one of the three enumerated bases for including sexual orientation discrimination in Title VII was sufficient. Judge Gerald Lynch’s dissent notably began by stating that although he would like Congress to pass legislation explicitly prohibiting sexual orientation discrimination under Title VII, it has not yet done so and the text of Title VII cannot be read to include such a prohibition.

What Comes Next?

The Zarda decision expands the circuit split on this issue and may result in the Supreme Court hearing an appeal (assuming Altitude Express appeals). Notably, in December 2017, the Supreme Court declined to hear an appeal in Evans v. Georgia Regional Hospital, due in part to the hospital’s arguments that it had not been properly served with process and was not subject to the Court’s jurisdiction. Of course, Congress also has the opportunity to pass legislation that would explicitly include sexual orientation as a protected class under Title VII. However, it appears unlikely that any such legislation would be signed into law by the current administration. It is therefore up to the courts, and ultimately the Supreme Court, to provide guidance on this debate.

The state anti-discrimination laws for New York, Connecticut, and Vermont, which comprise the Second Circuit, each include sexual orientation as a protected class. Therefore, employers that operate in the Second Circuit likely already prohibit sexual orientation discrimination under their equal opportunity policies. Nonetheless, employers may want to be aware that absent the Supreme Court overturning the Zarda decision, Title VII cases in the Second Circuit may now properly include sexual orientation discrimination claims.