By Benjamin ConleyEmily MillerLeon RodriguezSam Schwartz-Fenwick, and Cameron Smith

Seyfarth Synopsis: For decades, courts and practitioners have struggled with whether federal law protects employees against discrimination on the basis of sexual orientation and gender identity. Today, in a landmark 6-3 decision authored by Justice Gorsuch, the Supreme Court held that Title VII of the Civil Rights Act of 1964 prohibits employment discrimination against LGBT individuals. The Court explained that “[a]n employer who fires an individual for being homosexual or transgender fires that person for traits or actions it would not have questioned in members of a different sex. Sex plays a necessary and undisguisable role in the decision, exactly what Title VII forbids.”

As we wrote about previously, the Court had consolidated three employment termination cases for its consideration: two based on sexual orientation (Zarda v. Altitude Express from the Second Circuit and Bostock v. Clayton County from the Eleventh Circuit) and one based on gender identity (R.G. & G.R. Funeral Homes v. EEOC from the Sixth Circuit). In each case, the employer made the termination decision because of the employees’ sexual orientation or gender identity. The Court had to decide whether Title VII protects individuals on these bases, and clearly concluded that it does.

While the majority acknowledged that sexual orientation and gender identity are “distinct concepts from sex,” it found “it is impossible to discriminate against a person for being homosexual or transgender without discriminating against that individual based on sex.” The Court explained that if an employer fires a male employee for dating a man – but does not fire a female employee for the same conduct – the employer treats the male employee differently “for traits or actions it tolerates in his female colleague.” The majority held that treating individual employees adversely because of their sexual orientation or gender identity is inherently discrimination “because of sex.”

Justice Gorsuch rebutted the arguments advanced by Justices Alito, Thomas and Kavanaugh in two lengthy, dissenting opinions. The dissenters argued that the legislature could never have imagined, when drafting Title VII, that the term “sex” might mandate employment protections for LGBT individuals. The majority rejected that rationale, explaining that the legislature in 1964 may not have imagined same-sex sexual harassment either, which Justice Scalia recognized as violating Title VII in the Oncale decision, that scholars and litigants did advance the argument that Title VII protected LGBT people shortly after its enactment, and that the text of the statute must control. As the Court noted, “the limits of the drafters’ imagination supply no reason to ignore the law’s demand.”

The dissents characterize the majority opinion as a dramatic act of legislating by an activist Court contrary to well-established notions that “sex” means “biological sex”. The dissents caution that employers will face litigation when maintaining workplace gender distinctions and that the Court’s holding will violate employers’ First Amendment rights, by forcing them to recognize the gender identity of employees and by forcing them to provide coverage for medically necessary transgender affirming benefits under their health plan.

The Court attempts to assuage these concerns of judicial overreach by noting that the decision today was limited to the question of the reach of Title VII. The Court expressly noted that it was not addressing hot-button topics such as bathroom access or exemptions based on free exercise of religion. The Court stated that further litigation would be needed to resolve such questions. The Court especially stressed this point as it related to the intersection of an employer’s exercise of its religious beliefs and the employment protection rights of LGBT employees, noting that potential arguments for religious employers might exist under the religious exemptions in Title VII and in the Religious Freedom Restoration Act. Through this language the Court made clear that its view articulated in Hobby Lobby v. Burwell, that at least some private employers have religious rights under the First Amendment, remains very much alive.

It is important to stress that the dissents articulate a position consistent with the Trump administration’s view of LGBT rights. Indeed, this past Friday, the Trump administration issued its final rule excising transgender healthcare protections from Section 1557 of the Affordable Care Act. The Trump administration argued that Section 1557 was an impermissible over-reach by the Obama administration, contending that no civil rights law passed by Congress extended employment protections to LGBT individuals. Today’s decision puts this reasoning in doubt. Indeed, the justification for promulgating Section 1557 was that the “because of sex” language in Title IX of the 1964 Civil Rights Act extends to gender identity. Because the sex based protections in Title VII and Title IX are the same, and decades of jurisprudence under Title IX tracks the evolution of Title VII, today’s decision strongly supports the position taken by litigants who have and will file suit to challenge the repeal of Section 1557’s protections for transgender individuals. Seyfarth will be issuing a separate alert detailing the Administration’s Section 1557 rule and examining the interaction between that rule and today’s SCOTUS decision.

The Bostock decision will directly impact workplaces throughout the country. Before today, in a majority of states, discrimination on the basis of sexual orientation or gender identity was legal. In addition to existing state and municipal protections, discrimination based on sexual orientation and gender identity is now expressly prohibited in all jurisdictions under federal law. Employers should anticipate that the Bostock decision’s definition of “sex” under Title VII will lead to additional litigation and clarification that discrimination “because of sex” when prohibited by other statutes, including Title IX, includes sexual orientation and gender identity. Employers who do not already prohibit discrimination based on sexual orientation and gender identity should review their employee handbooks, policies, and benefit plans to ensure compliance with Title VII’s prohibition of discrimination based on sexual orientation and gender identity.

For more information on this topic, please contact the authors, your Seyfarth Attorney, or any member of Seyfarth Shaw’s Labor & Employment Team.