Second Circuit Reverses Precedent and Holds Title VII Prohibits Discrimination on the Basis of Sexual Orientation

In a precedent setting case, the United States Court of Appeals for the Second Circuit reversed course in an en banc decision and held in Zarda v. Altitude Express, Inc. , 883 F.3d 100 (2d Cir. 2018), that sexual orientation discrimination is a form of sex discrimination that is prohibited by Title VII of the Civil Rights Act of 1964, as amended (“Title VII”). The decision by the Second Circuit continues the divide among federal courts on this issue. The decision also is noteworthy because it reverses a decision by the Second Circuit last year that held Title VII does not prohibit sexual orientation discrimination (written about here ).

Donald Zarda was a skydiving instructor with Altitude Express, Inc. With him being in close physical proximity to so many clients when doing tandem dives, many of Zarda’s co-workers routinely referenced his sexual orientation and made sexual jokes around clients. On one instance, a female client complained that Zarda touched her inappropriately during or preparing for a dive and he used his alleged sexual orientation as a basis to excuse his behavior. When the company received the complaint, it terminated his employment. Zarda filed suit alleging that he was terminated from employment because his sexual orientation failed to conform to male sex stereotypes.

The Second Circuit acknowledged that it is “well-settled” that “gender stereotyping” violates Title VII as a form of sex discrimination, but Second Circuit precedent established that sexual orientation discrimination, including in the form of failing to conform to a gender stereotype, was not prohibited by Title VII. The court then noted that in 2015 the Equal Employment Opportunity Commission (“EEOC”) held for the first time that “sexual orientation is inherently a ‘sex-based’ consideration;’ accordingly an allegation of discrimination based on sexual orientation is necessarily an allegation of sex discrimination under Title VII.” The court further noted that since the EEOC’s decision in 2015, two federal appellate courts had addressed the issue and reached different conclusions. In Evans v. Georgia Reg’l Hosp. , 850 F.3d 1248 (11th Cir. 2017), cert. denied , 138 S. Ct. 557 (2017), the United States Court of Appeals for the Eleventh Circuit relied on past precedent to hold sexual orientation was not protected by Title VII. On the other hand, the United States Court of Appeals for the Seventh Circuit in Hively v. Ivy Tech Cmty. Coll. of Ind. , 853 F.3d 339 (7th Cir. 2017) (written about here ), held that “discrimination on the basis of sexual orientation is a form of sex discrimination.” The court also noted its decision in 2017 where a concurring opinion invited an en banc review of the issue.

The court started its analysis of Title VII by looking at the plain text. The operative phrase is that an employer may not discriminate “because of . . . sex.” This phrase has been interpreted to mean that discrimination is prohibited “based on traits that are a function of sex, such as life expectancy . . . and non-conformity with gender norms.” The Second Circuit framed the question it had to answer as “whether an employee’s sex is necessarily a motivating factor in discrimination based on sexual orientation” and, if it is, sexual orientation discrimination is “a subset of actions taken on the basis of sex.” In framing the issue in this way, the Second Circuit specifically rejected the notion that “Title VII protection does not hinge on whether sexual orientation is ‘synonymous with sex discrimination.’”

The court started by finding “the most natural reading” of the phrase “because of . . . sex” “is that it extends to sexual orientation discrimination because sex is necessarily a factor in sexual orientation.” The court found that this conclusion is supported by the notion that sexual orientation can involve sex role stereotyping, which is predicated on assumptions about how persons of a certain sex are supposed to act. The court further found that its conclusion was supported from the perspective of associational discrimination in that when sexual orientation is implicated an employer is opposing an individual’s romantic association with an individual of a particular sex. Furthermore, the court found that examining any person’s sexual orientation necessarily requires an examination of that person’s sex (and that of individuals to whom the person is sexually attracted). For these reasons, the court concluded that “because sexual orientation is a function of sex and sex is a protected characteristic under Title VII, it follows that sexual orientation is also protected.”

After rejecting several arguments offered by the defense and amici, the Second Circuit then examined whether sexual orientation discrimination satisfied the requirement that the employee was treated differently “but for that person’s sex.” The court relied on the fact scenario in Hively (written about here) to illustrate the point. In Hively , the plaintiff was a woman who was attracted to women. She was denied a promotion. According to her theory, if she were a male who was attracted to woman, she would not have been denied the promotion. Under this theory, according to the Second Circuit, Hively would not have been denied her promotion “but for” her sex. The court then examined several other examples and rejected arguments by the defense, and moved on to issues concerning gender stereotyping.

When addressing gender stereotyping, the court concluded that “sexual orientation discrimination is almost invariably rooted in stereotypes about men and women.” To illustrate, the court referenced the United States Supreme Court decision in Price Waterhouse v. Hopkins , 490 U.S. 228 (1989), which concluded that impermissible sex discrimination occurred when adverse employment actions were taken “based on the belief that a female accountant should walk, talk, and dress femininely.” The court then applied the rationale used in Price Waterhouse to conclude 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 further concluded that failing to recognize sexual orientation discrimination involves sex role stereotyping leads to an unworkable outcome, which has been illustrated by a number of federal district court decisions. To illustrate, the court found it inconsistent to recognize a claim for sex discrimination if a woman is terminated from employment because she was “too macho,” but she fails to state a claim if she alleges she was terminated from employment for being perceived as a lesbian. The court again addressed several other arguments and then moved on to associational discrimination concepts.

The court noted that it was well established that associational discrimination is prohibited under Title VII. It relied on a number of race discrimination cases to illustrate and that the same rationale applies to sexual orientation. The court further noted that the notion of associational discrimination applying to sex should not be controversial. As an example, it noted that no one should question the notion that a woman could state a claim for sex discrimination if she is terminated from employment for having close friendships with male friends. To this end, the court concluded it makes no sense to “carve out” an exception to this concept for sexual orientation and not recognize a claim when an employee “associates” romantically with individuals of the same sex.

For these reasons, and many others described in the lengthy opinion, the Second Circuit held that Title VII does prohibit discrimination on the basis of sexual orientation.

The Second Circuit’s decision in Zarda is significant because the Second Circuit becomes just the second federal appellate court to recognize sexual orientation discrimination constitutes sex discrimination in violation of Title VII. Although many state and local statutes prohibit discrimination on the basis of sexual orientation, it is not universal, and companies should continue to monitor developments in this regard, as courts remain split at the federal level.

If you have any questions regarding this post, please contact Stephen B. Stern at sstern@hwlaw.com or (410) 260-6585 or Amitis Darabnia at adarabnia@hwlaw.com or (410) 260-6592.

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