Earlier this week, in Bostock v. Clayton County, Georgia, the U.S. Supreme Court ruled that firing an employee for being homosexual or transgender constitutes discrimination based on the employee’s sex in violation of Title VII of the Civil Rights Act.  The decision is likely to be relied on by regulators and private plaintiffs alleging violations of the Equal Credit Opportunity Act or the Fair Housing Act based on sexual orientation discrimination.

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.”  A majority of the Supreme Court reasoned that firing an employee based on the employee’s sexual orientation is discrimination based on sex because the employer’s treatment of the employee is based on traits that the employer would have tolerated if the employee was of a different sex.  According to the majority, if, for example, an employee is fired because he is a man who is either attracted to other men or identifies as female, the employer has discriminated against him for traits or actions it would tolerate in an employee who is a woman (i.e., attraction to men or female identification).  As a result, in the majority’s view, the employer has fired the employee based on the employee’s sex.

The ECOA makes it “unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction on the basis of race, color, religion, national origin, sex or marital status, or age (provided the applicant has the capacity to contract).”  The FHA makes it “unlawful for any person or other entity whose business includes engaging in residential real estate-related transactions to discriminate against any person in making available such a transaction, or in the terms or conditions of such a transaction, because of race, color, religion, sex, handicap, familial status, or national origin.”

In Bostock, the Supreme Court dismissed the employers’ concerns that its decision “will sweep beyond Title VII to other federal or state laws that prohibit sex discrimination” with the statement that “none of those other laws are before us.”  Nevertheless, Bostock clearly provides support for the position that the ECOA and FHA prohibitions against discrimination on the basis of “sex” include discrimination based on sexual orientation.  Indeed, under former Director Cordray’s leadership, the CFPB signaled that discrimination on the basis of sexual orientation might become a focus of fair lending supervision and enforcement and looked to Title VII cases as support.  While the CFPB under Director Kraninger’s leadership has not publicized any efforts to extend ECOA protections to sexual orientation, information currently on the CFPB’s website regarding consumer protections against credit discrimination includes the following statement: “Currently, the law supports arguments that the prohibition against sex discrimination also affords broad protection from discrimination based on a consumer’s gender identity and sexual orientation.”  (A CFPB booklet about credit discrimination also indicates that discrimination based on sexual orientation may be unlawful.)

Companies should also be mindful of the fact that numerous state laws already prohibit discrimination in credit transactions on the basis of sexual orientation.  Companies should therefore continue to consider revising their policies, procedures and fair lending analyses to incorporate discrimination based on sexual orientation.