The EEOC has made sexual orientation discrimination a priority in recent years, and interprets Title VII’s prohibition on sex discrimination to forbid employment discrimination based on gender identity or sexual orientation. In 2015, in Baldwin v. Dep’t of Transportation, the EEOC held that a claim of discrimination on the basis of sexual orientation “necessarily” states a claim of discrimination on the basis of sex under Title VII. In a series of later decisions, the EEOC has recognized Title VII protection of transgender status.  The first such case was Macy v. Dep’t of Justice, in which the EEOC held that intentional discrimination against a transgender individual because of that person’s gender identity is discrimination based on sex and violates Title VII. Since Macy, the EEOC has found sex-based discrimination, harassment, or disparate treatment in cases of an employer’s restrictions on a transgender woman’s ability to use a common female restroom, the intentional misuse of a transgender employee’s new name and pronoun, and an employer’s failure to revise its personnel records pursuant to changes in gender identity.

In fiscal year 2015, the EEOC received 1,412 charges that included allegations of sex discrimination related to sexual orientation, gender identity, or transgender status.  That was an increase of 28% over similar charges filed in fiscal year 2014.

The federal courts generally accept that gender identity and transgender status are protected by Title VII, but so far, few federal courts have agreed with the EEOC’s assertion that sex discrimination includes discrimination based on sexual orientation.  As a result, employees who present, dress, or act as a member of the opposite sex, or who medically transition to the other gender, are likely to be protected from discrimination by federal law, while lesbian, gay, or bisexual employees are not. Such cases continue to be litigated, however, and just last month the Seventh Circuit Court of Appeals vacated and ordered rehearing of a July 2016 decision in Hively v. Ivy Tech Community College. The July 2016 decision, issued by a 3 judge panel of the 7th Circuit, held that sexual orientation discrimination is not sex discrimination under Title VII of the Civil Rights Act. Now, the full 7th Circuit will reconsider Hively, and some observers anticipate that the outcome will change.  Even if the 7th Circuit recognizes sexual orientation-based discrimination as prohibited sex discrimination under Title VII, other Circuits are likely to disagree, and it may be some time before the issue is finally decided by the United States Supreme Court.

Courts considering these issues under Title VII may look to ongoing litigation over transgender bathroom use. Last week, the Supreme Court granted cert in a case about a school district’s obligation to accommodate a transgender student’s restroom choice, and the Obama Administration is appealing a Texas judge’s ruling that schools do not have to abide by new federal guidelines allowing transgender students to use the bathroom of their choice. Although these cases do not involve Title VII, the “intimate facilities” issue impacts employment as well as education and public services, and decisions in this area may provide guidance to courts considering charges of Title VII discrimination.

So where are we now, and where are we headed?  Societal acceptance of lesbian, gay or bisexual sexual orientation has significantly increased, but federal discrimination law does not yet offer protection.  Transgender individuals do not enjoy the same level of acceptance or understanding in American society that LGB individuals do, but federal courts have ruled that Title VII protects them. This patchwork evolution will continue—perhaps slowly—and it seems likely to us that within a few years Title VII will prohibit all forms of sexual orientation and gender identity discrimination in the workplace.  Meanwhile, employers will need to respond to workplace issues involving sexual orientation and transgender individuals. In doing so, they should be mindful of relevant law, societal trends, employee morale, and the benefits of a diverse workforce.