Supreme Court: Employers Violate Title VII When They Fire Employees Merely for Being Gay or Transgender

The U.S. Supreme Court has ruled that employers violate Title VII of the Civil Rights Act of 1964, which prohibits employment discrimination based on race, color, religion, sex, or national origin, when they discharge employees merely for being gay or transgender. The 6-3 decision comes in three consolidated cases, which had divided the lower courts. The Second Circuit had ruled that a skydiving instructor fired days after he mentioned being gay could pursue a Title VII claim, while the Eleventh Circuit had concluded that an employee fired for conduct “unbecoming” a county employee shortly after he began participating in a gay softball league could not (see our Checkpoint article). And the Sixth Circuit allowed an employee, who presented as male when hired, to sue under Title VII when she was discharged after writing a letter to her employer explaining that she planned to live and work full-time as a woman based on a medical diagnosis of gender dysphoria and recommendations by her clinicians.

Because the court viewed an employer’s decisions based on homosexuality or transgender status as intentionally treating individual employees differently because of their sex (e.g., firing male, but not female, employees for being attracted to men), it held that an employer who discharges an employee for being homosexual or transgender necessarily discriminates on the basis of sex in violation of Title VII. The court rejected the employers’ argument that homosexuality and transgender status are excluded from Title VII’s reach since they are not mentioned in the law’s text—noting that sexual harassment also is omitted from the text and conceptually distinct from sex but still within Title VII’s scope. Moreover, the court said, Congress’s ongoing consideration of, but failure to adopt, amendments to add sexual orientation and transgender status to Title VII is not relevant in interpreting the existing statutory language. The court also discounted the argument that an employer does not violate Title VII if it treats men and women equally, concluding that an employer who fires both gay men and lesbians due to their sexual orientation does not diminish but rather doubles its liability. Responding to assertions that Congress would not have anticipated this application when it enacted Title VII in 1964, the court noted other broadly accepted interpretations of Title VII that would not have been envisioned at the time of enactment (such as a prohibition on sex-segregated job postings). The court concluded: “In Title VII, Congress adopted broad language making it illegal for an employer to rely on an employee’s sex when deciding to fire that employee. We do not hesitate to recognize today a necessary consequence of that legislative choice: An employer who fires an individual merely for being gay or transgender defies the law.”

EBIA Comment: Although this is unquestionably a landmark ruling, its full implications will be developed in future cases. The majority emphasized that its holding is limited to employees discharged for being homosexual or transgender and does not address other employment policies (such as sex-segregated bathrooms, locker rooms, or dress codes) or the impact of employers’ religious convictions. The consequences for employee benefit plans likewise remain to be seen, but plan sponsors should proceed with caution in the implementation of eligibility and benefit provisions based on sexual orientation (e.g., limiting eligibility to opposite-sex spouses) or transgender status (e.g., blanket exclusions of coverage for gender dysphoria). Other state and federal laws must be considered as well, so consultation with legal advisors is advised. For more information, see EBIA’s Employee Benefits for Domestic Partners at Section IV.G (“Impact of Title VII on Plan Design”) and EBIA’s Group Health Plan Mandates manual at Sections XXI.C (“EEOC’s Position on Title VII and Health Coverage”) and XXI.D (“Court Decisions Applying Title VII to Health Coverage”). See also EBIA’s Cafeteria Plans manual at Section XI.B (“Who Is a Spouse for Purposes of Obtaining Tax-Free Health Coverage?”), EBIA’s Consumer-Driven Health Care manual at Section XXII.B.4 (“Who Can Be Provided Tax-Free Benefits?: Spouses and Domestic Partners”), EBIA’s ERISA Compliance manual at Section IX.J (“Spouse and Dependent Child Eligibility”), EBIA’s HIPAA Portability, Privacy & Security manual at Section X.E.2 (“Special Enrollment Rights of Same-Sex Spouses, Domestic Partners, and Their Children”), and EBIA’s Self-Insured Health Plans manual at Section XIV.E (“Beneficiary Eligibility”).

Contributing Editors: EBIA Staff.