On February 3rd, the Equal Employment Opportunity Commission released an internal memorandum stating that the EEOC will now process and investigate claims of discrimination based on sexual orientation, transgender status, and gender identity. The EEOC will treat such claims as charges of sex discrimination under Title VII.

Of course, the EEOC does not have the authority to amend Title VII, so its memorandum does not change the substantive law. The memorandum does, however, reflect the EEOC’s current view that discrimination based on sexual orientation may be grounded in sex-based stereotypes and thus violate Title VII’s prohibition on sex discrimination. For example, the EEOC believes that discrimination against a gay man because he’s not attracted to women, or discrimination against a lesbian because she’s viewed as insufficiently feminine, are based on impermissible sex-based norms and expectations in violation of Title VII.

Similarly, the EEOC takes the position that complaints of sexual orientation discrimination can constitute “protected activity” for purposes of a retaliation claim. The EEOC reasons that in light of its own enforcement efforts and several recent court decisions, a belief that Title VII prohibits sexual orientation discrimination is “objectively reasonable,” even if the presiding court rules that Title VII contains no such prohibition.

Several federal courts have ruled that Title VII does not prohibit sexual orientation discrimination, while other courts take a more expansive view of the statute. The proposed Employment Non-Discrimination Act would clarify this issue by amending Title VII to expressly prohibit discrimination based on sexual orientation and gender identity. But ENDA has been kicking around Congress since 1994, and its chances of passing in a Republican-controlled Congress seem slim.

If the EEOC has its way, ENDA won’t be necessary. Title VII will evolve through EEOC enforcement efforts and private litigation until sexual orientation, transgender status, and gender identity discrimination claims are all considered forms of sex discrimination. Another possibility is that the Supreme Court will rule that these forms of discrimination are not prohibited by Title VII. That would clarify the issue in the courts, but spur the call for ENDA’s passage.

For now, employers would do well to err on the side of caution and strictly prohibit sexual orientation discrimination in the workplace. Depending on the location of the workplace, state laws or local ordinances may already impose this obligation.