Sexual orientation discrimination occurs when an employee is treated unfairly or differently or is harassed because of the employee's real or perceived sexual orientation (gay, lesbian, bisexual, or heterosexual). As a result of a 2020 Supreme Court decision, sexual orientation discrimination or harassment is now illegal in all places of employment in the United States. It is also illegal to discriminate or harass in the workplace on the basis of gender identity. An employer discriminates based on sexual orientation when the employer considers an employee's sexual orientation in making employment decisions. This includes hiring, training, promotion, compensation, discipline, and termination.

For example, it is illegal to refuse to hire gay or lesbian employees, fire a gay employee for marrying his same-sex partner, or segregate openly gay employees from positions that require customer contact. It is also illegal for an employer to take action against heterosexual employees because of their sexual orientation. Harassment on the basis of sexual orientation and gender identity is also prohibited. Harassment is conduct based on an employee's sexual orientation that creates an intimidating, hostile, or offensive work environment. Harassing conduct includes homophobic slurs or jokes, or physical acts.

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