(CNN) In a case with far-reaching implications, a federal appeals court on Tuesday ruled that the Civil Rights Act protects LGBT employees from workplace discrimination. The full panel of 7th US Circuit Court of Appeals heard the case, holding that plaintiff Kimberly Hively's 2014 lawsuit against Ivy Tech Community College could proceed. Hively argued that the school violated Title VII of the Civil Rights Act of 1964 when it denied the adjunct instructor full-time employment based on her sexual orientation.

The appellate court's opinion could have been summed up in a sentence: We are going against several decades of judicial authority holding that Title VII does not cover sexual orientation.

Or even more simply, we think it's time to reinterpret Title VII.

Title VII of the Civil Rights Act of 1964 makes it unlawful for employers to discriminate on the basis of a person's sex. That prohibition against sex discrimination has traditionally excluded discrimination on the basis of a person's sexual orientation. Twenty states ban such discrimination. The Supreme Court, however, has never squarely addressed the issue.

Make no mistake about it, this case was all but hopeless from the beginning. Hively had zero chance of winning ... right up to the moment she actually won.

That's why her original claim with the Equal Employment Opportunity Commission and her subsequent lawsuit were filed pro se, because no lawyer wanted to take on a case that was sure to lose. Not surprisingly, the trial court dismissed her case at the outset, because what she claimed -- even if true -- was not a violation of the law.

She then appealed to a three-judge panel of the 7th Circuit, and those judges backed the trial court's decision: She didn't have a case. Then, that same appellate court agreed to hear the case again en banc. This time, all the judges would hear it, not just a three-judge panel. While that would have given Hively a glimmer of hope, there was every reason to expect that the appeals court would agree with not only the lower court, but its own prior decisions, and, and the historically accepted law of Title VII.

This time, eight of the 11 judges voted to do something very different. Something very rare.

For decades, Title VII has been interpreted as only prohibiting discrimination against women because they are women or against men because they are men, that Congress had only the traditional notion of "sex" in mind when it outlawed "sex discrimination."

Who said so? The same court deciding the Hively case. And pretty much every other court that has ever addressed the issue. The 7th Circuit acknowledged the binding precedent, yet it found a way through it.

After all, it observed, the Supreme Court has danced pretty close to this issue without actually taking it on. It has held that gender stereotyping falls within Title VII.

This means an employer can't deny partnership to a female employee because she's too "aggressive" and isn't feminine enough. The high court has also held that a sexual harassment claim is not defeated if the sex of the harasser is the same as the sex of the victim. And of course, more recently, the Constitution now protects the right of same-sex couples to marry.

The 7th Circuit did not seek to rewrite Title VII to add sexual orientation to the protected categories of race, color, religion, sex or national origin. Instead it sought to define what it really means to discriminate on the basis of sex, and in particular, whether employer actions based on sexual orientation are actions taken on the basis of sex.

Ultimately, the test is whether the protected characteristic played a role in the adverse employment action. In other words, imagine Hively is a man, but everything else stays the same, including the sex of her partner. Isn't she then being treated differently only because she is a woman?

The court also pointed out that if gender stereotyping is unlawful, then Hively is the classic example of someone who does not conform to others' stereotypes about females, e.g., that females stay at home with the kids, that they cook and ... that they are heterosexual.

To the court, there really is no difference between a gender nonconformity claim and discrimination based on sexual orientation; if one is prohibited, so is the other.

What about discrimination based not on your sex, but the sex of whom you associate with? Is there even a difference? The 2016 film "Loving" introduced many to a famous Supreme Court case that held racial restrictions on marriage were unconstitutional. To the 7th Circuit, if the law prohibits discrimination on the basis of the race of someone with whom a plaintiff associates, it also prohibits discrimination on the basis of the sex with whom a plaintiff associates.

Even though the courts have excluded sexual orientation from Title VII since its enactment in 1964, the world -- and the laws -- have grown up around it since then. The landscape of sexual orientation laws is such that Title VII's long-accepted exclusion of sexual orientation is now an exception, rather than the norm.

It's an exception with a firm history and legal foundation, however. That's why the 7th Circuit's decision is so significant in the legal world. It takes a lot of chutzpah for a judge -- even an en banc panel -- to break with established precedent.

It's likely that this decision and the new interpretation of Title VII will stand, at least in this broad swath of Midwest states that make up the 7th Circuit. The employer, Ivy Tech, said Tuesday night it does not plan to appeal to the Supreme Court -- though it denies it discriminated against the plaintiff. It also likely means that, for the foreseeable future, there will be a split among the federal courts as to the meaning of federal discrimination law.

In the coming weeks, this opinion will be criticized as judicial activism -- deciding a case based upon social trends, personal feelings or even the political landscape instead of the actual law. That could be true; even the 7th Circuit acknowledges its decision defies precedent established by virtually every other court that has decided whether sexual orientation is covered by Title VII.

Of course, when you take a step back, Hively hasn't won the case against Ivy Tech. All the 7th Circuit did was allow her claim to exist, and to move forward. Hively's could still be a losing discrimination case. That doesn't matter today, because it wasn't really what the courts were deciding. They were deciding whether it was even a case to begin with. Last week it wasn't. Now it is.