But in February, it revoked guidance on transgender students' use of public school bathrooms, deferring to states.The Hively case stems from a lawsuit by Indiana teacher Kimberly Hively alleging that the Ivy Tech Community College in South Bend didn't hire her full time because she is a lesbian.

The entire court reheard oral arguments in November and directed the toughest questions at a lawyer for the college who argued only Congress could extend the protections. The aggressive questions suggested the court might be willing to expand the 53-year-old landmark law.

Judge Richard Posner asked the attorney for the community college, John Maley: "Who will be hurt if gays and lesbians have a little more job protection?" When Maley said he couldn't think of anyone who would be harmed, Posner shotback, "So, what's the big deal?" Posner also said it was wrong to say a decades-old statute is "frozen" on the day it passed and that courts can never broaden its scope.

Eight out of the 11 judges who reheard the case, including Posner, were appointed by Republican presidents.

The ruling comes as hopes have dimmed among some gay rights activists that the question will be resolved in their favor following election victories in November by Republicans.

The issue could still land before the Supreme Court at some point. A GOP-majority House and Senate make it unlikely the Congress will amend the statute.

The focus of discussion at the November session in Chicago was the meaning of the word 'sex' in Title VII of the Civil Rights Act, the provision that bans