EEOC's gender identity ruling could be far-reaching

Agency finds that discrimination against a transgender person is a violation of Title VII

Q. Sarah, Acme Company’s human resources manager, receives a request for termination from the facilities manager for an employee named Larry. The manager’s reason for termination is that Larry does not fit in with the rest of the team and therefore he is not working out. As part of her due diligence, Sarah learns that Larry’s mannerisms and clothes are perceived by other employees in his group as “girlish.” Should Sarah be concerned that Larry’s termination may be discriminatory?

A. In April 2012, the Equal Employment Opportunity Commission (EEOC) ruled that an employee can maintain a discrimination claim against an employer under Title VII of the Civil Rights Act of 1964 based on the theory of gender identity or transgender. This decision is important because it clarified the EEOC’s interpretation that federal law protects employees from sex discrimination on the basis of sex stereotyping as well as gender identity. 

In Macy v. Holder, a transgender woman applied for a position in one of the crime labs of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Upon her application, she discussed the position with the director of the crime lab while still presenting as a man. According to the complainant, the director told her that the position would be filled as a civilian contractor through an outside company. The director also told her that the position was hers if there were no problems with the background check, which she alleges he reaffirmed in follow-up communications.

The outside agency responsible for filling the job began the complainant’s paperwork and an ATF investigator was assigned to conduct a background check. At that time, the complainant informed the contractor via email that she was in the process of transitioning from male to female and requested that the director of the crime lab be informed of this change.

The contractor emailed the complainant to confirm that the director had been notified of her change in name and gender. Five days later, the complainant was informed that due to federal budget cuts, the position was no longer available.

The complainant alleged that she later learned the position had not been eliminated and that another person was hired for the position. She was told that the other person got the job because that person was further along in the background investigation.

The complainant filed a formal complaint with the ATF, claiming sex discrimination based on “gender identity (transgender woman) and on the basis of sex stereotyping.” The ATF only accepted her claim based on “sex (female)” under Title VII, but not her “gender identity stereotyping” claim.

Title VII provides that “[a]ll personnel actions affecting employees or applicants for employment … shall be made free from any discrimination based on … sex … .”

Significant impact?

The EEOC explained that prohibition of discrimination on the basis of “sex” includes gender discrimination. It noted gender to encompass not only a person’s biological sex but also the “cultural and social aspects associated with masculinity and femininity” and relied on the U.S. Supreme Court decision in Price Waterhouse v. Hopkins, finding that adverse employment action for failing to conform with gender-based expectations violates Title VII.

In Price Waterhouse, the employer had refused to promote a female senior manager to partner because she did not act as some partners thought she should as a woman. She was told that her chances for partnership would improve if she walked, talked and dressed more femininely, wore make-up and jewelry, and had her hair styled.

The EEOC concluded that sex stereotyping is only “one means of” sex discrimination. It held that discrimination “against a transgender individual because that person is transgender is, by definition, discrimination ‘based on … sex,’ and such discrimination therefore violates Title VII.”

This ruling will likely have far-reaching effects for all employers. While the decision is binding on federal employers, the EEOC is expected to follow this interpretation when deciding charges of discrimination filed against private employers. The full impact of the decision remains to be seen, but it could be significant, with claims based on transgender likely to increase after this ruling.

Because federal courts are not bound by the EEOC’s interpretation, some courts may find that Title VII does not include such a prohibition while others may adopt the EEOC’s interpretation.

Employers should be mindful that 16 states, including a Massachusetts’s law that went into effect on July 1, 2012, have added transgender or gender identity as a protected category under state anti-discrimination laws. Employer best practices include training employees on sexual stereotyping and gender expression and, where applicable, revision of workplace policies.

Jennifer L. Parent, a director in the Litigation Department and chair of the Employment Law Practice Group of McLane, Graf, Raulerson & Middleton, can be reached at 628-1360 or jennifer.parent@mclane.com.