Alerts and Updates

EEOC Ruling Provides Guidance on Applying Title VII's Discrimination Prohibition to Transgender Employees

May 7, 2012

Employers can anticipate that this ruling in Macy will greatly shape the EEOC's future enforcement and litigation activities around gender identity discrimination.

On April 20, 2012, the Equal Employment Opportunity Commission (EEOC) in Macy v. Holder ruled that a "complaint of discrimination based on gender identity, change of sex, and/or transgender status is cognizable under Title VII." This landmark ruling marks the first time that the EEOC has provided any guidance on the extent to which Title VII's sex discrimination prohibition applies to transgender employees.

Macy's Complaint and Appeal to EEOC

In December 2010, complainant Mia Macy, a transgender woman, applied for a position as a contract ballistics technician at the Bureau of Alcohol, Tobacco, Firearms and Explosives (the "Bureau"). When Macy spoke to the Bureau's director about the position, she presented her gender as male.

The Bureau's director tentatively offered her the position, pending satisfactory background check results, and instructed her to contact the outside contractor responsible for filling the position to inquire about the status of her background check.

Shortly thereafter, Macy advised the outside contractor that she was transitioning her gender expression to female, and as a result, the contractor informed the Bureau of Macy's intended change in name and gender classification. Several days later, Macy received an email from the contractor stating that the position at the Bureau was no longer available due to budgetary issues.

Macy filed a formal discrimination complaint with the Bureau in which she alleged discriminatory failure to hire based on sex, gender identity and sex stereotyping. The Bureau reclassified her discrimination claim into two separate claims, one "based on sex (female) under Title VII" and the other based on "gender identity stereotyping."

The Bureau concluded that Macy's gender identity stereotyping claim could not be investigated as a Title VII claim because it was outside the scope of Title VII's sex discrimination prohibition. Macy appealed this determination, asking the EEOC to rule that the Bureau is required to investigate her gender identity discrimination claim as a Title VII action. This case required the EEOC to reconsider its definition of "sex" for Title VII purposes.

"Sex" Discrimination Redefined

Over the past few decades, what constitutes sex discrimination has been redefined by federal courts, particularly as it pertains to transgender individuals. In 1984, according to the U.S. Court of Appeals for the Seventh Circuit, the term "sex" in Title VII meant "biological sex" only. Thus, in Ulane v. Eastern Airlines, Inc., a transgender woman fired for dressing in feminine clothing could not state a claim for sex discrimination because her biological sex was "male," and she had not alleged discrimination based on her status as a "biological male." Prior to 1989, several other courts adopted this reasoning in cases involving transgender employers.

Five years later, however, the way in which the federal courts interpreted Title VII's sex discrimination prohibition changed significantly when the U.S. Supreme Court decided Price Waterhouse v. Hopkins. There, the Court held that discrimination based on "gender non-conformity" is discrimination based on sex in violation of Title VII.

Hopkins, a non-transgender woman, filed a Title VII sex discrimination claim after she was denied partnership at the accounting firm where she worked. When Hopkins discussed her candidacy with the head partner, he advised her "to walk more femininely, talk more femininely, dress more femininely, have her hair styled, and wear jewelry."

The Court held that her employer had violated Title VII's sex discrimination prohibition, stating that "we are beyond the day when an employer could evaluate employees by assuming or insisting that they matched the stereotype associated with their group, for '[i]n forbidding employers to discriminate against individuals because of their sex, Congress intended to strike at the entire spectrum of disparate treatment of men and women resulting from sex stereotypes.'"

Following Price Waterhouse, many transgender litigants successfully used this "sex stereotyping theory" to pursue employment discrimination claims under Title VII. For example, in Smith v. City of Salem, a transgender woman contended that her employer discriminated against her because she was a "biological male" who failed to conform to her employer's sex stereotypes associated with males.

The U.S. Court of Appeals for the Sixth Circuit agreed, stating that "sex stereotyping based on a person's gender non-conforming behavior is impermissible discrimination, irrespective of the cause of that behavior; a label, such as 'transsexual,' is not fatal to a sex discrimination claim where the victim has suffered discrimination because of his or her gender non-conformity."

Several district courts have also held that Title VII's sex discrimination provision prohibits discrimination against transgender employees. Most notably, in 2008, the U.S. Court of Appeals for the District of Columbia, in Schroer v. Billington, held that whether a transgender employee relies on a "sex stereotyping" theory or a "sex discrimination per se" theory, the employee states a cognizable claim under Title VII.

The Schroer court compared a change of sex to a change of religion, noting that "[d]iscrimination 'because of religion' easily encompasses discrimination because of a change of religion." The court stated:

"Imagine that an employee is fired because she converts from Christianity to Judaism. Imagine too that her employer testifies that he harbors no bias toward either Christians or Jews but only to 'converts.' . . . No court would take seriously the notion that ‘converts’ are not covered by the statute."

Most recently, in 2011, the U.S. Court of Appeals for the Eleventh Circuit in Glenn v. Brumby held that a transgender woman could state a sex discrimination claim under the Equal Protection Clause. The court found that "[a] person is defined as transgender precisely because of the perception that his or her behavior transgresses gender stereotypes," and as a result, there is a "congruence between discriminating against transgender and transsexual individuals and discrimination on the basis of gender-based behavioral norms."

The 11th Circuit therefore concluded that "discrimination against a transgender individual because of her gender-nonconformity is sex discrimination, whether it's described as being on the basis of sex or gender."

The EEOC's Ruling in Macy

Citing this developing line of cases from Price Waterhouse in 1989 to Glenn in 2011, on April 20, 2012, the EEOC ruled in Macy that "claims of discrimination based on transgender status, also referred to as claims of discrimination based on gender identity, are cognizable under Title VII's sex discrimination prohibition." This is because when "an employer discriminates against someone because the person is transgender, the employer has engaged in disparate treatment 'related to the sex of the victim.'"

Thus, the EEOC clarified that impermissible sex discrimination includes disparate treatment because: (a) an individual has expressed his or her gender in a non-stereotypical fashion; (b) the employer is uncomfortable with the fact that the person has transitioned or is in process of transitioning from one gender to another; or (c) the employer simply does not like that the person is identifying as a transgender person.

Much like the federal district court in Schroer, the EEOC compared gender to religion in Macy. Specifically, the Commission said:

"Assume that an employee considers herself Christian and identifies as such. But assume that an employer finds out that the employee's parents are Muslim, believes that the employee should therefore be Muslim, and terminates the employee on that basis. No one would doubt that such an employee discriminated on the basis of religion. There would be no need for the employee who experienced the adverse employment action to demonstrate that the employer acted on the basis of some religious stereotype—although, clearly, discomfort with the choice made by the employee with regard to religion would presumably be at the root of the employer's actions."

What This Means for Employers

The EEOC's ruling in Macy is binding on all federal agencies and is entitled to at least some deference by federal courts. Employers can also anticipate that this ruling will greatly shape the EEOC's future enforcement and litigation activities around gender identity discrimination. It is also possible that this decision may pave the way for broader interpretations of Title VII's sex discrimination prohibition, such as an interpretation that sexual orientation discrimination is also "sex discrimination per se." This landmark ruling is likely to have a significant impact on both public and private employers.

In addition to the increasingly expansive federal interpretations of what constitutes sex discrimination under Title VII, legal protections are emerging for transgender employees at state and local levels. In fact, 16 states and the District of Columbia, as well as more than 100 localities across the United States, have enacted laws that expressly prohibit employment discrimination based on gender identity and expression.

As a result of these federal, state and local developments, employers should consider promptly reviewing their policies and procedures for compliance. In particular, employers may want to review and consider revising their policies and practices relating to anti-discrimination and harassment prevention, appearance and dress codes, restroom and locker room access, personnel and administrative records, leaves of absence and flexible schedules, employee benefits, pre-employment screening and employee confidentiality or privacy.

Employers should consider incorporating gender identity and expression into anti-discrimination training for new hires, as well as providing training to supervisors and human resources personnel on identifying and treating workplace exchanges that could reflect bias against transgender employees.

For Further Information

If you have any questions about this Alert or developing training programs to ensure compliance with the EEOC's transgender-inclusive interpretation of Title VII, please contact any of the attorneys in our Employment, Labor, Benefits and Immigration Practice Group or the attorney in the firm with whom you are regularly in contact.

Disclaimer: This Alert has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice. For more information, please see the firm's full disclaimer.