by Raanon Gal and Chad A. Shultz
The law regarding the rights of transgender employees is evolving, with a clear trend toward the recognition and protection of the rights of transgender individuals. Just five years ago, employers in the United States likely would not have considered whether transgender employees were protected by federal employment laws. At most, employers would have considered whether state or local laws extended protections to transgender employees. However, the global community has been active regarding the protection of transgender employees’ rights in the workplace, and now it seems that the federal government is on track to join that trend. 
DOJ’s holding
In a landmark decision issued on July 8, the U.S. Department of Justice (DOJ), an executive department of the federal government that is responsible for investigating discrimination complaints filed against agencies under its control, held that the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) unlawfully discriminated against Mia Macy, a transgender woman, on the basis of her sex in violation of Title VII of the Civil Rights Act of 1964. Macy was refused employment at the ATF because of her transgender status.
In late 2010, Macy worked as a detective for the Phoenix Police Department and expressed interest in moving to California. Her supervisor recommended her for an ATF job at the Walnut Creek Laboratory. At the time, Macy identified as a male and began the background check process using a male name.
Macy’s background check proceeded until late March or early April 2011, when she informed the company handling the process that she would be reporting to work as a female. Within hours of receiving documentation of Macy’s new name on April 6, 2011, a supervisor at the ATF laboratory stopped the background check and canceled the hire.
Macy filed a complaint with the ATF’s equal employment opportunity (EEO) office alleging unlawful discrimination. Her complaint was initially rejected on the grounds that discrimination against transgender employees is not covered by Title VII. She appealed the decision to the Equal Employment Opportunity Commission (EEOC), which is responsible for enforcing workplace discrimination laws, offering interpretive guidance, and investigating discrimination complaints. Five EEOC commissioners determined that transgender discrimination is a form of sex discrimination under Title VII, and the case was sent back to the DOJ.
After a lengthy investigation, the DOJ’s Complaint Adjudication Office issued a final determination on July 8 affirming that Macy had been discriminated against in violation of Title VII. The decision states:
The record established that the ATF intended and began taking steps to hire [Macy] for the position―until she disclosed that she was transitioning from a man to a woman. The ATF stopped [the] hiring process when it learned that [the applicant] . . . would become Mia Macy. In light of the EEOC’s decision . . . to hold that actions based on transgender status are actions based on sex and [are] therefore covered by Title VII, the ATF’s actions were discrimination based on sex and [were] therefore prohibited by Title VII.
The DOJ laid out several forms of relief for Macy. First, within 60 days, the ATF was required to offer Macy the job she sought and award her back pay and benefits (with interest) for the period from April 2011 to January 2012. Additionally, within 30 days, the ATF was required to take corrective action to ensure discrimination does not occur again, provide Macy with compensatory damages for the injuries she suffered, refund Macy’s attorneys’ fees, and post a notice informing employees of their right to be free from unlawful discrimination and assuring them that discrimination will not occur again. Macy v. Holder.
Implications
Although the Macy ruling was not issued by a court and therefore is not binding precedent, it will likely have a significant effect on courts. Courts and agencies often rely on EEOC decisions and the reasoning in them when considering how best to interpret a law the EEOC is tasked with enforcing (e.g., Title VII). The DOJ’s reliance on the EEOC’s reasoning in the Macy case is an example of that.
Accordingly, the Macy decision makes it clear that sex discrimination occurs anytime an employer takes into account an employee’s or applicant’s gender when making an employment decision and gender is not a bona fide occupational qualification. That includes when an adverse employment action is taken against an applicant or employee because:
- She expresses her gender in a nonstereotypical manner; or
- She has transitioned from one gender to the other or is planning to do so.
Thus, there is no longer a question of whether transgender employees are afforded protection under Title VII. Employers must turn a blind eye to applicants’ and employees’ gender identification and consider applicants and employees solely on their skills. Also, the decision may signal a wave of laws to protect transgender employees’ rights.
Best practices
As the rights of transgender employees continue to be affirmed, you should prepare for a possible increase in sex discrimination claims based on gender identity and review your policies and practices to help reduce the risks of those claims. Here are suggestions to help you navigate the new terrain:
- Revise existing policies and practices. Your existing policies and practices should be applied equally to all employees. You can easily make this change by adding “gender identity or expression” to the list of protected categories in your EEO, antidiscrimination, and antiharassment policies. Likewise, amend your employee orientation and management training programs to address the addition of transgender protections.
- Audit internal forms. Audit internal forms such as employment applications and direct deposit authorizations to see which ones require the person filling them out to check male or female. If the question is unnecessary, consider removing it. If the question is necessary, consider adding an “other” option. Likewise, when processing Social Security number verifications, take a second look at “no-match” letters. No-match letters are often issued when an applicant’s stated gender does not match the Social Security Administration’s (SSA) records. Gender is optional, so consider not submitting employees’ gender at all or resubmitting Social Security number verifications without gender when faced with a no-match letter.
- Inspect insurance policies. Examine the coverage exclusions and limitations of the medical insurance plans you offer to employees. While it is not common, some policies deny healthcare coverage to transgender individuals altogether. More subtle variations include denying coverage for claims associated with gender transition (e.g., hormone therapy, hysterectomies, and psychotherapy), even though the claims might be covered by other policies. Also, some policies may limit coverage to gender-specific conditions that could exclude transgender employees (e.g., a male transitions to female but later develops prostate cancer). A close analysis of insurance coverage can help you identify gaps that might adversely affect transgender employees.
- Treat transgender employees’ status confidentially and sensitively.Again, existing employment policies and legal obligations often extend seamlessly to transgender employees. For instance, the Family and Medical Leave Act (FMLA), the Americans with Disabilities Act (ADA), the Health Insurance Portability and Accountability Act (HIPAA), and the Genetic Information Nondiscrimination Act (GINA) all limit your ability to seek medical information and require you to maintain employees’ medical information in confidence. The same principles ought to apply when you learn that an applicant or employee is transgender.However, if an employee chooses to express a different gender, an untrained workforce could expose you to liability if the employee is harassed or discriminated against by supervisors or coworkers. Training employees that such behavior is inappropriate and won’t be tolerated will reduce your risks.Once an employee announces her gender transition and begins to present herself as a member of the opposite gender, you should take appropriate measures to recognize her “new” identity. That includes changing the employee’s name and gender on all personnel and administrative records, e-mails, directories, and business cards and updating photos on identification badges and promotional materials.
- Consider restrooms, locker rooms, and other gender-specific areas. Generally, employees must use the facilities that match their full-time gender presentation, regardless of their stage of transition. Currently, there is no requirement for employers to construct new facilities to accommodate transgender employees. If you have stand-alone bathrooms or locker rooms, transgender employees should not be required to use them.
- Review your dress code. Reasonable dress and grooming codes that serve a legitimate business purpose are lawful. You should review your dress and grooming codes to avoid gender stereotypes. For example, instead of requiring men to wear suits and women to wear dresses, implement a gender-neutral policy by requiring all employees to dress professionally. If your dress or grooming codes contain gender-specific rules, they should apply to employees based on their outward gender expression, even if it does not match their presumed gender.
As with all “best practices” lists, these suggestions are not comprehensive and might not be practical for all employers. In the wake of the new developments in this area of the law, it benefits employers to be attuned to potential risks and the opportunities for curtailing those risks.
Raanon Gal is a partner with FordHarrison LLP practicing labor 
and employment law in the firm’s Atlanta, Georgia, office. He may be contacted at rgal@fordharrison.com.
Chad A. Shultz is a partner with FordHarrison LLP practicing labor and employment law in the firm’s Atlanta, Georgia, office. He may be contacted at cshultz@fordharrison.com.