From the time I began practicing employment law (too many) years ago―and probably for longer than that―employment lawyers have been quite comfortable advising clients that Title VII of the Civil Rights Act of 1964 (the federal law that prohibits discrimination based on gender and other protected status) does not cover sexual orientation. Many states’ laws don’t prohibit discrimination based on sexual orientation, either. In other words, when it comes to homosexual or bisexual employees, discriminate away. 
However, it has become fairly clear that such glib advice is incomplete and perhaps even wrong not just from an ethical standpoint but also in terms of legal liability. This article provides an overview of some changes and developments to be mindful of when addressing sexual orientation issues in the workplace.
EEOC weighs in
In a case against a federal agency, the Equal Employment Opportunity Commission (EEOC) ruled that claims of “gender identity, change of sex, and/or transgender status” were covered by Title VII. After being offered a job conditioned on a background check, Mia Macy notified the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) that she was transitioning from male to female. Less than a week later, Macy was notified that the position had been filled by someone else.
Macy filed a complaint with the ATF alleging that she had been discriminated against on the basis of sex, adding that she was also asserting gender identity and sex-stereotyping claims against the agency. She then appealed to the EEOC, which held that Title VII’s prohibition against sex discrimination includes not only “biological sex but also gender stereotyping―failing to act and appear according to expectations defined by gender.”
The EEOC based its conclusion on several cases, the most important of which were the U.S. Supreme Court’s 1989 decision in Price Waterhouse v. Hopkins and subsequent decisions based on the Price Waterhouse ruling. In the Price Waterhouse case, the Court found that an employer violated Title VII by discriminating against an individual for failing to conform to “gender-based expectations.”
However, in its decision, the EEOC went further than the Price Waterhouse ruling, finding that gender stereotyping, which has been relied on by most courts that have ruled that Title VII protects transgender employees, is not the only way to prove sex discrimination. The EEOC found that valid sex discrimination claims include actions motivated by “hostility, a desire to protect people of a certain gender, by assumptions that disadvantage men, by gender stereotypes, or by the desire to accommodate other people’s prejudices or discomfort.” Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 0120120821 (Apr. 20, 2012).
Practical advice
Neither the EEOC nor the courts have found that sexual orientation discrimination is a form of sex stereotyping, but it does not take a great leap of imagination to see that result. Being born male and presenting as a female is certainly no more of a failure to live up to sexual stereotypes than being sexually attracted to a person of one’s own sex. It is difficult to see any meaningful difference between being homosexual and being transgender, and it is quite reasonable to expect that either a court or the EEOC will take that position before long.
In light of that possibility―which I would characterize as more of a probability―prudent employers will take steps now to avoid liability in the future, including:
- Revising HR policies to include a prohibition against sex discrimination, specifically sex stereotyping;
- Modifying preemployment background checks if necessary;
- Reviewing and making necessary changes to restroom, changing room, or locker-room policies and dress codes;
- Issuing new employee identification documents; and
- Investigating the possibility of providing coverage for sex transition-related medical procedures under your health insurance plan.
Perhaps most important, be sure to cover sex stereotyping in antidiscrimination training at all levels of your company. It is critical for you to get in front of this issue and take the necessary and prudent steps to avoid potential liability.
Harold Pinkley is with Butler Snow’s labor and employment practice group in the firm’s Nashville, Tennessee, office. He may be contacted at harold.pinkley@butlersnow.com.