Significant expansion of the antidiscrimination protections afforded to members of the LGBT community was accomplished in 2014 through executive action by President Barack Obama, the U.S. Department of Labor (DOL), and the attorney general (AG). The push for more protection of LGBT employees culminated in two lawsuits in which the Equal Employment Opportunity Commission (EEOC) challenged the layoff and termination of employees undergoing gender transition procedures. The EEOC’s litigation posture, bolstered by executive action, suggests that employers should anticipate increased enforcement activity in this unsettled area. 
Title VII of the Civil Rights Act of 1964 has always prohibited discrimination, harassment, and retaliation “because of sex” and “on the basis of sex.” Some states have adopted statutes that broaden that concept to include not only “sex” but also “sexual orientation [and] gender identity.” Although Title VII doesn’t explicitly prohibit sexual orientation or gender identity discrimination, the EEOC has now taken the position that discrimination based on gender identity (specifically, a “change in gender”) is discrimination “based on sex.” Similar pronouncements are found in the EEOC’s “Strategic Enforcement Plan, FY 2013-2016,” issued on December 17, 2012. However, many federal courts around the country have ruled that the language of Title VII doesn’t extend to the issues encompassed by the new executive actions.
Presidential action and DOL adoption
The president’s Executive Order signed July 21, 2014, prohibits discrimination by government contractors based on “sexual orientation and gender identity.” In announcing his action, the president spoke broadly about protecting the “lesbian, gay, bisexual and transgender” population by prohibiting the federal government from discrimination against LGBT employees and “prohibit[ing] all companies that received a contract from the federal government from discriminating against their LGBT employees.” The White House noted that “no current federal law adequately protects [LGBT] workers from employment discrimination.”
On August 19, 2014, the DOL issued Directive 2014-02, making the executive action applicable to all federal contractors and subcontractors, effective upon the expiration of the required notice period, estimated to be mid-April 2015. Once the directive becomes effective, federal contractors will be required to update the equal employment opportunity (EEO) clauses in their subcontracts and purchase orders, ensure that applicants and employees are not discriminated against on the basis of sexual orientation and gender identity, update EEO statements in job solicitations, and post updated notices.
EEOC files ‘gender transition’ lawsuits
Following the Executive Order, the EEOC filed two lawsuits in federal court on September 25, 2014—one in Florida and the other in Michigan—asserting that employees had been unlawfully terminated by their employers when they revealed that they were transitioning from male to female.
In the Florida case, the EEOC claims that after she disclosed her status, an employee’s position was eliminated, but her job was later filled. In the Michigan lawsuit, the employee was fired allegedly because her proposed change of gender was unacceptable. In both cases, the EEOC alleges that the employees were terminated “because of sex” in violation of Title VII, thus challenging the courts to address the scope of the Act’s express language.
AG’s declaration
On December 18, 2014, departing AG Eric Holder issued a memorandum to all U.S. attorneys and heads of department components titled “Treatment of Transgender Employment Discrimination Claims in Title VII.” The AG noted in his memorandum that Title VII makes discrimination “because of . . . sex” unlawful and that “questions have arisen concerning the appropriate legal standard for establishing claims of gender identity discrimination, including discrimination claims raised by transgender employees.” The memorandum defines “transgender” to mean “people with [a] gender identity that is different from the sex assigned to them at birth” and “gender identity” to mean “an individual’s internal sense of being male or female.”
Citing as support for his position the EEOC action, the president’s July Executive Order, and the DOL’s directive, the AG concluded that “as a matter of plain meaning, . . . Title VII’s prohibition against discrimination ‘because of . . . sex’ encompasses discrimination founded on sex-based considerations, including discrimination based on an employee’s transitioning to or identifying as a different sex altogether.” Thus, the AG directed that the U.S. Department of Justice (DOJ) “will no longer assert that Title VII’s prohibition against discrimination based on sex does not encompass gender identify per se (including transgender discrimination).”
Next steps
Employers should review and renew all antidiscrimination policy statements to ensure they address any existing state or local law (covering sex, sexual orientation, and gender identity). Consider augmenting your antidiscrimination statements to cover LGBT categories and include gender transitioning and gender identity issues as well.
During an open workshop on January 14, the EEOC addressed the ongoing issue of workplace harassment at length, underscoring the need for employers to consider updating and refreshing supervisory and employee training on the federal government’s new emphasis on gender 
identity and sexual harassment and establishing an effective investigation process to demonstrate that harassment complaints are taken seriously.
Geoffrey D. Rieder is an attorney with Foster, Rieder & Jackson, P.C. in Albuquerque, New Mexico. He may be contacted at geoff@frjlaw.com.