The legal landscape related to sexual orientation and gender identity has been shifting in recent years. The impact of same-sex marriage on employers and other topics involving homosexual employees and their partners have been featured in previous issues of this newsletter. Recent lawsuits and statements by key governmental officials have now placed transgender/gender identity discrimination and other issues at the forefront. 
There is no universally accepted definition of “transgender.” The term usually refers to an individual whose gender identity does not match his or her biological gender. Transgender is sometimes confused with sexual orientation, but gender identity is an independent issue. Further, some transgender people may undergo medical procedures to physically align their gender to their gender identity. As this article illustrates, employers need to keep an eye on this rapidly changing area of the law.
Liability for transgender discrimination
The law relating to whether an employer can be liable for gender identity discrimination is still developing. In the few written opinions on the topic, there have been varying conclusions. The U.S. 10th Circuit Court of Appeals (whose rulings apply to Colorado, Kansas, New Mexico, Oklahoma, Utah, and Wyoming employers) is one of the few courts that have actually issued a written ruling addressing gender identity discrimination.
In a 2007 case, Etsitty v. Utah Transit Auth., the 10th Circuit concluded that discrimination based on a person’s status as a “transsexual” is not discrimination “because of sex” under Title VII of the Civil Rights Act of 1964. The 10th Circuit also ruled in that case that “transsexuals” are not members of a protected class under the Fourteenth Amendment to the U.S. Constitution. Therefore, that is currently the law in Utah. Etsitty v. Utah Transit Auth., 502 F.3d 1215, 1222 (10th Cir., 2005).
Although the law in the 10th Circuit and Utah seems clear, other courts have concluded that transgender discrimination violates Title VII as discrimination based on sex. Accordingly, a universal definitive and prevailing conclusion about whether gender identity discrimination violates Title VII has not emerged. Further, there is an increasing trend toward wider recognition of liability for transgender discrimination.
In addition, some courts have recognized gender identity discrimination under a “sex-stereotyping” theory derived from Price Waterhouse v. Hopkins, a 1989 U.S. Supreme Court case. In essence, liability for discrimination under Title VII has been explicitly recognized “based on an employee’s failure to conform to stereotypical gender norms.” Even the 10th Circuit has recognized this theory.
Action by the executive branch
On July 21, 2014, President Barack Obama issued Executive Order 13672. In that Executive Order, the president announced that gender identity discrimination is prohibited in federal employment and for government contracting.
On December 15, 2014, U.S. Attorney General Eric Holder sent a memorandum regarding transgender discrimination to the heads of federal governmental departments. In the memorandum, the attorney general stated: “I have determined that the best reading of Title VII’s prohibition of sex discrimination is that it encompasses discrimination based on gender identity, including transgender status.” He added that “the [U.S.] Department [of Justice] will no longer assert that Title VII’s prohibition against discrimination based on sex does not encompass gender identity per se, including transgender discrimination.”
EEOC’s position
According to the U.S. attorney general, the Equal Employment Opportunity Commission (EEOC) determined in 2012 that gender identity discrimination constitutes discrimination on the basis of sex under Title VII. Recent EEOC lawsuits clearly show that the agency intends to pursue court action against employers that take adverse employment actions against transgender employees.
On September 25, 2014, the EEOC filed two lawsuits—one in Florida and one in Michigan—relating to transgender discrimination. In both lawsuits, the agency has alleged that discharging an employee because she is transgender constitutes discrimination on the basis of sex and was “motivated by sex-based considerations.” Consequently, the EEOC alleges, the conduct in each case violates Title VII. Although the cases have not been decided, it will be interesting to follow how they proceed and to learn whether the courts will vindicate the EEOC’s position.
Message to employers
Employers need to be aware of the potential workplace issues that may follow the increasing social and judicial recognition of LGBT rights. As with any legally protected status, employers should take steps to prevent discrimination against transgender employees. Employers that fail to take action to prevent such discrimination may be liable under Title VII and other state and federal discrimination laws.
HR departments should take transgender employees’ complaints about discrimination, harassment, and disparate treatment seriously. That likely will require taking appropriate steps to eliminate transgender discrimination and harassment. It will also require conducting thorough investigations into complaints about transgender discrimination to prevent any possible discrimination claims or allegations of retaliation for complaining about discrimination.
Ryan B. Frazier is an attorney with Kirton McConkie in Salt Lake City, Utah. He may be contacted at rfrazier@kmclaw.com .
It’s wonderful that transgender people’s harassment is finally being addressed in workplaces. Hopefully this will lead to more diverse workplaces and less unemployed transgender people.