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Title VII does not protect against sexual orientation discrimination (though many state and local laws do). The battle to amend this most prominent of employment laws to protect sexual orientation has been waged for years, unsuccessfully. Yet, seemingly overnight, issues of gender identity or transgender discrimination have leapfrogged to the forefront of the federal enforcement agenda and the media. Employers need to pay heed to how these developments impact their actions and policies.

The application of Title VII to protect individuals who do not conform to gender stereotypes is not new.  This was first recognized by the U.S. Supreme Court 1989 Price Waterhouse v. Hopkins decision.  But taking it a step further, in April 2012, the EEOC issued a decision (Macy v. Holder) clarifying that discrimination on the basis of gender identity or transgender status (including having transitioned or intending to do so) constitutes a form of sex discrimination under Title VII.  

Most recently, on July 21, 2014, President Obama executed Executive Order (EO 13672) that amends non-discrimination laws applicable to federal employers to include gender identity (sexual orientation was already covered) and to federal contractors and subcontractors to prohibit discrimination based on sexual orientation or gender identity. While EO 13672 will apply to all federal contractors entering into government contracts after the effective date of the implementing regulations, on August 19, 2014, the Office of Federal Contractor Compliance Programs (OFCCP) issued its own directive, effective immediately, announcing that it interprets the gender discrimination laws it enforces to include gender identity or transgender status.

Are these just paper victories for LGBT advocates? It doesn’t seem so. The EEOC and other federal agencies are pursuing enforcement action as well.  This fall, the EEOC filed its first-ever lawsuits (one in Florida, one in Michigan) seeking to protect transgender employees from discrimination under Title VII. Further, last week, the U.S. Office of Special Counsel announced its determination that the Department of the Army engaged in “frequent, pervasive and humiliating,” gender-identity discrimination against a veteran and civilian software specialist who transitioned from male to female.

This wave of enforcement activity is something employers cannot ignore in setting policies and addressing discrimination and harassment issues in the workplace. While the simple policy of not discriminating in, for example, performance evaluations or termination may not seem so difficult, an array of thorny issues will undoubtedly arise where an employee is transgender, is transitioning or has transitioned – from the use of restroom facilities; to controlling the use of pronouns by managers and coworkers; to dress codes and uniform policies; to coworker and customer relations issues; and unspoken managers’ biases.