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Title VII Does Not Cover Sexual Orientation…Or Does It?

From the time I began practicing employment law many (too many) years ago, and probably for longer than that, we employment types have been quite comfortable in advising our clients that Title VII does not cover sexual orientation; in other words, when it comes to the homosexual or bisexual employee, discriminate away. It has become fairly clear, however, that that rather glib advice is incomplete and perhaps even wrong.

In a recent case against a federal agency, the EEOC ruled that a claim of “gender identity, change of sex, and/or transgender status” is covered by Title VII. Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 0120120821 (Apr. 20, 2012). After being offered a job conditioned upon a background check, Ms. Macy notified the BATFE that she was transitioning from male to female. Less than a week later, she was notified that the position had been filled by someone else.

Ms. Macy then filed a complaint with the agency alleging that she had been discriminated against on the basis of sex, adding that she was also alleging gender identity and sex stereotyping by the agency. The EEOC held on appeal that Title VII’s prohibition of discrimination based on sex included not only “biological sex, but also gender stereotyping—failing to act and appear according to expectations defined by gender.” The EEOC based this conclusion on its reading of several cases, most importantly the Supreme Court’s decision in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) and some of its progeny. In Price Waterhouse, the Court found that Title VII’s provisions were violated when an employer discriminated against an individual for failing to conform to “gender-based expectations.” The EEOC’s decision, however, went further than Price Waterhouse finding that gender stereotyping, which is relied on by most of the courts that have found that Title VII protects transgender employees, is not the only way to prove sex discrimination. The EEOC went on to find that valid theories of sex discrimination 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 . . . .”

Neither the EEOC nor the courts have taken the next step and found that discrimination based on sexual orientation is a form of sex stereotyping, but it takes no great leap of imagination to see the argument. Being born male and presenting female is certainly no more a failure to live up to sexual stereotypes than being sexually attracted to others of one’s own sex. It is difficult to see any meaningful difference for these purposes between being homosexual and being transgender, and it is quite reasonable to expect that before long either a court or the EEOC will agree.

In light of this possibility—which I would characterize more as a probability—the prudent employer will take steps now to avoid liability in the future, including:

  • Revising HR policies to include a prohibition of sex discrimination, specifically including a prohibition of sex stereotyping;
  • Modifying, if necessary, pre-employment background checks;
  • Reviewing and making necessary changes to the restroom and changing or locker room policies, dress codes, issuance of new employee identification documents, and the like;
  • Investigate the possibility of including coverage under the company’s health insurance for transition-related medical procedures; and
  • Perhaps most importantly, be sure to include sex stereotyping in your anti-discrimination training at all levels of the company.

It is important for employers to get out in front of this issue and take the necessary and prudent steps to avoid potential liability. If you have any questions regarding discrimination or harassment in your workplace, please contact the author of this article or any of Butler Snow’s Labor and Employment attorneys for guidance.