EEOC's Inclusion of Sexual Orientation and Gender Identity Under Title VII's Prohibition of Sex Discrimination and Possible Implications for Private Employers

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By Erica Coray

2016 Bloomberg Law Write-On Competition

For the second year in a row, we invited law students from around the country to submit articles, the best of which would be published in selected Bloomberg BNA Law Reports.

Entries were evaluated by our editorial team based on accuracy, depth of analysis, writing style and usefulness to our audience. The winning articles will appear in 10 Bloomberg BNA publications and on Bloomberg Law.

Erica Coray is a third-year student at Boston College Law School, graduating in May. She is the editor in chief of the Boston College Journal of Law & Social Justice and will be an associate in the Boston office of Mintz Levin starting in the fall of 2016.

In response to congressional inaction on legislation aimed at prohibiting employment discrimination based on gender identity and sexual orientation, the Equal Employment Opportunity Commission has taken steps to interpret Title VII of the 1964 Civil Rights Act of, 42 U.S.C. §2000e-1, et seq., as already including these protections.

Following the U.S. Supreme Court's decisions in Price Waterhouse v. Hopkins, 490 U.S. 228, 49 FEP Cases 954 (1989), and Oncale v. Sundowner Offshore Services, Inc., 523 U.S. 75, 76 FEP Cases 221 (1998), the EEOC ruled, in Macy v. Holder, No. 0120120821 (EEOC April 20, 2012) , a federal employee case, that Title VII protects transgender individuals who have been discriminated against based on their gender identity.

More recently, the EEOC, in Baldwin v. Foxx, No. 0120133080 (EEOC July 15, 2015) , another federal sector case, interpreted Title VII as also protecting employees from discrimination based on sexual orientation.

Despite the importance of these decisions for protection of federal employees, it remains to be seen whether and how the EEOC's interpretations will hold up when applied to private employers.

It seems likely that courts will agree with the EEOC's interpretation of Title VII as including discrimination based on gender identity, as numerous federal circuit courts have already applied this interpretation following the decision in Price Waterhouse.

However, it is less clear whether courts will agree to extend the interpretation of Title VII's prohibition of discrimination based on sex to cover discrimination based on sexual orientation as district courts have been inconsistent and no circuit court has yet definitively applied Title VII in this way.

Court Interpretations of Title VII and Discrimination Based on Sex

Title VII prohibits employment discrimination “because of … race, color, religion, sex, or national origin.” For years, the protection based on “sex” was interpreted as only protecting women from discriminatory employment practices, with courts continually rejecting claims based on gender identity. See, e.g., Ulane v. Eastern Airlines, Inc., 742 F.2d 1081, 35 FEP Cases 1348 (7th Cir. 1984); Sommers v. Budget Marketing, Inc., 667 F.2d 748, 27 FEP Cases 1217 (8th Cir. 1982); Holloway v. Arthur Andersen & Co., 566 F.2d 659, 16 FEP Cases 689 (9th Cir. 1977).

However, in 1989, the Supreme Court in Price Waterhouse expanded the scope of discrimination based on “sex” to include the prohibition of employment decisions based on “sex stereotyping.” Hopkins, a female manager at an accounting firm, was consistently denied promotion and advised she should “walk more femininely, talk more femininely, dress more femininely, wear make-up, have her hair styled, and wear jewelry.”

In determining that Title VII applied, the court interpreted “sex” to include gender and prohibited employers from making decisions based on stereotypes of how an individual should look or act based on their sex. (“[W]e are beyond the day when an employer could evaluate employees by assuming or insisting that they matched the stereotype associated with their group…”).

Almost 10 years later, a unanimous Supreme Court in Oncale ruled that same-sex harassment is also sex discrimination under Title VII, finding in favor of a heterosexual male employee who had been subjected to sex-related physical assaults and threats of rape by two heterosexual male colleagues.

Recognizing that this type of harassment was likely not the “principal evil” contemplated by Congress in passing Title VII, the Court nevertheless stated that “statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.”

With Price Waterhouse and Oncale as precedent, courts began to recognize gender identity in particular as protected under Title VII, with the U.S. Court of Appeals for the Sixth Circuit being the first to apply Title VII to discrimination against a transgender individual.

In Smith v. City of Salem, 378 F.3d 566, 94 FEP Cases 273 (6th Cir. 2004) , the Sixth Circuit concluded that a transgender lieutenant in the Salem Fire Department had been discriminated against based on sex, stating that “discrimination against a plaintiff who is a transsexual—and therefore fails to act and/or identify with his or her gender—is no different from the discrimination … in Price Waterhouse.”

The Eleventh Circuit in Glenn v. Brumby, 663 F.3d 1312, 113 FEP Cases 1543 (11th Cir. 2011) , followed suit, ruling that Title VII protects transgender individuals and stating that “[a] person is defined as transgender precisely because of the perception that his or her behavior transgresses gender stereotypes.”

Decisions out of the First and Ninth circuits have also applied similar interpretations of sex discrimination outside the context of Title VII. (SeeSchwenck v. Hartford, 204 F.3d 1187 (9th Cir. 2000) (transsexual prisoner sued state officials for attempted rape by guard); Rosa v. Parks W. Bank & Trust Co., 214 F.3d 213 (1st Cir. 2000) (biological male who dresses in traditionally feminine attire sued bank for denial of loan application)). Additionally, numerous district courts have applied sex discrimination protections to transgender employees based on sex stereotyping.

Comparatively, application of Title VII to discrimination based on sexual orientation has been more limited. Although some district courts have interpreted Title VII as prohibiting discrimination based on sexual orientation, no circuit court has recognized such a claim.

Having previously found protection for transgender individuals under Title VII, the Sixth Circuit explicitly refused to recognize a claim of sex discrimination based on sex stereotyping where a male employee was harassed based on his perceived homosexuality (Vickers v. Fairfield Med. Ctr., 453 F.3d 757, 98 FEP Cases 673 (6th Cir. 2006) ).

The court said applying Title VII “would have the effect of de facto amending Title VII to encompass sexual orientation as a prohibited basis for discrimination.”

EEOC's Interpretation of Title VII to Include Protections Based on Gender Identity and Sexual Orientation

In the landmark 2012 decision in Macy v. Holder, the EEOC ruled that any discrimination against a transgender employee is sex discrimination, stating that discrimination because of “sex” under Title VII includes “discrimination based on gender identity, change of sex, and/or transgender status.”

Macy, a transgender woman, initiated her EEOC claim after being denied a job with the Bureau of Alcohol, Tobacco, Firearms and Explosives following notification to the agency that she was in the process of transitioning from male to female.

Relying on the Court's decision in Price Waterhouse, the EEOC recognized that discrimination against transgender individuals is discrimination “because of … sex” under Title VII based on sex stereotyping.

However, the EEOC further concluded that sex stereotyping is only one avenue of proving sex discrimination related to gender identity, ruling that “[w]hen an employer discriminates against someone because the person is transgender, the employer has engaged in disparate treatment ‘related to the sex of the victim.’ ” (Citing Schwenk, 204 F. 3d 1187).

As a result, any consideration of an individual's gender identity in employment decisions is discrimination based on sex, whether or not the consideration is based specifically on sex stereotypes.

Recently, in a July 2015 decision, the EEOC applied Title VII's prohibition of sex discrimination to sexual orientation. In Baldwin v. Foxx, a supervisory air traffic control specialist brought a claim against the Federal Aviation Administration stating that he was denied a permanent position because of his sexual orientation.

Recognizing that sexual orientation is not explicitly listed as a prohibited basis for discrimination in Title VII, the EEOC ruled that “[d]iscrimination on the basis of sexual orientation is premised on sex-based preferences, assumptions, expectations, stereotypes, or norms,” and thus “allegations of sexual orientation discrimination involve sex-based considerations” that are impermissible under Title VII.

As a result, in the EEOC's view, sexual orientation discrimination is sex discrimination because it involves less favorable treatment based on the employee's sex, as “associational discrimination” based on sex, and/or based on gender stereotypes.

Conclusions and Recommendations for Employers

Courts have been embracing the language of Price Waterhouse in applying Title VII to transgender individuals based on sex stereotyping. Although the EEOC decision in Macy expands the avenues for transgender individuals bringing claims of sex discrimination, transgender individuals will likely continue to be most successful under the theory of sex stereotyping that has been widely recognized by courts.

Alternatively, it is less clear whether the EEOC's reasoning in will lead to greater success for claims based on sexual orientation. The EEOC identified sexual orientation discrimination as sex discrimination under the judicially recognized theory of sex stereotyping, but also recognized that discrimination based on sexual orientation can occur independent of sex stereotyping.

However, because courts have been more skeptical of applying Title VII protections to sexual orientation discrimination, even under a theory of sex stereotyping that protects gender identity, it will likely take time before discrimination based on sexual orientation is widely recognized as sex discrimination by courts.

Although EEOC decisions aren't binding on private employers, companies will likely see more claims brought under the EEOC's interpretation of sex discrimination as including gender identity and sexual orientation discrimination, with increasing rates of success.

As a result, employers should re-evaluate their employment discrimination policies to incorporate prohibitions on discrimination based on gender identity and sexual orientation. Additionally, employers should train their employees, particularly managers and supervisors, on proper implementation of new anti-discrimination policies.