Transgender Employees: The Latest Discrimination Frontier

With the rights of same-sex couples to marry protected by federal law, transgender rights have become the latest frontier in nondiscrimination law. What laws pertain to transgender employees in the workplace, and what happens to employers that violate them?

The Transgender Law Center estimates that between 2 and 5 percent of the population is transgender, although little verifiable data exist. Title VII of the Civil Rights Act of 1964, the major federal employment discrimination law, prohibits employment discrimination based on race, color, religion, sex and national origin. Although the law doesn’t specifically address sexual orientation or gender identity, the Equal Employment Opportunity Commission (EEOC) has held that these forms of discrimination are discrimination based on sex and therefore prohibited under Title VII.

Title VII applies to private employers with 15 or more employees. It also applies to all federal, state and local government agencies in their capacity as employers. Several states also have laws that specifically protect the rights of transgender individuals: California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Iowa, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New Mexico, Oregon, Rhode Island, Vermont, Washington, and the District of Columbia, according to the ACLU.

The EEOC defines “transgender” as “…people whose gender identity and/or expression is different from the sex assigned to them at birth (e.g. the sex listed on an original birth certificate). The term transgender woman typically is used to refer to someone who was assigned the male sex at birth but who identifies as a female. Likewise, the term transgender man typically is used to refer to someone who was assigned the female sex at birth but who identifies as male. A person does not need to undergo any medical procedure to be considered a transgender man or a transgender woman.”

To ensure your employment practices don’t discriminate against lesbian, bisexual, gay or transgender employees, check the following areas:

Hiring practices: Unless gender is a legitimate qualification for a job (i.e., female or male model), avoid all references to a specific gender in ads, job descriptions and employee handbooks.

Dress codes: Dress codes that place an undue burden on one sex or gender (i.e., requiring women to wear heels or makeup, while not imposing similar standards on men) create a disparate impact. Disparate impact on the basis of sex or gender identity constitutes employment discrimination.

Restrooms: With laws over who can and cannot use restrooms in public schools in the news lately, employers should look at how they provide (or limit) access to restrooms and locker rooms in their own facilities. The case Lusardi v. Dep’t of the Army involved a dispute over a transgender woman’s access to a common restroom. On appeal, the EEOC held that:


  • denying an employee equal access to a common restroom corresponding to the employee’s gender identity is sex discrimination;
  • an employer cannot condition this right on the employee undergoing or providing proof of surgery or any other medical procedure; and,
  • an employer cannot avoid the requirement to provide equal access to a common restroom by restricting a transgender employee to a single-user restroom instead (though the employer can make a single-user restroom available to all employees who might choose to use it).


Benefits: Employment practices include the provision of benefits. To avoid discrimination, check the following:


  • If you offer benefits to spouses, make sure the language in your benefit communications is non-discriminatory and applies equally to same-sex and opposite-sex spouses.
  • Ensure your health plan does not discriminate in coverage on the basis of sex or gender. In May, the U.S. Health and Human Services Department issued a final rule banning discrimination against transgender people in the healthcare system. A recently filed lawsuit, Josef Robinson v. Dignity Health dba Chandler Regional Medical Center, could rely on that rule. Robinson, a transgender male, claimed Dignity Health discriminated against transgender employees because its health plan does not cover medical treatments for sex reassignment surgery. As a result, Mr. Robinson had to pay thousands of dollars out-of-pocket for hormone therapy and a double mastectomy to treat his “gender dysmorphia.” Mental health professionals recognize this as a psychological condition caused by having a birth gender that is contrary to the one they identify with. The DSM-5, the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders that’s the “bible” of mental health professionals, lists treatment options for gender dysmorphia as “counseling, cross-sex hormones, gender reassignment surgery, and social and legal transition to the desired gender.”


Employers found guilty of discrimination may have to pay the victim’s legal fees. They might also have to pay compensatory and punitive damages in cases of intentional discrimination. Compensatory damages pay victims for out-of-pocket expenses caused by the discrimination (such as costs of a job search or medical expenses) and emotional harm suffered. Punitive damages punish an employer who has committed an especially malicious or reckless act of discrimination.


Maximum fines vary by employer size:

  • 15-100 employees, up to $50,000,
  • 101-200 employees, up to $100,000,
  • 201-500 employees, up to $200,000,
  • More than 500 employees, up to $300,000.

When in doubt whether a particular practice is discriminatory, contact an employment law attorney.

And make sure you have adequate coverage under an employment practices liability policy, since the commercial liability policy excludes coverage for employment practices.