How will the Trump administration handle discrimination cases involving transgender employees? The EEOC’s pursuit of a sex discrimination claim on behalf of Aimee Stephens, a transgender woman who was terminated by a Michigan funeral home for expressing her intention to dress in conformance with her gender identity, will be an early indicator.

In a brief filed with the Sixth Circuit on January 26, 2017, Stephens argues that the interests of transgender individuals will not be adequately represented under the new administration. Under the Obama administration, the EEOC sued Stephens’ former employer, R.G. & G.R. Harris Funeral Homes, for sex discrimination on her behalf. The funeral home owner argued permitting Stephens to dress as a woman would conflict with his Christian beliefs and pose a threat to his free exercise of religion. The Eastern District of Michigan dismissed the EEOC’s lawsuit in August 2016 on the grounds that the funeral home is exempt from Title VII under the Religious Freedom Restoration Act (“RFRA”). Although the EEOC appealed to the Sixth Circuit in October 2016, Stephens filed a motion to intervene as plaintiff-appellant, citing her belief that the new administration would not adequately represent her interests.

Over the course of Obama’s presidency, the trend in federal government was the extension of protections for transgender individuals. Many federal agencies, including the EEOC, OFCCP, OSHA, and HHS, previously promulgated rules and guidance affording increased protections for transgender individuals. Numerous federal courts, including the First, Sixth, Ninth, and Eleventh circuits, have applied theories of sex stereotyping under Section 1983 or Title VII, resulting in protections for transgender individuals. Few courts, however, have found gender identity or transgender status is a protected class under Title VII. Indeed, the district court in G.R. & R.G. Funeral Homes rejected that position when presented by the EEOC.

Whether the EEOC will continue to aggressively pursue the expansion of Title VII to include transgender protections remains an open question. While still just a rumor, it has been reported that the Trump administration is considering an executive order that would provide individuals and organizations the ability to deny employment, as well as services and other benefits, to LGBT individuals on religious grounds. In her motion, Stephens references the removal of the White House webpage dedicated to LGBT rights, the federal government’s requests for extensions of time in other civil rights cases, and the President’s authority over EEOC appointments as reasons she believes her interests may not be adequately represented. Further, the current acting chair of the EEOC, Victoria Lipnic, was one of two commissioners who voted against the EEOC’s July 2015 decision that held that sexual orientation is included within the definition of sex for discrimination purposes under Title VII. The Trump administration also has rescinded guidance previously issued by the departments of Education and Justice under the Obama administration that took the position that the Title IX prohibitions of discrimination “on the basis of sex” require access to sex-segregated facilities based on gender identity.

On the other hand, the EEOC filed its opening brief with the Sixth Circuit just two weeks after Stephens moved to intervene, arguing that (a) discrimination based on transgender status and/or transitioning is inherently sex discrimination under Title VII; and (b) the RFRA does not provide the for-profit funeral home a defense in this case. This stance is consistent with that taken by the EEOC while Obama was in office. Further, Trump has indicated Executive Order 13672, which banned federal contractors from discriminating against LGBT employees, will stand.

Stephens’ case may have implications for the protection of transgender employees at the federal level, but employers need to keep in mind that many states explicitly prohibit discrimination against transgender workers. At least sixteen jurisdictions – including California, Illinois, Maryland, Massachusetts, New Jersey and the District of Columbia – now include gender identity as a protected characteristic under their discrimination laws.

Employers are advised to familiarize themselves with their state and local laws, to take a proactive role in preventing transgender, or gender identity, discrimination in the workplace, and to have a plan in place to accommodate the potential needs of transgender workers.

In a notable recent court decision highlighting transgender issues and employer sponsored benefit plans, on January 13, 2017, in Baker v. Aetna Life Ins. Co., 2017 U.S. Dist. LEXIS 5665, 2017 WL 131658 (N.D. Tex.), Aetna Life Insurance Co. (“Aetna”) defeated a claim by a transgender employee of L-3 Communications Integrated Systems LP (“L-3”) who alleged that Aetna’s denial of her disability benefits constituted discrimination based on her gender identity. The plaintiff, Charlize Marie Baker (“Baker”), is a participant in L-3’s Employee Retirement Income Security Act (“ERISA”) covered group health plan and short term disability benefits plan (“STD Plan”). Aetna is the third party administrator (“TPA”) of the group health plan and the claim fiduciary and administrator of the STD Plan.

In 2011, Baker began transitioning from male to female, legally changing her name and gender designation on all government issued documents. In 2015, after a consultation with a health care professional who determined that breast implants were medically necessary to treat gender dysphoria, Baker scheduled surgery and sought benefits under the STD Plan to cover her post-surgery recovery. Coverage under the group health plan and benefit claims under the STD Plan were denied. Filing suit against Aetna and L-3, Baker alleged that Aetna and L-3 discriminated against her based on her gender identity in violation of Section 1557 of the Affordable Care Act (the “ACA”), that Aetna denied her benefits under the STD Plan in violation of ERISA, and that Aetna and L-3 violated Title VII by discriminating against her based on her sex.

The court held that there is no controlling precedent that recognizes a cause of action under Section 1557 for discrimination based on gender identity with Baker failing to cite any precedent that recognizes such a cause of action. The court also held that ERISA does not recognize such a claim. Specifically, the court concluded that it is up to Congress to decide whether it wants to create in ERISA a protection that the statute does not expressly provide. Lastly, regarding Baker’s Title VII claims, the court found that Aetna was not an employer of Baker under the “single employer” test or the “hybrid economic realities/common law control” test. However, the court declined to dismiss Baker’s Title VII claims against L-3, finding Baker did sufficiently argue that she was denied employee benefits due to her sex.

Takeaways

While the Northern District of Texas declined to find a cause of action for gender identity discrimination under Section 1557 of the ACA, there are several cases of gender identity or transgender discrimination pending that may further impact the law for these benefit claims under Section 1557. There is little likelihood, however, that a claim of gender identity discrimination will be successful under ERISA. If the ACA is repealed under the Trump administration, Section 1557 will no longer be available and transgendered employees would be limited to claims under Title VII, to the extent that employees are successful in arguing that discrimination on the basis of gender identity constitutes sex discrimination.

Kyler Prescott was a 14 year old transgender boy who was receiving puberty-delaying medication to help him transition.  Shortly before Kyler’s death he had “suicidal ideation” and was taken to Rady Children’s Hospital – San Diego in April 2015.  The hospital has a Gender Management Clinic to provide services to children with gender dysphoria and related issues.  A lawsuit under the ACA’s non-discrimination provision, § 1557, alleges that after admission, despite assurances that he would be referred to with masculine pronouns, hospital employees referred to Kyler as a girl.  The suit claims that the hospital’s actions discriminated against Prescott “resulting in his inability to access necessary services and treatment during a dire medical crisis.” The federal lawsuit, filed in the Southern District of California, further alleges that the use of female references exacerbated his condition and that he thereafter had further difficulties and ultimately committed suicide.

As discussed in our recent October 6, 2016 webinar and in our Client Advisory, HHS’s Office of Civil Rights (“OCR”) final § 1557 regulations explicitly include coverage for gender identity and sexual stereotypes.  They also state that covered entities must “treat individuals consistent with their gender identity . . . .” 45 C.F.R. § 92.206.  This lawsuit appears to be one of the first under § 1557 for gender identity discrimination.  It will surely not be the last.

The suit focuses on claims that nurses and other staff repeatedly used feminine pronouns in referring to Kyler despite assertions in the court pleadings of multiple calls by his mother to the hospital to explain his distress at this alleged conduct.  Hospital staff failed to use Kyler’s preferred pronouns despite hospital records showing Kyler’s legal name and gender change from female to male, according to the suit.

The results of the lawsuit, which at this time are only unproven allegations, will await further court proceedings. What the suit clearly shows, however, is that compliance with § 1557’s notice and policy requirements, effective October 16, was only the beginning of § 1557 compliance needs for covered health care entities.  Among the necessary next steps in compliance with which we are assisting clients are developing appropriate training of all staff interacting with patients and companions on the requirements of § 1557 in providing services, proper categorization of gender in health care records and in-patient references, as well as the need for training and visibility on provider non-discrimination and grievance policies.  This lawsuit dramatically emphasizes the urgency for continuing efforts to achieve full compliance with § 1557 and the OCR final regulations to avoid § 1557 discrimination claims on the expansive grounds covered by § 1557 as interpreted in OCR’s final regulations.

Nathaniel M. Glasser
Nathaniel M. Glasser

North Carolina made waves last week by enacting legislation prohibiting cities from allowing transgender individuals to use public restrooms that match their gender identity and further restricting cities from passing anti-discrimination ordinances that would give protected status to sexual orientation or gender identity.

Employers in North Carolina and across the country, however, should be aware of the trend in the federal courts and agencies to grant protections to transgender workers under Title VII of the Civil Rights Act.  Last week two federal courts allowed transgender plaintiffs to proceed with their gender discrimination claims, representative of the growing acceptance of sex stereotyping or gender nonconformity theories under these circumstances.

In Fabian v. Hospital of Central Connecticut, No. 3:12-cv-01154 (D. Conn. Mar. 18, 2016), the District of Connecticut denied summary judgment to a hospital on a surgeon’s sex bias claims.  The surgeon alleged that the hospital failed to hire her after learning of her plan to transition from male to female.  Tracing the history of transgender claims under Title VII, Judge Underwood, a well-respected jurist in the district, noted that although most early cases considering the issue held that Title VII does not protect transgender individuals, courts more recently have allowed such claims to proceed on a theory that the term “sex” in Title VII refers to discrimination based on factors related to or having something to do with sex.

The District of Arizona reached a similar conclusion in Doe v. Arizona, No. 2:15-cv-02399 (D. Ariz. Mar. 21, 2016).  In that case, a male transgender correctional officer alleged he was not safe at work because his coworkers, who referred to him as “he/she” or “it,” would not respond to his emergency calls.  The court denied Arizona’s motion to dismiss, finding that the plaintiff’s allegation of transgender status satisfied the “protected status” element of a gender discrimination claim under Title VII.  (While not the subject of this post, this case also has important implications regarding failure to exhaust administrative remedies for retaliation claims.)

These courts join a number of federal courts – including the First, Sixth, Ninth, and Eleventh Circuits –that have extended protections to transgender individuals under the sex discrimination provisions of Title VII or Section 1983.  Federal agencies also have expressed their intent to enforce protections for transgender workers.  For instance:

  • The EEOC interprets Title VII as prohibiting discrimination based on gender identity, a position asserted against a Florida-based organization of health care professionals, resulting in a consent decree in 2015, and against a Michigan funeral home in a lawsuit surviving a motion to dismiss.
  • Pursuant to Executive Order 13672, federal contractors are now prohibited from discriminating on the basis of gender identity, and OFCCP has issued amended regulations incorporating this prohibition.
  • OSHA has issued a guide advising that transgender employees should be permitted access to restrooms and locker rooms consistent with their gender identity.
  • Regarding the implementation of Section 1557 of the Affordable Care Act, the Department of Health and Human Services has issued a Notice of Proposed Rulemaking, which would incorporate discrimination on the basis of gender identity into the definition of “on the basis of sex.”

Thus, even if North Carolina’s law survives the recent legal challenge in court, employers should be aware that federal law may still grant protections to transgender workers.  Indeed, in January 2015, the Eastern District of North Carolina denied a hospital’s motion to dismiss a claim of sex discrimination brought by a certified nursing assistant alleging she was denied a position based on her transgendered status.

Additionally, regardless of the viability of a claim for transgender discrimination under federal law, at least sixteen states – including California, Illinois, Maryland, Massachusetts, New Jersey – and the District of Columbia, now include gender identity as a protected characteristic under their discrimination laws.  Employers outside of North Carolina should know whether state or local law provides similar protections.

Employers are advised to take a proactive role in preventing transgender, or gender identity, discrimination in the workplace and to have a plan in place to accommodate the potential needs of transgender workers.

My colleague Nathaniel M. Glasser recently authored Epstein Becker Green’s Take 5 newsletter.   In this edition of Take 5, Nathaniel highlights five areas of enforcement that U.S. Equal Employment Opportunity Commission (“EEOC”) continues to tout publicly and aggressively pursue.

  1. Religious Discrimination and Accommodation—EEOC Is Victorious in New U.S. Supreme Court Ruling
  2. Transgender Protections Under Title VII—EEOC Relies on Expanded Sex Discrimination Theories
  3. Systemic Investigations and Litigation—EEOC Gives Priority to Enforcement Initiative
  4. Narrowing the “Gender Pay Gap”—EEOC Files Suits Under the Equal Pay Act
  5. Background Checks—EEOC Seeks to Eliminate Barriers to Recruitment and Hiring

Read the Full Take 5 here.