The recent ruling from the Equal Employment Opportunity Commission holding that transgendered workers can bring bias claims under Title VII is a “game changer” in employment discrimination law and could lead to claims under the act based on sexual orientation.

“This decision has confirmed the trend that we have seen in the courts, which is that there is no categorical exclusion in [the] law for claims for transgendered and gay employees,” said Jennifer L. Levi, director of GLAD’s Transgender Rights Project in Boston.

“It is without a doubt a watershed moment,” said Shannon P. Minter, legal director of the National Center for Lesbian Rights in San Francisco. “It is very significant to have the EEOC fully embrace the position that Title VII comprehensively and categorically protects transgendered people.”

The case involves Mia Macy, a former police detective who applied for a job as a ballistics technician for the federal Bureau of Alcohol, Tobacco, Firearms and Explosives.

Macy claims that she received positive feedback early in the hiring process, but the situation suddenly changed after she disclosed to the bureau that she was transitioning from male to female.

She says she was later falsely told that the position had been eliminated for budgetary reasons. She learned from a second ATF official that the post had been filled by another candidate.

Macy filed a formal complaint with ATF, arguing that it engaged in unlawful “sex stereotyping” based on her transgender status in violation of Title VII.

The agency asserted that she could not bring a sex stereotyping claim under Title VII. Her recourse, the agency determined, was through the internal U.S. Department of Justice system in place for considering claims based on gender identity and sexual orientation bias.

But on appeal, the EEOC reversed, ruling that transgender discrimination claims fall under Title VII’s protections.

“That Title VII’s prohibition on sex discrimination proscribes gender discrimination, and not just discrimination on the basis of biological sex, is important,” the EEOC decision in Macy v. Holder states. “If Title VII proscribed only discrimination on the basis of biological sex, the only prohibited gender-based disparate treatment would be when an employer prefers a man over a woman, or vice versa. But the statute’s protections sweep far broader than that, in part because the term ‘gender’ encompasses not only a person’s biological sex but also the cultural and social aspects associated with masculinity and femininity.”

Broader application?

While a number of federal trial and appellate courts have come to the same conclusion as the EEOC, attorneys say Macy is particularly significant because it sets a national standard for treatment of transgender-based discrimination claims.

“Having the protection of federal sex discrimination law is especially critical for transgender people who live in the 34 states that lack transgender-inclusive nondiscrimination laws,” said Masen Davis, executive director of the San Francisco-based Transgender Law Center, which represented Macy in the case. “This is a game changer.”

The ruling could also open the door for allowing other plaintiffs, such as those alleging bias on the basis of sexual orientation, to sue under Title VII.

“I think that we are going to start to see courts revisiting these old holdings that Title VII doesn’t protect gay people,” Minter said.

Since sex stereotyping against transgendered employees is often similar or identical to the kinds of actions that evidence bias against gay employees, courts could easily apply the same analysis and reach the same conclusion, lawyers say.

“There is no reason the same rationale can’t be allowed in claims against gay employees,” GLAD’s Levi said.

Philip K. Miles III, an associate in the State College, Pa., office of McQuaide Blasko, said sexual orientation under federal law “is a separate issue and will be analyzed separately.”

However, he said, there could be more claims by gay employees “using the sexual stereotyping theory.”

Some courts have already accepted such an analysis. In 2009, the 3rd Circuit in Prowel v. Wise Business Forms ruled that a plaintiff who described himself “as an effeminate man and [who] believes that his mannerisms caused him not to ‘fit in’ with the other men” in his workplace could bring a gender stereotyping claim under Title VII.

The plaintiff in that case, who is gay, claimed that he was harassed in the workplace because he has a “high voice and did not curse; was very well-groomed; wore what others would consider dressy clothes; … crossed his legs and had a tendency to shake his foot ‘the way a woman would sit,’” among other characteristics.

The court said that while Title VII does not provide a cause of action for bias claims based on sexual orientation, the plaintiff’s claim that he was harassed based on his “failure to conform to gender stereotypes” could proceed to a jury.

Minter expects more courts to follow suit after the EEOC decision.

“If you think about it, [all] anti-gay bias or prejudice is directly rooted in gender stereotypes,” Minter said. “Sexual orientation is by definition based on gender.”

The ruling should serve as a signal to employers to develop policies that discourage harassment based on traits associated with a particular gender identity or orientation, Minter added.

The case “has huge ramifications in terms of the impact on business culture and on broader social culture,” she said.

Meanwhile, legislation that would explicitly bar adverse employment actions based on sexual orientation or gender identity is stalled in Congress. If the Employment Non-Discrimination Act passes — and, as some lawmakers urge, language protecting transgendered individuals is dropped — courts could reason that Congress had an opportunity to explicitly ban transgender-based bias but chose not to.

But Levi said such an outcome is unlikely. Other federal laws, such as those specifically enumerating protection for pregnant employees, have not been read to scale back Title VII protections, she noted.

“There is no reason to interpret more comprehensive protections to be anything other than inclusive under the scope of Title VII,” she said.