On Tuesday, August 19, 2014, the U.S. Department of Labor issued a directive to “clarify that existing agency guidance on discrimination on the basis of sex . . . includes discrimination on the bases of gender identity and transgender status.”  This directive follows President Obama’s Executive Order 13672, issued on July 21, 2014, amending existing orders to specifically prohibit federal contractors from discriminating based on gender identity.

Tuesday’s directive specifically applies to federal contractors and subcontractors, but is also part of the Department’s broader focus on cracking down on gender identity-based discrimination.  On June 30, 2014, the DOL’s Secretary announced that:

“DOL is updating its enforcement protocols and nondiscrimination guidance to clarify that DOL provides the full protection of the federal nondiscrimination laws that it enforces to individuals on the bases of gender identity and transgender status.”

The directive also cites as support the EEOC’s decision in Macy v. Holder, 2012 WL 1435995, in which the EEOC unanimously concluded that discrimination because a person is transgender is sex discrimination in violation of Title VII.  In Macy, the EEOC determined that discrimination against a transgender employee can be a form of “sex stereotyping.”  Specifically, “disparate treatment of a transgender employee because he or she does not conform to the gender stereotypes associated with his or her biological sex is a form of sex discrimination” because it is “related to the sex of the victim.”  Moreover, the EEOC found that transgender discrimination constitutes sex discrimination “regardless of whether the discrimination was motivated by sex stereotyping or by some other reason related to the employee’s gender identity, such as discomfort with the idea of a transition.”

Tuesday’s directive is part of a continuing trend by the Obama Administration to expand Title VII’s protections to LGBT employees.  These actions make clear that, moving forward, the DOL and the EEOC will construe discrimination based on “sex” under Title VII broadly enough to encompass discrimination based on gender identity and transgender status.