Leyth Jamal, a former employee of the upscale retailer Saks, claims that she was discriminated against because of her transgender status. Jamal v. Saks & Company has sparked a heated debate over whether transgender individuals are protected under Title VII, which prohibits sex discrimination in employment.

Jamal, who was born a male but identifies as a woman, worked at two different Saks locations in 2011 and 2012. Her complaint alleges that she was not allowed to use the women’s restroom and was told to dress and act more masculine. Her co-workers also allegedly refused to use feminine pronouns when referring to her, and management asked her to “separate her home life from her work life.” Because of these purported actions, Jamal claims she suffered sex-based discrimination, harassment, and retaliation. Saks initially moved to dismiss the complaint on the grounds that transgender status is not a protected category under Title VII. It has since withdrawn its motion to dismiss and is defending its termination of Jamal by stating that she was fired after a customer complained that she had used inappropriate and offensive language on the selling floor in front of the customer. After its about-face on the motion to dismiss, Saks professed that its position has always been that discriminating against transgender individuals is unacceptable.

Jamal’s position is backed by various government entities. The Office of Federal Contract Compliance Programs and the Department of Justice issued directives instructing that Title VII includes gender identity and transgender status as forms of sex discrimination. Likewise, the EEOC is actively involved in this case and is championing the rights of transgender individuals across the nation.

In prosecuting these claims, the EEOC relies on Price Waterhouse v. Hopkins, a Supreme Court ruling from 1989, which held that Title VII prohibits discrimination because a plaintiff is a woman and discrimination based on the employer’s belief that she was not acting like a woman. After Price Waterhouse, the interpretation of what “sex” covers under Title VII expanded to encompass discrimination based on the failure to conform to gender expectations. Transgender individuals have relied on this theory to support their claims that Title VII covers their claims.

Four circuit courts have decided this issue and each found that a transgender plaintiff can state a claim for sex bias if the defendant took action against them because the plaintiff did not conform to a sex stereotype or norm.

Given the publicity that this case and others have received, it is likely that more transgender employees will begin pursuing similar claims. Many states already have laws protecting against transgender discrimination; however, this area of the law is largely unsettled. Considering the trend in federal law, it might be a good time to re-examine your company’s anti-discrimination policies to ensure that there are procedures to address transgender employees’ needs. Employers can also minimize their liability by working with employees who are transitioning to make certain that they feel comfortable in the workplace.