Why it matters: Employers should take note – this settlement affirms the EEOC’s position that discrimination against transgender workers constitutes a violation of Title VII, following a 2012 case where the agency held that such stereotyping on the basis of sex is illegal in Macy v. Department of Justice, involving a police detective in Phoenix who transitioned from male to female. In a press release about the deal, the EEOC said that courts are also increasingly recognizing that discrimination based on transgender status – also referred to as gender identity – constitutes a violation of Title VII’s prohibition on sex discrimination.

Detailed Discussion

The Equal Employment Opportunity Commission recently reached a conciliation agreement with a supermarket chain accused of discriminating against a transgender employee, including a $50,000 payment to the victim.

Cori McCreery approached supervisors at Don’s Valley Market in Rapid City, South Dakota, to inform them of her intent to transition from male to female. In response, the supermarket chain fired the store clerk, the EEOC alleged, despite her five years of good performance for the company and recent promotion. McCreery said she was told that she was “making other employees uncomfortable.”

The agency alleged the termination violated Title VII’s prohibition on gender discrimination. “Employers need to be made aware that their personal myths, fears, and stereotypes about gender identity can subject them to liability if they act upon them in an employment setting,” Julie Schmid, acting director of the EEOC’s Minneapolis Area Office, which handled the case, said in a statement.

In addition to the $50,000 payment, Don’s Valley Market agreed to provide McCreery with a letter of apology and a letter of recommendation. In addition, the chain must make several policy changes, including conducting annual antidiscrimination training for all employees, establishing and distributing an antidiscrimination policy to all employees, and reporting all future complaints of discrimination to the EEOC.

Lambda Legal, which represented McCreery, noted that the payment reflects the maximum statutory penalty for a business with under 100 employees.