California’s Fair Employment and Housing Act has prohibited discrimination in employment based on “gender identity” and “gender expression,” since 2011, but until now, employers have had little guidance on the practical implications of the law and what was needed to ensure compliance. Effective July 1, 2017, new regulations adopted by the California Fair Employment and Housing Council (FEHC) purport to change that. Whether they do so, remains open to debate.

Key Provisions of New FEHC Regulations

A. Expanded Definition of “Gender Identity”

One of the more significant aspects of the new regulations is the expanded definition of “gender identity,” which is defined as a person’s “internal understanding of their gender…which may include male, female, a combination of male and female, neither male nor female, a gender different from the person’s sex assigned at birth and transgender.” The implications of this definition remain to be seen. Although it more accurately captures the modern understanding of the spectrum of gender identity beyond the binary male/female construct, the regulation does not define what constitutes an “internal understanding” of one’s gender. Nor does it even require that such an understanding be manifested outwardly in order to invoke protection. Further, the regulations do not explain how employers should accommodate employees who identify as either “a combination of male and female” or “neither male nor female.”

B. Protections for Transitioning Employees

Discrimination against an employee who is transitioning, has transitioned, or is perceived to be transitioning to a gender other than the one assigned at birth is prohibited. The transitioning process includes changes in name and pronoun usage, facility usage, participation in employer-sponsored activities (such as sports teams, team-building projects, and volunteering), and hormone therapy, surgeries, and other medical procedures.

C. Employers May Not Ask Applicants for Documentation of Sex or Gender Employers are prohibited from inquiring about or requiring documentation or proof of an individual’s sex, gender, gender identity, or gender expression as a condition of employment. Discrimination against an applicant who fails or declines to designate male or female on an application form is also specifically prohibited.

D. Employers Must Use An Employee’s Preferred Name And Gender Pronoun

When an employee asks to be identified by a preferred name or gender, an employer who fails to comply with this request may be liable for discrimination under the FEHA. An employer may use an employee’s legal name and gender (as indicated in government-issued identification) rather than the employee’s preferred name and gender only when necessary to meet a legally-mandated obligation, such as IRS documentation or reports to other government agencies.

E. Employees Need Comply Only with the Appearance, Grooming, and Dress Standards of Their Gender Identity Where an employer has standards for physical appearance, grooming, or dress, an employer cannot require an employee to conform to a standard that is inconsistent with that individual’s gender identity or gender expression. The regulations are silent as to how employers should treat employees who do not identify as either male or female. For this reason, employers who enforce gender specific dress codes may be liable for discrimination against an employee who, for example, does not identify as either male or female, or who identifies as both male and female, or who is in transition.

F. Assigned Job Duties Must Correspond With An Employee’s Gender Identity Or Expression

Employers must allow an employee to carry out duties that correspond with the employee’s gender expression or gender identity, not the gender assigned to the employee at birth, unless all of the elements of the BFOQ defense are satisfied.

G. Further Limits to the BFOQ Defense

The regulations state that the “fact that an individual is transgender or gender non-conforming, or that the individual’s sex assigned at birth is different from the sex required for the job” cannot be relied upon for the BFOQ defense.

On-going Issues Regarding Multi-User Restroom Facilities

Although the new regulations require employers to permit employees to use “facilities that correspond to the employee’s gender identity or gender expression, regardless of the employee’s assigned sex at birth,” they do not offer guidance with respect to providing facilities for employees whose internal understanding of their gender identity is neither male nor female. If an employee has a gender identity that is neither male nor female, must that employee be permitted to use whatever restroom that employee chooses, regardless of how that employee presents? To complicate things further, an employer is only permitted to make “a reasonable and confidential inquiry of an employee for the sole purpose of ensuring access to comparable, safe and adequate multi-user facilities.” Exactly what this provision permits is unclear.

Moreover, the regulations elsewhere prohibit an employer’s asking about an employee’s gender identity or gender expression unless the employer can prove the existence of all three factors needed to establish a Bona Fide Occupational Qualification (‘BFOQ”) defense. The three factors needed to establish the personal privacy BFOQ defense are: (1) the job requires an employee to observe other employees in a state of nudity or to conduct body searches; and (2) it would be offensive “to prevailing social standards” to have an individual of a different sex present; and (3) it is “detrimental to the mental or physical welfare” of individuals being observed or searched to have an individual of a different sex present. Even if an employer could establish the second and third factors, a multi-user restroom with locked stalls would seem to foreclose proof of the first factor, and thus the availability of the defense if an employer were to prohibit a person who presents as one gender but who identifies as another from using the multi-user restroom of his preferred gender.

Single-Occupancy Restrooms - Signage

By contrast, the regulations provide an easy fix for single-occupancy restrooms: Employers need only change the signage to ensure that it is gender neutral. Terms such as “unisex” or “all gender restroom” are given as examples of appropriate signage. See our earlier Advisory on this issue. (Note that on July 25, 2017, the FEHC issued a Notice of Proposed Emergency Regulations to address an apparent conflict between its regulations and regulations promulgated by Cal/OSHA dealing with the provision of non-flushing toilet facilities separately marked for men and women in certain industries. Information regarding this Notice can be found at here.

What steps must California employers take to comply with these new rules? 1. Carefully review all handbooks and policies, including grooming and dress code standards, to ensure compliance with the regulations. Include gender expression, gender identity, and transgender as protected characteristics in EEO policies. 2. Remove any requests for gender-related information from any company documents, including application forms, unless you can establish a BFOQ defense or such information is required by law. 3. Respond promptly to complaints by transgender and gender non-conforming employees, including specifically complaints that other employees are not using their preferred pronoun or name. Accidental usage of an incorrect pronoun or name, especially shortly after a transition, is understandable; however, if an employer learns that employees are consistently or intentionally refusing to use an employee’s preferred name or pronoun, the employer must take appropriate corrective action or face liability. 4. Review any job descriptions that make any distinction between male and female employees to either remove any such distinction or determine whether a BFOQ defense would be successful; note that there are likely to be very few scenarios where such a defense will withstand challenge.

Actions that are not required, but may reduce the risk of liability for gender identity/gender expression discrimination:

1. Employers may benefit from including in their management training curriculum the topics of gender identity, gender expression, transgender, and gender stereotyping.

2. Consider removing binary male/female pronouns (he/she, him/her) from handbooks, policies, applications, company literature, etc., and replacing them with gender neutral terms. The regulations use “employee” or “individual;” some employers use “they” or “their” to include both singular and plural pronouns.

3. If a transitioning employee initiates a discussion around the transition process and seeks a dialogue with the employer, then the employer and employee may work together to create a transition plan. With the employee’s permission, this process could include the employee’s supervisors and human resources. A transition plan could address such issues as timing, whether and how co-workers should be informed, name/pronoun changes, updating of records, leave-related issues, and any other subjects that could aid in ensuring a smooth and supportive process, both for the transitioning employee and for the workplace. Cues should be taken from the transitioning employee; if the employee is not interested in such a plan or wants to limit it, employers must be sensitive and responsive to those concerns.

4. The FEHC regulations do not expressly require the elimination of male/female designated multi-user restrooms, but they arguably require an employer to permit its employees to use any restroom they want, regardless of their outward presentation. There will likely be litigation that will sort these issues out and provide greater clarity. In the meantime, California employers should be sensitive to this potential issue and consult legal counsel before denying access to a multi-user restroom to any employee on the basis of gender identity or gender expression.