President Barack Obama's second term will likely bring new employment protections for lesbian, gay, bisexual, and transgender individuals.

President Barack Obama's election in 2008 ushered in a period of increased regulation of U.S. employers. The Equal Employment Opportunity Commission (EEOC or Commission) promulgated new employee-friendly guidance on the Americans with Disabilities Act (ADA), the Family and Medical Leave Act (FMLA), the Age Discrimination in Employment Act, and the use of background checks in employment decisions. As President Obama begins his second term, it is anticipated that this trend will continue, with more employee-friendly FMLA and ADA regulations. But perhaps one of the largest changes on the horizon—one that could have a dramatic impact on the EEOC's enforcement focus and lead to a significant uptick in civil litigation—is the potential addition of sexual orientation and gender identity to the list of categories protected by federal anti-discrimination laws.

Employment Non-Discrimination Act and EEOC Cases Under Title VII

Currently, 21 states and the District of Columbia prohibit employment discrimination on the basis of sexual orientation; 16 states and the District of Columbia also protect gender identity. However, federal law currently does not protect either category. Proposed legislation known as the Employment Non-Discrimination Act (ENDA) would change that, banning discrimination on the basis of both sexual orientation and gender identity. ENDA has percolated in Congress for years without much attention, but it has gained traction recently and is expected to be taken up again in 2013. Indeed, it appears that President Obama intends to push ENDA to the front of his agenda, calling in his recent inaugural address for lesbian, gay, bisexual, and transgender (LGBT) equality under the law and explicitly comparing the fight for LGBT rights to the historic battles for civil rights and women's equality. If the positive public response to the inaugural address is any indication, we can expect ENDA to gain momentum this year. But, even if ENDA does not pass right away, many advocates anticipate that President Obama will introduce some federal protection for LGBT workers by executive order, banning federal contractors from discriminating against employees on the basis of sexual orientation and gender identity. Many believe that such an executive order by President Obama would lay the groundwork for the passage of ENDA in the same way that President John F. Kennedy's 1961 executive order prohibiting race discrimination by federal contractors paved the way for the Civil Rights Act of 1964.

The passage of ENDA would alter the landscape of employment law, particularly in jurisdictions where sexual orientation and gender identity are not already protected categories under state law. ENDA would expand these protections nationwide and would give the EEOC jurisdiction to investigate, conciliate, and litigate on behalf of LGBT individuals with vigor. The EEOC has already forecast its focus on this population, listing the protection of LGBT employees as one of its target priorities for 2013-2016—with or without ENDA—by bootstrapping protection for sexual orientation and gender identity onto Title VII.[1]

To accomplish this goal, the EEOC has adopted a broad interpretation of Title VII's prohibition of discrimination on the basis of gender stereotypes. For example, in Veretto v. Donahoe,[2] the EEOC concluded that Title VII prohibits harassment on the basis of sexual orientation where a complainant can show that the harassment occurred because of his or her failure to conform to conventional gender norms. In that case, Jason Veretto, a mail carrier in Connecticut, complained of verbal and physical harassment by a co-worker that escalated after Veretto announced in a local newspaper that he had married his male partner. The case was initially dismissed because sexual orientation is not a protected category under Title VII. On appeal, however, the EEOC held that Veretto had stated a Title VII claim because the alleged harassment was based upon Veretto's marriage to another man—conduct that was, in the eyes of the harassing co-worker, outside the boundaries of the stereotypical male gender role.

The EEOC relied upon the same reasoning in Macy v. Holder where the full Commission held that Title VII covered claims brought by a transgender woman who had been purportedly denied a job with the Bureau of Alcohol, Tobacco, Firearms and Explosives after the agency learned that she was in the process of transitioning from male to female.[3] According to the EEOC, Title VII's prohibition against "gender stereotyping" protects individuals who fail to conform to gender-based expectations or norms. Discrimination against a male who is presenting as a female, the Commission reasoned, is a type of sex discrimination.

The EEOC's broad application of the "gender stereotyping" theory reflects a growing trend, as more and more plaintiffs around the country attempt to use the theory to transform what should be petty nuisances into actionable conduct. For example, a prison guard in Vermont brought a claim for sex-stereotyping discrimination after his supervisor criticized him for taking medical leave to recover from a groin injury. The supervisor commented, "Way to milk it buddy," and an inmate remarked, "Good luck making kids with that package." On a motion to dismiss, the U.S. District Court for the District of Vermont concluded that the two alleged comments were sufficient to state a claim for gender stereotyping since it was plausible that the remarks were motivated by a perception that the plaintiff had failed to conform to stereotyped expectations of masculinity.[4] The increase in these "gender stereotyping" claims, coupled with the passage of ENDA, could lead to a substantial increase in litigation for many employers in the coming years.[5]

Even beyond ENDA, there may still be further changes relating to the employment of LGBT individuals in 2013 if the U.S. Supreme Court affirms the U.S. Court of Appeals for the Second Circuit's holding that the Defense of Marriage Act (DOMA) is unconstitutional.[6] Currently, section 3 of DOMA provides that, for purposes of federal law, "marriage" means only a legal union between one man and one woman and that the term "spouse" refers only to a person of the opposite sex. If DOMA is overturned, however, the meaning of these terms would be broadened to include legally married same-sex couples. This would have a sweeping impact on employee benefit plans, requiring that same-sex spouses be given the same access as opposite-sex spouses to numerous benefits, including health plans, retirement and insurance plans, and family leave.

What Employers Can Do to Get Ready for These Changes

Given that the EEOC already has fashioned arguments out of existing law to protect LGBT persons in the workplace, even before the passage of ENDA and in keeping with its Strategic Enforcement Plan, employers should consider taking policy steps to manage and decrease associated risks.

Employers doing business in jurisdictions that already protect sexual orientation and/or gender identity should make certain that these categories are included in their anti-discrimination policies; even employers who operate outside these jurisdictions should consider taking this step. Likewise, employers around the country should now include "gender stereotyping," sexual orientation, and gender identity to their anti-harassment training programs and adopt appropriate prohibitions on gender-based jokes and anti-LGBT slurs, similar to those applied to other protected classes.