Acting unilaterally to expand federal civil rights laws to protect transgenders in the workplace – although Congress has failed to do so – the Obama Administration has announced that it will push forward with its own interpretation of Title VII of the 1964 Civil Rights Act.

Reversing the prior position of the U.S. Justice Department, outgoing Attorney General Eric Holder has announced that his new interpretation of Title VII has led him to believe that the federal statute prohibiting employment discrimination on the basis of sex also applies to transgender people. Going forward, Holder announced, the Civil Rights Division of the Justice Department will be able to file Title VII claims against state and local public employers on behalf of transgender individuals claiming discrimination. The Justice Department does not have authority to sue private employers, and the new interpretation does not affect that.

Title VII provides that it is unlawful for an employer “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” Title VII applies to private employers with 15 or more employees, including state and local governments. It also applies to employment agencies and to labor organizations, as well as to the federal government.

“This important shift will ensure that the protections of the Civil Rights Act of 1964 are extended to those who suffer discrimination based on gender identity, including transgender status,” Holder said in a statement on December 18, 2014. “This will help to foster fair and consistent treatment for all claimants. And it reaffirms the Justice Department’s commitment to protecting the civil rights of all Americans.”

“The most straightforward reading of Title VII,” according to Holder, is that discrimination “because of . . . sex” includes discrimination “because an employee’s gender identification is as a member of a particular sex, or because the employee is transitioning, or has transitioned, to another sex.” He acknowledged that “Congress may not have had such claims in mind when it enacted Title VII.”

On July 21, 2014, President Obama had issued an executive order providing that discrimination based on gender identity was prohibited for purposes of federal employment and government contracting.

The federal government’s Office of Personnel Management defines transgender individuals as “people with a gender identity that is different from the sex assigned to them at birth,” and defines “gender identity” as an individual’s “internal sense of being male or female.” Among other things, its policies state that once a transgender employee has begun living and working full-time in the gender that reflects his or her gender identity, agencies should allow access to restrooms and (if provided to other employees) locker room facilities consistent with his or her gender identity.

Congress has considered this issue in the past but has never amended Title VII to include coverage for transgenders. In contrast, Congress amended Title VII in 1978 to make it clear that sex discrimination covers discrimination on the basis of pregnancy, childbirth, or related medical conditions.

The U.S. Equal Employment Opportunity Commission and a number of courts have concluded that protection for transgenders is included in the Title VII prohibition of discrimination on the basis of sex, but the issue has not yet reached the U.S. Supreme Court.

Many courts have recognized that gender identity discrimination claims may be established under a “sex-stereotyping” theory. In 1989, in the case of Price Waterhouse v. Hopkins, the Supreme Court interpreted Title VII’s prohibition of discrimination because of “sex” as barring discrimination based on a perceived failure to conform to socially constructed characteristics of males and females. But it did not rule specifically that transgenders were covered by Title VII.

Eighteen states (not including Florida) and the District of Columbia have state employment non-discrimination law that cover transgenders with protections based on sexual orientation and gender identity. Many municipalities across the nation also protect transgenders against discrimination, including Miami-Dade County.

“The decision by Attorney General Holder will go a long way toward advancing equality for the transgender community,” said Sarah Warbelow, legal director for the Human Rights Campaign of Washington, D.C., which promotes civil rights for lesbian, gay, bisexual, and transgender Americans. “Transgender people continue to face some of the highest levels of discrimination in the workplace. We are thrilled to see the Department of Justice take this important step.”

In contrast, Peter Sprigg, senior director for policy studies of the conservative Family Research Council in Washington, D.C., criticized Holder, saying that the original intent of the 1964 Civil Rights Act most certainly did not cover transgendered people. “Probably not one person thought they were passing a bill to protect men who wanted to become women or women who wanted to become men,” Sprigg said. “This is another example of the Obama administration circumventing the role of Congress in imposing its own radical re-interpretation of the law.”

In a two-page internal Justice Department memorandum outlining his new interpretation of Title VII, Holder acknowledged that a number of courts have reached varying conclusions about whether discrimination based on gender identity in and of itself—including transgender status—constitutes discrimination based on sex. The memorandum is available free online at: releases/attachments/2014/12/18/title_vii_memo.pdf