Yesterday, U.S. Attorney General Eric Holder issued a memo setting out the Obama Administration’s position that Title VII specifically prohibits discrimination based on transgender status or gender identity per se.

In the memo, Attorney General Holder pointed out that questions have arisen in a number of administrative and judicial contexts as to the appropriate legal standard applicable to claims of gender identity discrimination.  While courts have recognized gender identity discrimination claims under a “sex-stereotyping” theory – discrimination based on a perceived failure to conform to particular gender characteristics – there is no consensus among courts as to whether discrimination based on gender identity or transgender status, per se, is illegal.

The administration’s new position, as explained in the memo, is based on the text of Title VII.  Attorney General Holder wrote that “the most straightforward reading of Title VII is that discrimination ‘because of … sex’ includes discrimination because of 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.”

Attorney General Holder’s memo only directly effects claims of discrimination by governmental employees, and does not specifically apply to private employers.  However, the policy shift can be seen as part of a growing trend of increasing protections for transgender employees.  For example, the EEOC ruled in 2012 that discrimination on the basis of gender identity constituted prohibited discrimination on the basis of sex.  Earlier this year, President Obama issued an executive order prohibiting discrimination on the basis of gender identity for federal employment and government contractors.  Massachusetts state law already expressly prohibits discrimination on the basis of “gender identity.”