Here is an indication that the courts' previous reluctance to read Title VII as providing protection to the transgendered may be starting to weaken. The price tag for a recent U.S. District Court of the District of Columbia transgender Title VII case: $491,190.80; Schroer v. Billington, 1:05-cv-01090-JR (D.D.C. April 28, 2009).
“Ultimately, I do not think that it matters [whether the Library] perceived Schroer to be an insufficiently masculine man, an insufficiently feminine woman, or an inherently gender-nonconforming transsexual.”
Second, the Court held that discrimination against transgenders was "based on sex." Previous precedent had held that "sex" under Title VII meant nothing more than "male and female." In this case, however, the Court reasoned:
“Imagine that an employee is fired because she converts from Christianity to Judaism. Imagine too that her employer testifies that he harbors no bias toward either Christians or Jews but only 'converts.' That would be a clear case of discrimination 'because of religion.' No court would take seriously the notion that 'converts' are not covered by the statute. Discrimination 'because of religion' easily encompasses discrimination because of a change of religion.”
You can find more excellent analysis on this case at the Lawffice Space Blog.
Hat Tip to Ross Runkel for linking to the article.