Can Saks Fifth Avenue Legally Discriminate Against Transgender Employees?

Saks Fifth Avenue’s latest fashion trend is receiving mixed reviews from critics across the nation.

According to a discrimination and retaliation complaint filed in the U.S. District Court for the Southern District of Texas by Leyth O. Jamal, case number 4:14-cv-02782, employees of the corporation allegedly harassed Jamal due to her transgender status, refused to call her by female pronouns and continuously asked her “if she was a prostitute” thereby fostering an incredibly hostile environment. Store management prohibited her from using the women’s restroom, asked her to “separate her home life from her work life” and to refrain from wearing makeup or women’s clothing to work. Jamal also alleges that Saks terminated her after she filed a complaint with the EEOC, the federal agency charged with enforcing federal discrimination law.

In response, Saks argues that the case should be dismissed because of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq. (“Title VII”) does not prohibit discrimination based on an employee’s transgender status. According to Saks’ motion to dismiss that was filed on December 29, 2014, “it is well settled that transsexuals are not protected by Title VII. Thus, Plaintiff’s alleged complaints were not protected.”

Although it has received sizeable media scrutiny and adverse publicity, the legality of Saks’ position is unsettled. Currently, there is no federal or state law in Texas that prohibits discrimination based on a person’s transgender status. The U.S. Supreme Court has not yet addressed whether Title VII’s ban on sex discrimination prohibits discrimination based on an employee’s transgender status. However, especially in recent months, the federal government has taken significant strides to enlarge the rights and protections afforded to transgender people in the workplace. In fact, just days before Saks filed its motion to dismiss, U.S. Attorney General Holder sent a memo to all United States Attorneys and DOJ Department Component Heads, announcing that the Department of Justice now concurs with the EEOC’s interpretation of Title VII - Title VII’s “because of sex” provision prohibits discrimination based on an employee’s transgender status.

Regardless of whether Saks’ motion to dismiss will prove successful, the filing has produced significant consequences for the corporation. In response to the filing, the Human Rights Campaign (“HRC”), one of the largest LGBT civil rights organizations in the nation, suspended Saks Fifth Avenue’s Equality Index score – which was previously calculated to be 90 out of 100. According to HRC, “while HRC honors the right of the company to vigorously defend itself against allegations of misconduct, the arguments made in Saks’ court filings go well beyond arguing the veracity of the allegations.”

Moreover, both HRC and Jamal, who has also asserted a breach-of-contract claim in the complaint, take issue with the fact that Saks’ current position directly undercuts its internal corporate LGBT policies. More specifically, Saks’ employee handbook contains a non-discrimination policy that includes gender identity protection. Now, in its motion to dismiss, Saks is arguing that transgender employees are not protected from workplace discrimination. In response, Saks argues that because “policies in an employee handbook do not create a contract,” the company’s nondiscrimination policy cannot constitute the “contract” and thus, Jamal’s breach of claim should also be dismissed.

The current Saks debacle is a stark indication that in the coming year, given the inordinate amount of attention both the media and the federal government have recently given to Title VII, employers must be cognizant of the fact that claims based on transgender discrimination claims may gain unparalleled momentum. Employers must keep a close eye on the course of this case, as it has the ability to have practical as well as legal implications for all corporations and transgender employees.

If you or your institution has any questions or concerns regarding employment related issues, please contact Hayley B. Dryer at hdryer@cullenanddykman.com or at 516-357-3745.