Can en employer legally fire an employee for not being “pretty enough?” Consider the following scenario: A supervisor first approves a female employee’s transfer to a receptionist position. Later, the supervisor questions the transfer after meeting the employee and determining she is not a “good fit,” because she lacks the “Midwestern girl” look the supervisor wanted. The employee wears her hair short, foregoes makeup, and frequently dressing in men’s clothes. In the past, the supervisor has refused to hire female applicants she has deemed “not pretty enough” for the job. Ultimately, the employee in question is fired after questioning the job-related relevance of her appearance.

Has the employer done anything wrong? Potentially yes, according to the Third Circuit Court of Appeals’ recent decision in Lewis v. Heartland Inns of America. The court ruled that a jury must decide whether the employer’s conduct constituted impermissible “gender stereotyping,” a form of illegal sex discrimination under federal law.

But where is the line drawn? Is it ever permissible for an employer to consider an applicant’s or employee’s “attractiveness” in making an employment decision? Does an employee’s sexual orientation matter in determining an employer’s right to dictate how that employees dresses or acts at work? What rights do transgender employees have in their jobs?

Employers wrestling with these and other questions understandably may be confused. To help clarify matters, the following provides an overview of the relevant laws pertaining to gender, sexual orientation and gender identity discrimination, and some practical advice to help employers avoid costly missteps.

State Law

California’s anti-discrimination in employment statute, the Fair Employment and Housing Act (“FEHA”), prohibits reliance on an applicant’s or employee’s sex as a factor in determining the terms and conditions of employment. So, for example, an employer cannot choose to hire a female applicant instead of a male applicant because that employer “prefers women,” or to promote only men into senior-level positions, without a legitimate basis for doing so. The FEHA likewise prohibits targeting employees for harassment because of their sex.

The FEHA specifically defines “sex” to include “a person’s gender.” There is a difference between “sex” and “gender.” The term “sex” refers to a person’s biological condition of being a man or a woman. “Gender” may involve issues of self-identification and personal expression rather than chromosomes. Under the FEHA, “gender” includes an employee’s actual sex, but also an employee’s perception of his or her sex, as well as an employee’s “identity, appearance or behavior, whether or not that identity, appearance or behavior is different from that traditionally associated with the [employee’s] sex at birth.” Thus, in California it is illegal to discriminate against or harass transgender applicants or employees, because they may dress, act or behave in a manner associated with the opposite sex.

The FEHA also separately prohibits harassment and discrimination based on applicants’ or employees’ “sexual orientation.” While claims for sexual orientation discrimination are typically made by gay employees, FEHA’s protections extend to employees who are heterosexual, homosexual, bisexual or asexual, as well. Likewise, a person’s sexual orientation may be independent of his or her “gender.”

Federal Law and “Gender Stereotyping”

Like the FEHA, Title VII of the Civil Rights Act of 1964 prohibits discrimination in employment “because ofäó_sex,” and therefore also outlaws, for example, treating women differently “because they are women” and vice versa. However, unlike state law, Title VII does not extend prohibit discrimination based on employees’ sexual orientation or gender identity—at least not yet. Congress has repeatedly proposed, and rejected, legislation to extend Title VII’s protections to encompass claims of sexual orientation and gender identity discrimination.

Even under Title VII, though, employers may be held liable for discrimination or harassment against gay or bisexual employees with impunity. An employee may still raise a claim for sex discrimination if that individual can demonstrate that he or she was treated negatively for failing to comply with “gender stereotypes.”

Such was the case in Prowell v. Wise Business Forms, a recent decision out of the Third Circuit. In that case, Brian Prowell, an openly gay man, alleged that his admittedly “effeminate” appearance and mannerisms caused a clash with his male colleagues at work. Prowell alleged he was teased about the way he talked and walked, and said he was called names like “Princess” and “Rosebud.” Following his termination, Prowell sued, claiming his mistreatment constituted unlawful gender harassment under Title VII.

The lower court dismissed his action, finding that Prowell’s claims were based on his sexual orientation, which was not protected under federal law. However, the Third Circuit reversed, finding that the facts established that Prowell was harassed and treated differently because he did not conform to his co-workers’ vision of how a “man” should look or behave, a form of illegal gender “stereotyping” discrimination under Title VII.

In reaching its conclusion, the court relied on the U.S. Supreme Court’s 1989 decision in Price Waterhouse v. Hopkins, which—under distinctly similar facts—held that it was illegal to deny promotion to female employee because she was “macho” and did not walk, talk or dress in a feminine manner, as such conduct was discrimination “because of sex” in violation of Title VII.

In certain instances, unlawful gender stereotyping has also been applied by courts to protect transgender employees under federal law. For example, in Smith v. City of East Salem, the Sixth Circuit ruled in favor of a transsexual firefighter who claimed employment discrimination when he started dressing and acting more feminine at work. Relying on Price Waterhouse, the court held that discrimination against a male who appears as a female at work is a form of unlawful sex discrimination, where the employer’s conduct would not have occurred but for the employee’s sex. Put another way, the discrimination is based on the plaintiff’s sex because had a biological female acted the same way, she would not have been subjected to the conduct.

Physical Appearance as a Criteria for Employment

As described above, California employees are protected from discrimination and harassment in employment on account of their sex, sexual orientation and gender identity, and employees cannot be made to conform to gender stereotypes as a condition of their employment. As a result, employers must proceed cautiously any time they seek to enforce policies or employment practices relating to employees’ physical appearance.

While neither state nor federal law expressly outlaws “physical appearance” discrimination, certain local laws may restrict employer conduct in this area. For example, a Santa Cruz city ordinance bans discrimination based on an employee’s or applicant’s height, weight or “physical characteristics.” San Francisco likewise prohibits discrimination on the basis of height and weight.

Does that mean a manager lawfully may hire a job candidate simply because she finds her better looking? Not necessarily. Because physical attractiveness may be linked to sex-specific beauty “ideals,” employers must be careful to avoid engaging in illegal gender stereotyping, as described above. So, while it may not be illegal for a supervisor to hire a blonde with long hair instead of a brunette with short hair based on her personal hairstyle preference, it may violate the law if the decision was made the short-haired applicant looked “too masculine” for the job.

In rare circumstances there may be situations in which a certain gender-specific appearance is considered a “bona fide occupational qualification” (“BFOQ”) for a position. For example, a film director may consider only male applicants when casting for the role of Julius Caesar, or only female actors to play the lead in a Marilyn Monroe biopic. However, legitimate BFOQ defenses are difficult to prove and apply only to extremely narrow circumstances where an employee’s sex is “reasonably necessary” to the position. This was the argument airlines used years ago to hire only young, attractive females to be flight attendants. The Equal Employment Opportunity Commission (“EEOC”) did not allow the BFOQ defense because being female was not essential to the airlines primary job of safely transporting its passengers.

Dress Codes

Can employers lawfully force employees to meet certain grooming and appearance standards, even where those standards arguably perpetuate gender stereotypes? In certain circumstances, the answer will be “yes.” In Jespersen v. Harrah’s Operating Company, Inc., the Ninth Circuit affirmed an employer’s dress and grooming policy that imposed different, but essentially equal, burdens on men and women. The court rejected a female casino bartender’s claim that the employer’s policy unlawfully required her to wear makeup against her wishes. The court found that a dress and grooming policy with slight differences between sexes will not constitute impermissible sex discrimination. Under the same casino’s policy, male bartenders were also required to adhere to appearance standards, including wearing short haircuts and keeping neatly trimmed fingernails.

Even under Jespersen, employers must not impose standards that unequally burden one sex over the other. Nor should they enforce policies that prohibit employees from appearing or dressing consistently with their gender identity. California’s FEHA expressly outlaws such practice. The FEHA also specifically prohibits employers from requiring women to wear skirts or dresses rather than pants.

Finally, policies that contain otherwise permissible restrictions can be applied illegally. Accordingly, to avoid liability, employers must make sure that any dress/grooming policies are enforced in a consistent and non-discriminatory manner.

Bathrooms

Another sensitive “gender”- related issue involves bathrooms. For example, should a transgender employee use the restroom associated with the employee’s biological sex, or the restroom of the sex with which the individual more closely identifies? Most courts that have considered the matter have concluded that transgender employees have a right to use the bathroom of the sex with which they identify.

As a practical matter, such a policy may not sit well with some employees, who for religious, cultural or other reasons might be sensitive to sharing bathroom space with a person of the opposite sex. Transgender employees themselves might be uncomfortable and intimidated if forced to use any sex-specific restroom. Many employers facing this dilemma opt for a “gender-neutral” bathroom solution—typically a single-stall, lockable restrooms available to anyone, regardless of sex.

Employer Compliance

The reality of the modern workplace is that employees do not always conform to rigid notions of gender identity. Employers are better off not trying to make distinctions between what sort of discrimination or mistreatment of employees is lawful under federal or state law. Instead, employers should ensure that its policies prohibit discrimination and harassment on the basis of biological sex or gender, as well as sexual orientation. Managers and employees also should be trained to accept others differences in an increasingly diverse workplace.

At the same time, however, employers retain discretion to require employees to follow reasonable dress and grooming policies. Regardless of one’s gender identity, it remains the employer’s decision whether to require professional rather than casual dress, conservative hairstyles, jewelry, and other grooming standards. Sometimes, the distinction between reasonable grooming standards and unfair burdens on one sex or the other is hard to discern. As always, employers should consult competent employment counsel before imposing such policies.