December 17, 2013

Transgender issues in the workplace

Posted in Employment Law by Gene Killian |

Approximately 9 million people in the United States identify themselves as LGBT.  Of this group, approximately 700,000 identify themselves as transgender, or about 0.3% of the total U.S. population.  The odds are therefore against a transgender person being employed by your company, but they do exist, and a transgender situation can present unique problems.  (In the banking industry, six financial regulatory agencies, including the Consumer Financial Protection Bureau, are finalizing a rule pushing banks to set “metrics” and “percentages” for diversifying their workforces and supplier pools. That could increase the odds, if only slightly.)  

If an employee undergoes a sex change operation, suffice it to say that people are going to notice.  And, the employee is likely to be sensitive to people noticing.  Without proper training, the chances of a misunderstanding taking place are high.

A recent case from the Third Circuit Court of Appeals, Stacy v. LSI Corporation, resulted from a “perfect storm” of events. The employer, though, was able to protect itself through proper and diligent documentation.  I think this is a good case for all employers to read, because its lessons are valuable in the context of any discrimination claim.

Janice Stacy worked as an engineer for Agere Systems.  When she was hired, she was, by all appearances, a guy, and went by the name “Jim.” She was diagnosed with gender identity disorder, and began undergoing treatment, which included psychological counseling and hormonal therapy. She then changed her appearance from male to female, at which time she became known as “Janice” and wore women’s clothes. She also had multiple surgeries to change her physical appearance.

After a return from one of her surgeries, she was reassigned to a different group at the company. She complained that she had been rated unfairly on her performance review and unfairly compensated. The employer investigated the allegations, and determined that she had received the exact same performance rating in a prior year (before her gender identity disorder disclosure), and that she had recently received a salary increase that put her in the top 10% of the highest-paid engineers in the entire company.

The company then merged with LSI.  The economy being what it was, LSI implemented a reduction in force. Stacy lost her job, primarily because her group supported a product line which the company determined was unprofitable.

In evaluating the members of the group, Stacy’s supervisor (Lawrence) testified that he had selected five particular skills critical for the functioning of the team going forward: execution, teamwork, communication, technical versatility, and customer focus. Lawrence ranked Stacy the lowest in the group, and she was separated. Naturally, this being America, litigation followed.

The appeals court made short work of Stacy’s allegations.

First, Stacy contended that she had been replaced by another employee. But the Court noted that LSI had not hired another person to replace her. Instead, a current employee assumed her responsibilities, which was consistent with the reduction-in-force argument.

Second, she contended that the skills assessment was biased. Documentation, however, showed that Lawrence chose the skills to be evaluated based upon those he believed would be most beneficial to the company moving forward. Stacy ranked the lowest in these skills.

Third, Stacy contended that Lawrence’s explanations for termination varied, and were therefore not credible. She pointed to four allegedly different explanations: (1) to give her a “fresh start”; (2) because of her low ranking in her performance evaluation; (3) because another employee who rated higher in the skills assessment had assumed her responsibilities; and (4) because of the skills assessment itself. The Court, however, held that all of these explanations were consistent with one another.

The Court’s ruling emphasizes a point with which all competent HR personnel are familiar: document everything, using objective criteria. 

Could the employer have avoided a lawsuit in this circumstance? Probably not. This was a difficult and volatile situation, and in the end, a manager made a difficult choice to separate an underperforming employee and to take the risk of a lawsuit.  In retrospect, I can’t criticize that decision.

One other obvious point: having Employment Practices Liability Insurance is a good thing.

You can read the full decision by clicking here.

-        Gene Killian