Title VII, the federal anti-discrimination, harassment, and retaliation law in employment, does not explicitly name gender identity or homosexuality as protected classes, but broadly prohibits sex discrimination.  Over the years, sex discrimination has been interpreted to include pregnancy-based discrimination, as well as sex stereotyping.  However, sexual orientation discrimination has typically not been held to be prohibited by Title VII, but that may be changing with the help of the EEOC.  

The EEOC is the federal administrative agency responsible for the investigation and enforcement of the provisions of Title VII and other anti-discrimination laws.  In 2012, the EEOC announced that one of its objectives over the next few years would be to address "emerging and developing issues" including "coverage of lesbian, gay, bisexual and transgender individuals under Title VII's sex discrimination provisions, as they may apply."  

The critical phrase is "as they may apply" because the EEOC must recognize that the statuses of being transgendered or homosexual are not directly covered by the language of Title VII.  Thus, what the EEOC has done to effectuate its policy goal is take the position that discrimination on the basis of one's transgender or homosexual status violates Title VII because the traits affiliated with such individuals fall into the category of gender stereotyping.

 Gender stereotyping has been recognized as covered by Title VII since the United States Supreme Court's 1989 holding in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989).   In the Hopkins case, a female employee suffered discrimination due to management's perception that she did not fit the "traditional" profile of femininity in her appearance and attitude.  The Court held that discrimination on the basis of such sex stereotyping was prohibited under Title VII.  The interpretation of Title VII in the Hopkins case is critical to the EEOC's move to enforce the rights of LGBT individuals in the workplace. 

In 2014, the EEOC filed suit on behalf of a transgender woman who worked for a Lakeland, Florida eye clinic.  The employee was transitioning from male to female, and began to present at the workplace as a female.  Although her work product remained satisfactory, she was fired.  The EEOC alleged that the employee was unlawfully fired on the basis of sex, in that she did not conform to the employer's sex-based stereotypes.  

A settlement was approved in April 2015, with Lakeland Eye Clinic agreeing to pay $150,000 to the terminated employee. According to the EEOC, this case was one of the first two to be filed where the employee's transgender status was the protected class.  

While the EEOC does not make law, employers should definitely take note that the EEOC is actively pursuing the rights of LGBT employees.  Although a strict reading of Title VII does not indicate homosexuality or transgender status as protected classes, there is court precedent that could support such claims under the umbrella of gender stereotyping.  Therefore, as with any employees, employers are best served by making employment decisions on the merits of the employee's work and not on the employee's gender-based attributes.