DannyLee Mitchell knew she would face a rough road physically and emotionally when she decided to transition from a man to a woman. What she didn’t expect was to lose her job and spark a fierce legal battle over the civil rights of transsexual people.

Mitchell had been employed by Axcan Scandipharm, a pharmaceutical and hospital-supply company based in Birmingham, Ala., as a sales representative for four years when, in November 2003, she informed her supervisors that she was a pre-operative transsexual and had been diagnosed with gender identity disorder.

Things became more complicated when Mitchell was involved in an automobile accident while driving a company car Dec. 29, 2003, and Axcan fired her. The company said that her termination was due to misconduct related to the accident.

Mitchell, however, claims she was fired because she began to present as a female. She filed suit against Axcan in February, claiming she was a victim of discrimination and a hostile work environment based on her sex and condition in violation of Title VII of the Civil Rights Act of 1964 and the Pennsylvania Human Relations Act.

A federal judge in Pennsylvania ruled Feb. 17 to let Mitchell’s case go forward. Axcan, which is appealing, argues that Title VII provides no protection from discrimination based on transgender status. It also contends that the definition of “sex” under Title VII does not include transsexuals. Mitchell’s case is a significant milestone in the ongoing debate about the workplace rights of transgender and transsexual people–a debate to which all employers should pay attention.

Broad View

With her suit, Mitchell also raised the question of how this legal wrangling might have been avoided.

After she informed her manager in human resources of her intentions to transition, “DannyLee went through sheer hell,” says John Burt, Mitchell’s attorney. “She was told to stay away from other sales representatives and not talk about what was happening with her personally. That’s kind of hard when someone who used to be a guy starts presenting as a woman.”

He adds: “Had [Axcan] had something in place in their HR policy about protecting transgender people, it wouldn’t have been a problem.”

Axcan, through its attorney Philip Voluck of Kaufman, Schneider & Bianco in suburban Philadelphia, declined to comment about its HR policy or any other aspect of the Mitchell case.

The issue itself–alleged discrimination against transsexual individuals in the workplace–is not uncharted territory.

Judge Gary Lancaster cited several key cases on which he based his ruling. The U.S. Supreme Court’s 1989 decision in Price Waterhouse v. Hopkins stated that Title VII requires gender to be irrelevant to employment decisions. In 2001 the 3rd Circuit held in Bibby v. Philadelphia Coca Cola Bottling Co. that a plaintiff may be able to prove sex discrimination by demonstrating that “the harasser’s conduct was motivated by a belief that the victim did not conform to the stereotypes of his or her gender.”

Further, the 6th Circuit in Smith v. City of Salem, Ohio held in 2004 that allegations by a transsexual employee that he was discriminated against based upon his non-conforming behavior and appearance were actionable under Title VII.

David Kairys, a professor of constitutional law and civil rights at Temple University, describes Lancaster’s ruling as “sensible.”

“Any company facing this kind of issue would be well-advised to take the kind of broad view of Title VII that this judge does,” Kairys says.

Others describe the decision as consistent with Supreme Court precedent.

“In Price Waterhouse the Supreme Court is using a broad definition of both gender and sex as Title VII is being applied to human interaction in the workplace,” says Paul Davis, a partner in the labor, employment and benefits practice at Preston Gates & Ellis in Alaska. “Price Waterhouse extended that to the zone of perceived stereotypes, and says if your employment decisions are being based on the sex, that is, the gender, of an individual or upon what is appropriate behavior to gender, then that is prohibited.”

The use of “sex” instead of “gender” in Title VII muddies the picture somewhat.

“The word sex should be interpreted in the current context, which is more recognition of the range of sexuality and less rigid male-female, married, etc.,” Kairys says. “Certainly the intent behind the Act is that people not be harmed in their workplaces because of their sexual preferences or identities.”

Sheryl Willert, a labor and employment litigation specialist with Williams, Kastner & Gibbs in Seattle, agrees.

“Title VII was intended to do one thing and one thing only, to ensure that people are treated with respect and dignity in the workplace,” Willert says. “If people were all treated with respect and dignity, frankly, we wouldn’t need the law.”

Proactive Change

Even so, the law is anything but clear-cut.

“This case points out what a confusing area of the law this is,” says Barbara Johnson, a partner in the employment law department in Paul Hastings’ Washington, D.C., office. “Title VII hasn’t caught up with the trend of extending civil liberties to people regardless of their sexual orientation.”

So where does that leave DannyLee Mitchell and other transsexuals, as well as Axcan and other employers?

“Where we are with our advocacy for transgender people parallels a lot of what we have seen in the civil-rights struggle for African-Americans and the struggle for women in the last century,” Burt says. “Every victory adds to societal and legal change.”

Johnson says that, Title VII or not, it’s clear what the behavior of employers should be.

“Why would you want to condone harassment on any basis?” she says. “It’s not something that should be tolerated. For that reason, more and more employers are prohibiting discrimination on the basis of sexual orientation.”