Season of Change: Federal Appeals Court Recognizes Gender Dysphoria as Disability and NLRB Proposes New Joint Employer Rule

October 12, 2022

Federal courts and administrative executive agencies have recently made significant developments in the area of employment law.  In a matter of first impression by any Federal appeals court, the Fourth Circuit recently held that gender dysphoria constitutes a disability subject to the Americans with Disabilities Act (“ADA”).  The National Labor Relations Board (“NLRB”) also recently proposed a new joint employer test.  If finalized, the rule would relax the standard of joint employment in the context of union organizing and labor relations.  Here are the details:

Gender Dysphoria is a Covered Disability

Do transgender people have a disability?  That depends.  In a Fourth Circuit decision, Williams v. Kincaid, a transgender woman with gender dysphoria, sued multiple Fairfax County officials for violations of the ADA during her incarceration.  She claimed that prison officials discriminated against her on the basis of disability when they harassed her, refused to use her desired pronouns, rehoused her with the men after originally being placed with the women, denied her request for a female deputy to perform searches, and delayed medical treatment (continued hormone therapy) during her incarceration.  The lower court dismissed her claim holding that gender dysphoria was not a protected disability under the ADA.  On appeal, the Fourth Circuit reversed.

The crux of the fight on appeal was the proper interpretation of a section of the ADA which excludes from the definition of “disability” and the statute’s protections “gender identity disorders not resulting from physical behaviors.”  Williams argued that 1) gender dysphoria was not a gender identity disorder, and 2) even if it was, it results from a physical basis which brings it outside the scope of the gender identity exclusion.  The Court agreed with Williams on both points.

On the first, the Court explained that a diagnosis of gender identity disorder is distinctly different from gender dysphoria.  While gender identity concerns an incongruity between one’s assigned sex and gender identity, the latter focuses on the clinically significant distress (e.g., anxiety, depression, self-mutilation, suicidal ideation, suicide, or other self-harm) of some people who experience incongruity between their assigned sex and gender identity.  The Court also noted a shift in the medical understanding of these issues.  When the ADA was passed, the diagnosis of gender dysphoria did not even exist.  Meanwhile, in the years since the ADA was passed, the medical community has rejected the gender identity disorder as a proper medical diagnosis of any condition.  Further to this point, the Court said that relevant manuals of mental health disorders have removed gender identity disorder from the list of applicable medical diagnoses, and added gender dysphoria to the list.   The Court reasoned that these developments in medical understanding showed that, while cross-gender identity is not a disability, the clinically significant stress that may result from cross-gender identity can indeed be understood as a disability.  For these reasons, the Court concluded that gender dysphoria was not a “gender identity disorder” excluded from the ADA’s protections.

On the second point, the Court reasoned that even if gender dysphoria was a gender identity disorder (which is not), it is one that results from a physical impairment for which Congress explicitly gave safe harbor and provided protections.  The Court noted that it must defer to federal agencies’ reasonable interpretation of ambiguous terms in the statutes they are responsible for enforcing.  And the Equal Employment Opportunity Commission (which enforces the ADA) interprets the term “physical impairment” broadly to include “any psychological disorder of condition…. affecting one or more body systems, such as neurological….and endocrine.”  The court found that Williams had satisfied this standard.  She alleged her gender dysphoria experienced “emotional, psychological, and physical distress” and furthermore required physical treatment such as hormone therapy to treat the dysphoria.  To this Court, this was sufficient to find that Williams’s gender dysphoria was a gender identity disorder resulting from a physical impairment, and that it was therefore a disability covered by the ADA.

As a final rational for its decision, the Court noted that to conclude that the ADA did not protect gender dysphoria would implicate “a serious constitutional question.”  In essence, the Court said that excluding from the protections of the ADA both “gender identity disorders” and gender dysphoria “would discriminate against transgender people as a class” that would violate the 14th Amendment’s equal protection clause.  As the Court put it, the only reason for the ADA’s exclusion of “gender identity disorders” was “‘a bare…desire to harm a politically unpopular group [, which] cannot constitute a legitimate governmental interest” that complies with the Constitution.

All of this confirmed for the Fourth Circuit that “a transgender person’s medical needs are just as deserving of treatment and protection as anyone else’s.”  The Court accordingly concluded that gender dysphoria was a disability protected by the ADA.

Proposed New Joint Employee Rule

When do companies become “joint employers” for the same employee?  The NLRB has proposed to change the rule that answers that question.  In another new employment law development, the NLRB announced just after Labor Day, its proposed new rule for the joint employer test to determine whether two employers are “joint employers” of certain employees within the meaning of the National Labor Relations Act.

According to the NRLB, the proposed rule change is intended to ground the joint-employer standard in common law agency principles.  In essence, two or more employers would be considered joint employers of one or more employees if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules.  The proposed rule further provides that joint-employer status can be proven in court not only with direct evidence of control and agency, but also “with evidence of indirect and reserved forms of control, so long as those forms of control bear on employees’ essential terms and conditions of employment.”  If this new rule becomes final, it would replace the joint employer test that took effect just over 2 years ago on April 27, 2020.

So, what does all of this mean for employers?

As far as the Williams decision about gender dysphoria, the ruling is only binding on employers doing business in Fourth circuit states (i.e., Maryland, North Carolina, South Carolina, Virginia, and West Virginia).  That said, it would not be surprising if other Federal courts, including those in New England, soon follow suit.  Employers are therefore well-advised to review their policies and procedures now in anticipation of this development and ensure that they prohibit discrimination, harassment, and retaliation on the basis of gender dysphoria.

Employers should also consider revising their policies and procedures to establish a mechanism for responding to requests for accommodations of transgender and LBGTQ+ employees with gender dysphoria or otherwise.  Such requests may include, for example, gender neutral bathroom, transgender restroom usage, and leaves of absence for medical treatment.  Training in this regard will also be critical.  Finally, if nothing else, the Williams decision is worth reading if only to help employers better understand and respond to the workplace issues associated with the efforts to recognize LGBTQ+ rights.

With regard to the proposed joint employer rule by the NLRB, employers with an interest on the issue should submit comments, pro- or con-, before the November 7, 2022 deadline.  Otherwise, businesses who share employees with other entities (for example, temp agencies or employee leasing companies) should monitor for the final rule and assess thereafter appropriate plans regarding joint employees.  To the extent the final rule transforms businesses into joint employers of employees they share with another company, those businesses should consider if it makes sense to alter arrangements with related entities to avoid this fate, or if not, what changes they may need to make to ensure they are complying with the law.