Companies Grapple with New Sex-Change Rules
By Martin C. Daks - 6/11/2007

TRENTON - New state work force laws that take effect next week could force small businesses and others to reach deep into their pockets to build new restrooms, lockers and other facilities for cross-dressers and other transgender individuals.

Labor lawyers say companies that watch their step may be able to keep out of trouble, but experts point out that many small-business owners are clueless about the new legislation.

"Recent amendments to New Jersey's Law Against Discrimination (LAD) contain certain provisions that may result in a conflict between transgender employees' rights and the personal privacy rights of other employees," says Tricia O'Reilly, an employment law partner with Connell Foley LLP in Roseland who represents businesses involved in employment and other disputes. "Employers should be updating their personnel policies, postings, handbook provisions and training programs to include 'gender identity or expression' as a protected characteristic."

Since 1945, the state's LAD has barred employers from discriminating against workers because of their race and other characteristics. But on June 17, New Jersey will join 26 other states that require companies to accommodate men who believe they should have been women, and women who believe they're really men. Such accommodations will be required even if the individuals have not undergone sex change operations and have no plans to do so.

"If a man identifies himself as a woman and wants to wear a dress to work, then it appears as though he would be a protected individual under the amended LAD," says O'Reilly. "Does this mean that new restroom, locker and other facilities will have to be built to accommodate transgender individuals? That will depend on the way the New Jersey courts rule when such a case comes before them.

"In the event of a dispute, a New Jersey court would look to balance all interests," adds O'Reilly. "If a small business were being asked to construct expensive new locker room or other facilities, an employer could argue that the expense would cause undue hardship to his or her business."

The amendments to the LAD grew out of a 2001 New Jersey Appellate Panel decision known as Enriquez v. West Jersey Health Systems. In that case, an employer refused to renew the employment contract of a doctor who was in the process of changing from a male to a female.

While the appellate court initially found that the state LAD did not explicitly protect persons who have decided to change their sexual identity, the judges ultimately held that it was "incomprehensible" that lawmakers "would condone discrimination against men or women who seek to change their anatomical sex because they suffer from a gender-identity disorder." The amendments to the LAD essentially codify that ruling.

Companies that enter into frank discussions with their transgender employees are likely to reach a solution without going to court, says Jillian Weiss, an assistant professor of law and society at Ramapo College of New Jersey in Mahwah. Weiss studies transgender issues and is holding a June 27workshop addressing the transgender workplace issues stemming from the LAD amendments. She says many small-business owners will be blindsided by the new law. "In general, small-business owners don't spend much time tracking new legislation," Weiss says. "It's not unusual for them to wait until someone complains before taking action. But by that time there's a greater chance that the dispute will end up in court."

The breadth of the New Jersey legislation seemed to surprise some Trenton-based business lobbyists. A representative of the New Jersey Restaurant Association says when changes to the LAD were released last year, there was no indication the amendments would be so sweeping. And a representative from the state chapter of the National Federation of Independent Business says she still needs to research the issue.

O'Reilly doesn't expect a flood of transgender individuals to step forward June 17 since there are relatively few in the work force. According to research by Weiss, transgender individuals comprise no more than 1 percent of the U.S population, which suggests that there could be as many as 3 million.

In Minnesota, which has a law similar to New Jersey's enhanced LAD, a 2001 state Supreme Court decision came down on the side of an employer in a dispute over alleged transgender discrimination. Attorney M. Trevor Lyons at Connell Foley says the Minnesota case, Goins v. West Group, concerned a transgender employee who was undergoing a sex change and wanted to use the women's restroom even though he was still biologically male.

According to O'Reilly, "the Supreme Court of Minnesota rejected the plaintiff's argument stating that the statute required only that the employer provide an adequate and sanitary restroom to transgender persons."

A savvy small business may be able to skirt issues like cross-dressing, or restroom and other accommodations, says one activist.

Barbra Casbar Siperstein, the transgender owner of a paint and wall-covering store in Fords, says "our business has two bathrooms, but because each can only accommodate one person at a time, they can be used like unisex restrooms. Our biggest problem is getting the men to remember to put the seat down before they leave the restroom."

Siperstein, who is in the process of becoming a woman, says that employee handbooks with a clear dress code can help prevent extreme situations like a man with a beard wearing a dress while he waits on customers.

"Personally, I wouldn't feel comfortable with a situation like that," says Siperstein, who lobbied the state Legislature to expand the LAD to cover transgender and other individuals. "An employee handbook that requires clean-shaven customer service representatives may address that kind of issue."

Attorney Michael Homans, a partner with Flaster/Greenberg 's Cherry Hill and Philadelphia offices, says companies that make a good-faith effort to accommodate transgender employees have a better chance of winning lawsuits than businesses with a hostile attitude. "Under the new LAD rules, a business ... may be able to reach reasonable accommodations regarding restrooms, customer service and other issues," he says.

"One thing [businesses] can't do is refuse employment to a cross-dresser just because they feel their customers would be uncomfortable with such an individual. That's the excuse restaurants in the South once used to bar African-Americans from being served at the same facilities as whites, and ultimately the courts didn't buy that excuse."