In D.C. there is no workplace protection for transgender employees. So the ACLU filed the case of Schroer v. The Library of Congress as violation of Title VII, specifically, sex discrimination. The decision was made in Schroer's favor citing it wasn't transgender discrimination but sex discrimination that resulted in her being passed over for the job. They gave this analogy as to why it wasn't the transition from male to female (transgender) but rather the being female that resulted in discrimination.
Imagine that an employee is fired because she converts from Christianity to Judaism. Imagine too that her employer testifies that he harbors no bias toward either Christians or Jews but only "converts." That would be a clear case of discrimination "because of religion." No court would take seriously the notion that "converts" are not covered by the statute. Discrimination "because of religion" easily encompasses discrimination because of a change of religion. But in cases where the plaintiff has changed her sex, and faces discrimination because of the decision to stop presenting as a man and to start appearing as a woman, courts have traditionally carved such persons out of the statute by concluding that "transsexuality" is unprotected by Title VII. In other words, courts have allowed their focus on the label "transsexual" to blind them to the statutory language itself.
I doubt employers who discriminate against transitioned employees or prospective employees realize they may be in violation of Title VII. This decision sets a precedent by saying a fully transitioned person is the gender they transitioned to and not a transsexual, as many believe they are.
Julie