The settlement comes after Saks argued that discrimination based on gender identity was not covered under the Civil Rights Act's ban on sex discrimination.
Saks & Company on Wednesday settled claims that it discriminated against former saleswoman Leyth Jamal, who said she had been subject to harassment and retaliation because of her transgender identity.
The settlement comes after Saks tried to defend itself by arguing that discrimination based on gender identity was not covered under the ban on sex discrimination in Title VII of the Civil Rights Act of 1964. That stance stood in stark contrast to recent actions by the federal government advocating for the protection of transgender employees. In late December, Attorney General Eric Holder announced that, going forward, the Justice Department would consider discrimination against transgender people as covered by the Civil Rights Act’s prohibition of sex discrimination. Holder’s statement came a few months after the EEOC—the government agency that enforces the federal employment discrimination laws—filed its first-ever lawsuits to protect transgender workers under Title VII of the Civil Rights Act. And in July, President Barack Obama issued an executive order prohibiting federal contractors from discriminating against workers based on their sexual orientation or gender identity.
Saks eventually withdrew that defense amid pressure from other corners of the legal world. New York Attorney General Eric Schneiderman sent a letter to Saks inquiring about its anti-discrimination policies for the company’s employees based in New York. The Human Rights Campaign and National Center for Lesbian Rights chimed in with a court filing that argued that Saks’ “position that Title VII does not protect transgender workers from the types of discrimination and harassment alleged in [Jamal’s] complaint is wrong as a matter of law.” The Department Justice blasted the retailer for its controversial stance. “Saks maintains that Ms. Jamal cannot prevail on a Title VII sex discrimination claim that is based on her gender identity, particularly her transgender status,” the Justice Department said in a filing. “Not so. Discrimination against an individual based on gender identity is discrimination because of sex.”
The retailer had said it planned to fight Jamal’s lawsuit on its merits. “As this matter proceeds, the facts will demonstrate that the plaintiff’s allegations are wholly without merit,” Saks said in a court filing. Jamal’s lawsuit claimed that her coworkers at a Saks store in Houston referred to her as a man and forced her to use the men’s bathroom. A manager suggested that she make her appearance more masculine and “separate her home life from work life.” Saks fired Jamal in 2012 after she filed a discrimination complaint with the Equal Employment Opportunity Commission, according to the complaint.
On Wednesday, Jamal’s lawyers Jillian Weiss and Mitchell Katine filed a stipulation of dismissal of the case with prejudice. When asked about the terms of the settlement, Weiss told Fortune that the parties had amicably settled the lawsuit and they will have no further comments regarding the suit. Saks’ lawyer Michael Mitchell did not immediately return a request for comment.