Sex. Gender. Employment Discrimination.

Diane Schroer was offered a job as a terrorism research analyst by the Library of Congress in December 2004 -- but she was known as David Schroer at the time. Yet when the decorated Army veteran told her would-be boss that she was about to undergo sex-reassignment surgery, the offer was revoked. Schroer sued, claiming sex discrimination. The library countered that workers like her enjoyed no such legal protection.

But on September 19 a federal district court in Washington, D.C., sided with Schroer, ruling that she was indeed discriminated against on the basis of sex -- a violation of Title VII of the Civil Rights Act. It was the first time a transgender person had won a lawsuit on such grounds.

Predictably, the American Civil Liberties Union and Sharon McGowan of the ACLU's LGBT Project, who represented Schroer, were immediately inundated by press requests for quotes. But there were dozens of calls from employment lawyers and hiring managers too, seeking advice on what the landmark decision meant for them. To McGowan, the answer was obvious.

"This ruling says it's no longer acceptable to treat transgender workers like they're some kind of disposable goods you can just throw away," she says, adding that she expects to see fewer transgender employment discrimination cases as a result. The ruling will also affect cases already in the pipeline, says Cole Thaler, Lambda Legal's transgender rights attorney. "Now judges will have this case to rely on in making their decisions," he says.

In the past, courts had declined to extend Title VII protection to transgender employees, arguing that "sex" referred to biological men and women only, not those who changed or were changing their sex. But Judge James Robertson forcefully rebuked this reasoning in his opinion, saying that previous judges had "allowed their focus on the label 'transsexual' to blind them to the statutory language itself." He invoked the example of religion, which is also protected under Title VII.

"Imagine that an employee is fired because she converts from Christianity to Judaism," Robertson wrote. "Imagine too that her employer testified 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."

Although attorneys for the Library of Congress offered expert testimony from a psychologist who said that "gender identity" was distinct from "sex" and therefore Schroer wasn't entitled to legal protection -- the ACLU's witness said that gender identity was a component of sex -- Robertson said such a distinction was irrelevant. After all, he asserted, "the Library was enthusiastic about hiring David Schroer -- until she disclosed her transsexuality."

It didn't help, Robertson added, that the decision "was infected by sex stereotypes," something he said is also illegal under Title VII. The supervisor who hired Schroer, Charlotte Preece, testified that she couldn't understand why the former Special Forces officer would want to become a woman, given what a masculine man he was.

Discrimination against transgender workers, of course, doesn't end with this ruling, no matter how groundbreaking it is. Trans-related employment discrimination cases have been on the rise, a "side effect of visibility as more and more transgender people come out," Thaler says. "The upside is judges are finally starting to understand this discrimination is very real -- and with this case and others, we now have a good legal argument to stop it."

Thaler will see the impact of the Schroer decision firsthand in the case of his client Vandiver Elizabeth "Vandy Beth" Glenn. A former employee of the Georgia general assembly's Office of Legislative Counsel, Glenn was fired "on the spot" once she told the office director she intended to transition to female, Lambda Legal officials say. At the time her lawsuit was filed in federal court last July, Glenn said that in dismissing her, the director told her that coworkers would be uncomfortable and that legislators would see her transitioning as immoral. Preece, Schroer's supervisor, made similar remarks.

Thaler hopes the Schroer ruling will help Glenn win justice too, but he's still cautious. "The interpretation [Robertson] made--while solid and accessible--may not be made by other judges," he says. That's why it's so important for Congress to pass a transgender-inclusive Employment Non-Discrimination Act, he adds, "to make sure there's no room for ambiguity."