Was company biased against transgender employee?

A recent case adds an item to the list of pitfalls HR and hiring managers need to watch out for: transgender discrimination.
A man was hired to teach courses at a community college. Shortly after he started working, he was diagnosed with Gender Identity Disorder and began “functionally living as a female.”
The school began receiving complaints that the male teacher was using the women’s restroom, and he was told to use the men’s room. He refused and was fired.
The employee sued, claiming he was being discriminated against because of his gender. Who won?
Answer: the company.
The court acknowledged that discrimination based on gender stereotypes is discrimination based on gender — therefore, in some case, companies can be sued for bias against transgender employees.
However, in this case, the company had a good reason for enforcing its rest room rule — students expressed concerns about their privacy and safety. The case was thrown out.
Cite: Kastl v. Maricopa County Community College District.