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Posted: 7:12 PM- Transsexuals are not a separate protected group of workers under a law that bans employment discrimination based on a worker's sex, a federal appeals court has ruled.

The 10th U.S. Circuit Court of Appeals upheld a federal judge's ruling in favor of Utah Transit Authority, which fired bus driver Krystal Etsitty because she planned to use the women's restroom despite having male genitalia.

The Denver-based appeals court agreed with the judge that Title VII, a federal discrimination act, does not protect Etsitty solely on the basis of her transsexuality. In ruling for the first time on the issue, the court said it is reluctant to expand the traditional definition of "sex" in Title VII beyond the two starkly defined categories of male and female.

"Rather, like all other employees, such protection extends to transsexual employees only if they are discriminated against because they are male or because they are female," Judge Michael Murphy wrote in the 10th Circuit opinion, handed down Thursday.

The opinion also said the former bus driver was not terminated for failing to conform to male stereotypes, which Etsitty alleged is an act of discrimination based on sex.

Etsitty and her lawyers could not be reached Friday for comment.

The 44-year-old Salt Lake County resident was born a biological male and given the name "Michael." She has been diagnosed with Adult Gender Identity Disorder and always believed she was born with the wrong anatomical sex organs, according to the appeals court, which uses feminine pronouns when referring to Etsitty.

Eventually, she began taking female hormones and living as a woman to prepare for sex reassignment surgery in the future.

In the fall of 2001, Etsitty was hired as a UTA bus driver and presented herself as a man and used male restrooms during her training period, court records say. She later told her supervisor she was transsexual and would begin to appear more female.

She was fired in February 2002 after UTA's manager of operations and a human resources official said they were concerned about liability based on possible complaints from women about Etsitty using the same restroom. The officials said she was eligible for rehire after her surgery and denied any discriminatory motive.

Etsitty filed suit in U.S. District Court in Salt Lake City claiming the real reason for her dismissal was her failure to conform to the stereotype of a man.

Judge David Sam dismissed the lawsuit in June 2005, ruling there was no evidence UTA officials required Etsitty to fit a certain stereotype, only that she follow the accepted practice of using the restroom for her biological sex.

The 10th Circuit opinion, in upholding that decision, said it is aware of the difficulties transsexuals can face in the workplace.

"The conclusion that transsexuals are not protected under Title VII as transsexuals should not be read to allow employers to deny transsexual employees the legal protection other employees enjoy merely by labeling them as transsexuals," the ruling said. "If transsexuals are to receive legal protection apart from their status as male or female, however, such protection must come from Congress."

Will Carlson of Equality Utah, an advocacy organization for lesbian, gay, bisexual and transgendered people, called the decision "legalized injustice." He acknowledged the restroom issue can make workers uneasy but said stalls are available for privacy.

In addition, UTA had not received any complaints about Etsitty because she had not started using women's restrooms, Carlson said, making the basis of her firing a "red herring."