It’s one of those workplace episodes you never anticipated. After working alongside your pod-mate for a year or two, he comes in one morning with news of a transition and a request. Henceforth, please use a different personal pronoun when referring to him: her. Among minorities, transgender employees have been somewhat of an invisible and misunderstood presence in the U.S. — so invisible that the Equal Employment Opportunity Commission (EEOC) only began tracking workplace complaints by transgender employees in January 2013. For most people, the concept remains a hazy one.

But like gays and lesbians before them, transgender men and women are stepping into the limelight, and their heightened presence is ushering in a national moment of examination. Caitlyn Jenner’s process of coming out as transgender  — in carefully packaged public steps — may be laced with the kind of celebrity pixie dust available to few others. Still, experts say it is bringing mass-education value that nothing else could.

“It will change our workplace, and I really do think Jenner will have made it far more acceptable,” says Wharton operations and information management professor Maurice Schweitzer. At the moment, however, “people are far more accepting of gay and lesbian people, and somehow transgender is still keeping people off balance,” he notes.

Along with Adam Galinsky, Schweitzer is author of the upcoming book, Friend and Foe: When to Cooperate, When to Compete and How to Succeed at Both, as well as a piece on a related website that unpacks the significance of Jenner’s handling of the matter. Schweitzer and Galinsky, a professor at Columbia Business School, argue that what Jenner did was to re-appropriate the very concept of transgender — the same way gays and lesbians adapted the pink triangle badge once used to identify them by the Nazi party. By embracing the term and being proud of it, Jenner gained power and control. “Some real subtle things can shift our perceptions, and I think she’s done that,” says Schweitzer.

“This is the way progress gets made, with one person on the cover of Vanity Fair.” –Dana Beyer

“To me, what’s changed is that we’re no longer toxic,” adds Dana Beyer, executive director of Gender Rights Maryland. “You couldn’t have had a Jenner moment two or three years ago. I think you can see that the way the tabloids used to handle it was as something salacious, and there has never been an interview done with a transgender person that was as respectful [as the one Jenner did in April with Diane Sawyer on 20/20], and it changed everything. This is the way progress gets made, with one person on the cover of Vanity Fair.”

Still, there is a long way to go. “It’s a watershed moment, and it’s great exposure,” says Beyer. “But national exposure is one thing. It has to trickle down. It has to happen locally to really change school systems and local government. That’s going to happen when people come out and demand it.”

Beyond Male and Female

The concept of gender has evolved far beyond being an if-not-this-then-that matter. Rather, gender has come to be understood as a spectrum of more vaguely defined identities. Facebook acknowledged as much last year when it diversified its gender profile options to more than 50 choices. Beyond “male” and “female,” the categories now include “Transfemale,” “Bigender,” “Pangender” and “Ciswoman.” Allowing users to choose began after Facebook suspended accounts because it said users were required to use names as they appeared on legal identification, and trans rights activists protested.

The American Psychological Association says transgender is an umbrella term that encompasses many different people whose gender identity is different from their assigned one — whether or not they are on their way to gender reassignment surgery. These include genderqueer, which is somewhere on the continuum between male and female, as well as names that indicate blending, alternating or rejecting identities — like androgynous, multi-gendered, gender nonconforming and third gender.

“It is unsettling because we are used to categorizing people, and in the gender category, we’ve been hardwired to categorize people since infancy. We announce a birth with very few details — the length, the weight and gender,” notes Schweitzer. “From preschool or kindergarten, people are segregated by gender. When you show up and no longer fit into one of these categories, you are throwing off a fundamental characterization scheme, and like it or not, we like categorizing things. It helps us make sense of the world, tells us who our allies are. Of course, we oversimplify things, and gender is one category that has been oversimplified.”

Hostility and Homophily

The reason for oversimplifying may be as guileless as lack of exposure. As a group, people who identify as transgender make up a tiny portion of the U.S. population — about 700,000, or 0.3%, according to UCLA’s Williams Institute. So why are employers increasingly concerned about putting policies in place to deal with accommodation of transgender workers? Liability is certainly one reason.

“I have 20 active cases and there are a lot of other lawyers around the country that have lots of cases,” says Jillian T. Weiss, principal of Jillian T. Weiss & Associates and professor of law and society at Ramapo College of New Jersey. “You want to minimize the risk because litigation is so ridiculously expensive today. It’s much better to address the situation before it becomes a legal issue.”

Among the scenarios she sees: Employers who fire or demote transgender employees; who ask them not to dress a certain way; who ask them not to speak about their gender or plans for gender transition; who don’t heed requests to use a different gender-specific restroom, and who make threats and engage in harassment.

Transgender workers operate with a heightened level of risk. Their unemployment rate is twice the national average for the general population, according to the National Transgender Discrimination Survey, with 50% reporting having been harassed at work. A quarter of respondents said they had been fired from a job for being transgender, and a quarter reported having been denied a promotion. Nearly 80% said they had experienced mistreatment or discrimination.

One reason for friction stems from the natural forces of homophily, or “how people tend to hang out with people like themselves — who ends up going to lunch together; who ends up carpooling together,” Schweitzer explains. “However diverse your workplace is, people end up segregating themselves.”

And so, it’s up to managers to figure out how to facilitate dynamics, he says. “You can’t just introduce them and assume that everything is going to function harmoniously and perfectly. We have to work at building that bond and demonstrating a commitment to those values.”

“You want to minimize the risk because litigation is so ridiculously expensive today.” –Jillian T. Weiss

Gender discrimination laws at the state level vary, but federal protection has been clarified in recent years — built primarily around Title VII of the Civil Rights Act of 1964 that prohibits employment discrimination based on race, color, religion, sex and national origin. “Some very important rulings by the EEOC make the case very clear and strong. In terms of what constitutes bias — when can you restrict bathroom use, using the wrong pronoun — the EEOC has made it clear that this is discrimination,” says Weiss. In April, the EEOC issued a landmark ruling in Lusardi v. McHugh, finding that the U.S. Army, in denying access to restrooms and refusing to use pronouns consistent with a person’s gender, committed unlawful discrimination.

Most cases arise from an employee who traverses a gender transition in the job, not from someone who starts a job with a transgender journey as something in the past, adds Weiss. With today’s changing comfort levels and more young people making the transition earlier, “I think that you’ll see a rise in cases over the next decade, and then a drop. When you do this at 18, no one knows,” she notes.

But even if no one knows, should a transgender employee share his or her history with co-workers? Many will want to, since it’s an important part of their personal history and, therefore, identity. Some aspects of identity are self-evident; an African American worker, for instance, does not have a choice in sharing that identity — but he or she also does not bear the burden of having to make a choice about whether to disclose. A transgender person can often choose whether, when and to whom to disclose that part of his or her identity.

It might be smart to start small, says Wharton management professor Nancy Rothbard. “Seek out someone you have a good relationship with, and if the relationship is strong and the person seems generally open, start there. It’s almost like coalition building,” she notes. “If you think about this in general organizational terms, you build a strong coalition of folks who support you in this endeavor and are willing to really be creative and help support you and smooth the way. Build support before you shock everyone.”

Rothbard sees transgender in the workplace as part of the concept of bringing your authentic self to work. “There are a lot of groups who don’t feel like they can bring their authentic self to work in their full glory of how they would express themselves in other settings,” she says. In this way, it is not unlike the friction some African American women feel in trying to square their professional identities with certain ways of styling their hair. Indeed, in McManus v. MCI Communications Corp., an employee claimed to have been fired for wearing her hair in braids and dreadlocks and dressing at work in African clothing.

“Minority women often feel they must compensate for both their gender and race in attempting to present a professional image that will render them credible to their co-workers,” write Ashleigh Shelby Rosette and Tracy L. Dumas in “The Hair Dilemma: Conform to Mainstream Expectations or Emphasize Racial Identity,” published in the Duke Journal of Gender Law and Policy in 2007. Rothbard says the dilemmas of these women and the challenges of being transgender in the workplace are analogous because “both are charged, but in a different way.”

Beyer of Gender Rights Maryland transitioned from male to female in the late 1980s, and says that the difference between public acceptance then and now is like night and day. “People often times try to hide it, and then you get outed, and then you’re on the defensive,” she says. “That’s not a good thing; you don’t want to do that. Generally there is no problem unless there is one person [who objects], and usually it is just one person. It’s not like everyone is saying, ‘Oh my God, we don’t want this.'”

A Gender Transition Plan

One of the reasons it might be easier for transgender employees today is that many companies have worked hard to smooth the path. The Human Rights Campaign’s annual Corporate Equality Index this year reached a highwater mark in terms of comprehensive transgender initiatives at a wide swath of American businesses. Two-thirds of the Fortune 500 and 89% of the nearly 800 businesses examined in the study now offer gender identity non-discrimination protection; a third of the Fortune 500 and more than half of all businesses in the study offer transgender-inclusive health care coverage, up from none in 2002. Eight in 10 businesses rated by the HRC study offer education and training programs specifically addressing gender identity in the workplace. Today, hundreds of major businesses have gender transition guidelines in place.

“Seek out someone you have a good relationship with, and if the relationship is strong and the person seems generally open, start there. It’s almost like coalition building.” –Nancy Rothbard

In fact, any business that does not have such guidelines is at risk, says Denise A. Norris, a senior analyst in service delivery and operations at Accenture. Among the things at stake, says Norris: attraction of top talent, employee retention and employee performance. “People who are able to be authentic and not worry about what their co-workers think about them take that energy and apply it to performance,” notes Norris, who is also Accenture’s global lead for transgender workplace inclusion and diversity and has worked with Moody’s and Bloomberg on these issues. “It’s not just that you can send out a memo and everyone gets it. It’s a journey.”

Some policies aimed at accommodating transgender employees are obvious — such as having a non-discrimination statement. But then there are matters like dress codes. “If you say men can only wear tailored shirts, but women can wear a blouse, that is actually a discriminatory practice,” notes Norris. “The moment an employee declares [that he or she has begun to transition] gender, they have the right to use gender-specific facilities. We don’t ask any other employee to identify gender, so if we target this class, whose gender expression is not confined to traditional roles, then we are creating a discriminatory situation.”

Norris — whose own transition started in 1989 and lasted three years — says that there is no reason a company should not immediately honor an employee’s name change, regardless of what his or her legal documents still list under name. “You set a policy that allows people to use nicknames,” she says. “Until someone changes their name legally, we can’t change what it says on your paycheck, but being able to use a preferred nickname is already common policy in most workplaces.”

Health care is another area of potential controversy. Should company health care pay for gender reassignment surgery and other costs? When insurance will pay for, say, hip replacement surgery and not the $25,000-$40,000 required for gender reassignment surgery, “it is discrimination,” says Norris. Costs vary, depending on the extent of the surgical procedures being done. When a male transitions to female, many also require facial surgery to make bone structure look more feminine.

Weiss says many problems can be avoided by having at the ready a “gender transition plan” to use the moment an employee informs an employer that he or she has initiated the process. It should cover matters such as the anticipated timeline for the transition, expectations for dress code, company resources available for support during the transition, an agreement about which restrooms will be used, and a protocol for how complaints from other employees would be addressed.

The messages coming from the top are critical, says Norris. “If there is clear support from the leadership, if management says this is part of our core values to respect the individual, then that employee is going to have fewer problems.” And that means reducing as much as possible bias around gender in general. “You need to talk about processes for evaluation that reward people based upon their accomplishment to make sure you are doing things in a fair, objective way,” says Schweitzer, who says that some lessons can be borrowed from the era in which women first sought and gained greater accommodation in the workplace.

That process is decades old, of course, and women struggle still for equal treatment — an irony not lost on people like transgender female Beyer in recalling the story by Stanford University neurobiologist Ben Barres, who, after he began living as a man, overheard another scientist say: “Ben Barres gave a great seminar today…. His work is much better than his sister’s work.”

Says Beyer: “Everyone I know who has made the transition tells stories of being treated differently from one day to the next. I call it the reinforced glass ceiling.”