Attorney General Eric Holder announced last week that it is the position of the U.S. Department of Justice that discrimination against transgender people is prohibited under Title VII of the Civil Rights Act of 1964.

The announcement, made Thursday via a memorandum sent to to all department heads and U.S. attorneys, reflects a reversal of the department’s prior position that the federal civil rights law’s prohibition on sex discrimination did not cover claims of discrimination against transgender people.

The Justice Department opposed such claims as recently as 2006.

“This important shift will ensure that the protections of the Civil Rights Act of 1964 are extended to those who suffer discrimination based on gender identity, including transgender status,” Holder said in a statement. “This will help to foster fair and consistent treatment for all claimants. And it reaffirms the Justice Department’s commitment to protecting the civil rights of all Americans.”

The circulated memo makes clear that “sex” under Title VII includes discrimination based on transgender status, including discrimination “because an employee’s gender identification is of a particular sex, or because the employee is transitioning, or has transitioned to another sex.”

The memo cites a 2012 case, Macy v. Holder, in which the U.S. Equal Employment Opportunity Commission ruled that discrimination against a transgender employee is a form of discrimination based on sex.

The memo concludes that “the Department will no longer assert that Title VII’s prohibition against discrimination based on sex does not encompass gender identity per se (including transgender discrimination).”

Federal courts have not always agreed on whether Title VII’s prohibition on sex discrimination includes claims based on gender identity, and according to Holder, the goal of the memo is to “foster consistent treatment of claimants throughout the government, in furtherance of this Department’s commitment to fair and impartial justice for all Americans.”

“We are thrilled to see this clear commitment from the Department of Justice on the issue of transgender rights,” said Ilona Turner, legal director for the Transgender Law Center.

Turner’s organization filed the lawsuit that resulted in the Macy v. Holder decision. “This announcement will have far-reaching effects for transgender people both within the federal workforce and beyond, influencing the courts as well as other employers looking at their legal obligations under Title VII,” she said. “Our communities remain disproportionately unemployed and living in poverty. Legal protections against discrimination can make a real difference.”

The memo follows a series of recent administrative actions embracing transgender rights and holding that discrimination based on transgender status is prohibited. In 2011, the U.S. Office of Personnel Management issued guidance affirming the rights of transgender employees in the federal workforce. President Obama in June issued an executive order that prohibited discrimination based on gender identity and sexual orientation in federal employment and government contracting.

The Department of Labor released regulations to enforce that order last week.

The move to increase workplace protections for transgender people is a critically important one, especially as the Employment Nondiscrimination Act (ENDA), which would specifically prohibit employment discrimination based on sexual orientation and gender identity, has stalled in Congress, and with social conservatives looking to roll back state-level employment protections against LGBT persons as well.

According to the 2011 National Transgender Discrimination Survey of 6,450 transgender people in the United States, transgender people experience twice the rate of unemployment as other Americans and are much more likely to live in poverty.