What are the LEGAL ramifications of being "caught" or outed"?

[BRANDYJ]

Then you could be sued for sexual harassment :-)

Litigation in US has gotten too far...

I think you are wrong. A business owner has the right to set a dress code for it's employees. A crossdresser does not have the right tocome to work dressed fem. There is nothing in the way of sexual harrassment for an employee to demand propper attire for work. to say it's sexual harrassment is a huge stretch.
So if you are correct, I guess the Hooter's waitresses can wear blue jeans and a sweat shirt to work and cut their hair as short as a butch cut ( pun intended)

[StarrOfDelite]

I think you are wrong. A business owner has the right to set a dress code for it's employees. A crossdresser does not have the right tocome to work dressed fem. There is nothing in the way of sexual harrassment for an employee to demand propper attire for work. to say it's sexual harrassment is a huge stretch.
So if you are correct, I guess the Hooter's waitresses can wear blue jeans and a sweat shirt to work and cut their hair as short as a butch cut ( pun intended)

You are correct in stating that an employer has a right to set a dress code. However, assuming that there is an anti-discrimination law in place, that dress code has to be equally applied to all employees. Thus, a work place rule against skirts and high heels would have to include female employees as well as male. Same thing for long hair, liptick, earrings, et cetera. Regarding Hooters, if a man is willing to wear hot pants/short shorts, and take table orders on roller skates then under Federal law he cannot be refused a job if qualified by training and experience. There is, in fact, a famous lawsuit in which Hooters paid the EEOC a $3.75 million dollar settlement and agreed to create gender neutral positions.

[PetiteDuality]

I think you are wrong. A business owner has the right to set a dress code for it's employees. A crossdresser does not have the right tocome to work dressed fem. There is nothing in the way of sexual harrassment for an employee to demand propper attire for work. to say it's sexual harrassment is a huge stretch.
So if you are correct, I guess the Hooter's waitresses can wear blue jeans and a sweat shirt to work and cut their hair as short as a butch cut ( pun intended)

I was focusing more on what you said about

"Yes, I would extend a warning and then maybe ask them to come over and dress at my house"

If you are the boss and make such invitation, that could be considered sexual harassment...