Washington (CNN) Attorney General Jeff Sessions has formally determined that a 1964 federal civil rights law does not protect transgender workers from employment discrimination, upending previous guidance issued under the Obama administration.

In a memo to all federal prosecutors and obtained by CNN, Sessions states that "Title VII's prohibition on sex discrimination encompasses discrimination between men and women but does not encompass discrimination based on gender identity per se, including transgender status."

"This is a conclusion of law, not policy," Sessions said, adding that the department will take this new position in all "pending and future matters."

Title VII prohibits employment discrimination based on race, color, religion, sex and national origin.

"The Department of Justice cannot expand the law beyond what Congress has provided," DOJ spokesperson Devin O'Malley said in a statement. "Unfortunately, the last administration abandoned that fundamental principle, which necessitated today's action. This department remains committed to protecting the civil and constitutional rights of all individuals, and will continue to enforce the numerous laws that Congress has enacted that prohibit discrimination on the basis of sexual orientation."

But advocates of equal rights for members of the transgender community blasted the move and pledged to sue the administration.

"According to Sessions, an employer is free to hang a 'Transgender Need Not Apply' sign in their window. Fortunately, he is dead wrong on the law," said Mara Keisling, executive director of the National Center for Transgender Equality, in a statement Thursday. "Courts have repeatedly ruled that transgender people are protected by sex discrimination laws in employment, education, housing and healthcare. We'll see him in court."

Under the Obama administration, Attorney General Eric Holder issued a policy memo explaining that the federal government's approach on this issue had "evolved" over time.

"I have determined that the best reading of Title VII's prohibition of sex discrimination is that it encompasses discrimination based on gender identity, including transgender status. The most straightforward reading of Title VII is that discrimination 'because of ... sex' includes discrimination because an employee's gender identification is as a member of a particular sex, or because the employee is transitioning, or has transitioned, to another sex," Holder wrote in 2014.

The department's policy shift was previewed in July when DOJ made similar argument in a lawsuit involving a skydiving instructor who said he was fired after disclosing his sexual orientation to a customer. In that case, Justice Department lawyers wrote that "that Title VII does not prohibit discrimination because of sexual orientation" and efforts to amend Title VII's scope "should be directed to Congress rather than the courts."

The reversal also comes at the same time the Trump administration is litigating the President's proposed ban on transgender service members in the military.