The subject is genderless. There is no genderless singular pronoun in either English version. Therefore, the correct answer should be "They do not wear pants" as "they" is the closest pronoun to the genderless singular pronoun, not he or she.
그녀 literally means "that girl" and I heard it isn't used very often by Korean people. So I presume 그 is indeed genderless.
그 means both 'that' and 'he'. 그녀 means only 'she'. 'that girl' would be 그 여자아이, where 그 means 'that'.
So does this translate like the English?
그는 바지를 안 입어요.
He does not wear pants.
Meaning he typically doesn't wear pants.
그는 바지를 안 입고 있어요. He is not wearing pants.
Meaning he currently does not have pants on.
The last sounds a bit strange to me.