Earlier this month, we discussed the Second Circuit Court of Appeals' decision concluding that Title VII prohibits discrimination on the basis of sexual orientation. Days later, the Sixth Circuit Court of Appeals (covering Kentucky, Michigan, Ohio, and Tennessee) issued a significant Title VII decision of its own when it concluded that a funeral home's discharge of a transitioning transgender employee also violated Title VII.

In EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., the funeral home terminated a funeral director after she informed the owner (who identifies as Christian) that she would be transitioning from male to female and wanted to begin dressing and presenting as female.  The owner admitted that he fired the employee because "he was no longer going to represent himself as a man."  The employee filed a discrimination complaint with the Equal Employment Opportunity Commission (EEOC).  Following an investigation, the EEOC brought suit on the employee's behalf alleging that the funeral home violated Title VII by terminating the employee based on her transgender/transitioning status and refusal to conform to sex-based stereotypes.  The EEOC also asserted that the funeral home administered a discriminatory clothing allowance policy pursuant to which male employees were provided with a clothing allowance but female employees were not.

In response to the funeral home's motion to dismiss, the district court concluded that transgender status is not, in and of itself, protected under Title VII but the court allowed the EEOC to proceed with a claim premised on sex- or gender-based stereotyping and expectations. Both the EEOC and the funeral home subsequently filed motions seeking judgment in their favor and the court found in favor of the funeral home.  In doing so, the district court concluded that, although there was evidence to support a claim of sex discrimination under Title VII, the funeral home was shielded from liability under the Religious Freedom Restoration Act (RFRA) because of the substantial burden placed on its ability to conduct business in accordance with its owner's sincerely held religious beliefs and the EEOC's failure to show that enforcement of Title VII was the least restrictive means of ensuring protection from sex-based stereotyping.  The EEOC then appealed.

On appeal, the Sixth Circuit concluded that the district court was correct in allowing the EEOC's sex-based stereotyping claim to proceed. However, the Sixth Circuit also determined that it was an error to conclude that transgender or transitioning status is not protected under Title VII.  Instead, the Sixth Circuit noted that, because "an individual's transgender status is always based on gender-stereotypes," it is "analytically impossible" to distinguish between discrimination on the basis of sex-based stereotypes and discrimination based on transgender status.  Consequently, the Sixth Circuit held that "Title VII protects persons because of their transgender or transitioning status, because transgender or transitioning status constitutes an inherently gender-nonconforming trait."

Additionally, the Sixth Circuit rejected the funeral home's RFRA defense because it determined that the funeral home's exercise of religion would not be substantially burdened by the employee's continued employment. Specifically, the court noted that the funeral home's first alleged burden – that the employee's dress and presentation would be a distraction to grieving families – was based on presumed biases which cannot be used to establish a substantial burden under the RFRA.  In addition, the court determined that the funeral home's second alleged burden – the choice of providing the employee with female clothing or being forced to leave the business – was a "predicament of [its] own making" because the funeral home was not required to provide any clothing or stipend to any employee.  Moreover, the court determined that simply tolerating the employee's understanding and presentation of her sex and gender identity was not equal to supporting it.  Finally, the court found, that even if the funeral home could establish a substantial burden on its exercise of religion, the EEOC had a compelling interest in preventing employment discrimination and enforcement of Title VII was in fact the least restrictive means of achieving that goal.

The Sixth Circuit's decision appears to be the next step towards an expansion of Title VII protections for sexual orientation and gender identity. Given the ongoing evolution in this area, employers should stay tuned for information about additional developments and be mindful of the law applicable to their locations.

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