Seyfarth Synopsis: To the surprise of many, the EEOC is not retreating from the argument first made by the Obama administration that Title VII forbids employment discrimination based on gender identity.

In EEOC v. R.G. & G.R. Harris Funeral Homes, Inc., Aimee Stephens, a transgender woman, informed her employer, a funeral home, of her gender identity and intention to transition. Although she intended to abide by the funeral home’s gender-specific dress code and wear clothing approved for female employees, she was terminated. She filed a charge of sex discrimination with the EEOC, and ultimately, the EEOC during the Obama administration brought suit against the funeral home in federal district court alleging that the funeral home terminated Ms. Stephens “because [she] is transgender, because of [her] transition from male to female, and/or because [she] did not conform to [the funeral home’s] sex- or gender-based preferences, expectations, or stereotypes.”

The district court rejected the funeral home’s motion to dismiss, holding the complaint stated a claim for relief based upon unlawful sex-stereotyping but not gender identity discrimination. The district court subsequently granted the funeral home’s motion for summary judgment, in which the funeral home relied in part upon the Religious Freedom Restoration Act (“RFRA”) as a defense. In its order, the district court found that the RFRA did, in fact, operate as a defense to Ms. Stephens’ wrongful termination claim.

In its opening brief to the Sixth Circuit, the EEOC continues to advance arguments originally made during the Obama administration. The EEOC argues that, “[c]ontrary to the court’s ruling below, Title VII’s prohibition on discrimination ‘because of … sex’ encompasses discrimination based on transgender status and/or transitioning.” The EEOC also maintains that the “RFRA does not provide what Title VII omits: a defense in this case that exempts the Funeral Home from complying with Title VII’s prohibition on sex discrimination based on the sincere religious beliefs of its owner.”

Many observers had expected the EEOC to reverse its stance, and the agency may still do so. After all, the full impact of President Trump’s administration on the makeup and enforcement agenda of the EEOC remains to be seen. Additionally, the administration’s position on a range of LGBT issues is not clear. The EEOC’s actions here are aligned with President Trump’s statements on preserving President Obama’s Executive Order prohibiting discrimination against LGBT individuals employed by the federal government and by federal contractors. However, that position is at odds with the DOJ’s and Education Department’s withdrawal of Obama-era guidance advising federally-funded educational institutions that Title IX prohibits discrimination based on gender identity. (The EEOC’s current position is further complicated by the fact that the stated protections for transgender individuals, found in Section 1557 of the Affordable Care Act, derive in part from Title IX.)

Currently, it appears the EEOC is poised to maintain its position, in the context of Title VII. But it is unclear whether the EEOC will continue to prioritize sex discrimination claims on behalf of transgender employees. Additionally, although unsettled, a growing number of courts have held that discrimination on the basis of gender identity violates Title VII. For these reasons, employers are wise to consider how their policies, practices, and procedures impact transgender employees and whether they are sufficiently inclusive.