The U.S. Court of Appeals for the Sixth Circuit recently ruled, in what many have described as a ground-breaking decision, that discrimination based on an employee’s transgender status is discrimination based on “sex” in violation of Title VII of the Civil Rights Act of 1964 (Title VII).1 While the Equal Employment Opportunity Commission (EEOC) made such a determination in 2012,2 the Sixth Circuit is the first such federal appellate court to so rule.

Background

R.G. & G.R. Harris Funeral Home is a closely held for-profit corporation that is 95.4% owned by Thomas Rost. The funeral home itself is not and has never been affiliated with a church. The funeral home does not claim to have a religious purpose in its articles of incorporation, is open on Christian holidays, and serves clients of all faiths. Nevertheless, Rost – a Christian who regularly attends church – proclaimed “God [] called him to serve grieving people,” and that his “purpose in life [was] to minister to the grieving.”

With regard to its employees, the funeral home maintained a gender-specific dress code. Pursuant to that dress code, men were required to wear dark, conservatively-styled suits with white shirts. Women were required to similarly dress conservatively in a suit or plain dress. Men who interfaced with the public were required to wear business suits and neck ties; women were required to wear a skirt and business jacket. The funeral home provided free suits and ties to all male employees who interacted with clients, and replaced those suits as needed,3 but did not provide its female employees with any clothing or clothing allowance.

Plaintiff Aimee Stephens began working for the funeral home on October 1, 2007. At the time she was hired, Stephens presented as male and provided identification consistent with her then-legal name. In July 2013, Stephens informed the owner she intended to begin living and working as a woman. Specifically, she told him that when she returned from her vacation in August 2013, she would begin presenting as Aimee Australia Stephens, her “true self,” by wearing appropriate professional attire. Stephens worked for two more weeks and, just before she left for her vacation, the owner fired her.

The EEOC Complaint

Stephens filed a complaint with the EEOC, alleging she was discriminated against based on her sex. According to her complaint, the only explanation she received for her termination was that “the public would [not] be accepting of [her] transition.”

After an investigation, the EEOC found there was reasonable cause to believe the funeral home terminated her due to her sex and gender identity in violation of Title VII. The EEOC also found the funeral home discriminated against its female employees because it provided male employees with a clothing benefit it did not provide to its female employees. The complaint did not resolve during the conciliation phase and, as a result, on September 25, 2014, the EEOC filed a complaint against the funeral home in the United States District Court for the Eastern District of Michigan.

The District Court Proceedings

The funeral home sought to have the district court dismiss the EEOC’s complaint for failure to state a claim under Title VII. While the district court denied the motion to dismiss the case, it nonetheless narrowed the wrongful termination claim by finding Stephens’ transgender status was not protected under Title VII. In essence, the district court ruled the EEOC could not sue the funeral home for discrimination against Stephens based on her transgender status or because of her gender transition; the EEOC still could proceed, however, under a theory that Stephens was terminated based on her failure to conform to the funeral home’s “sex- or gender-based preferences, expectations, or stereotypes.”

Thereafter, both the EEOC and the funeral home moved for summary judgment. In ruling on the cross-motions for summary judgement, the district court found the EEOC had a “solid argument” Stephens was terminated based on her “failure to conform to sex stereotypes” in violation of Title VII. This is particularly true given the owner's testimony that he terminated Stephens because “he was no longer going to represent himself as a man. He wanted to dress as a woman.” However, based on the funeral home’s defense that the application of Title VII would force it to violate its sincerely-held religious beliefs, the district court found the funeral home was exempt from Title VII pursuant to the Religious Freedom Restoration Act of 1993 (RFRA). In so finding, the district court relied on RFRA’s provision that “[a] person whose religious exercise has been burdened in violation in this section may assert that violation as a claim or defense in a judicial proceeding.”4

Sixth Circuit Appeal

On appeal, the Sixth Circuit – which covers Michigan, Ohio, Kentucky, and Tennessee – reviewed the district court’s decision in its entirety. With regard to Stephens’ wrongful termination claim, the Sixth Circuit found the district court correctly determined Stephens was terminated by the funeral home based on her failure to conform to sex stereotypes in violation of Title VII.

More importantly, the Sixth Circuit found the district court erred when it narrowed the theory of the case, finding it was “analytically impossible” to terminate an employee based on their status as a transgender person without being motivated, at least in part, by the employee’s sex. By way of example, the Sixth Circuit likened gender to religion, citing to the District of Columbia federal district court’s decision in Schroer v. Billington:

There, the court noted that an employer who fires an employee because the employee converted from Christianity to Judaism has discriminated against the employee “because of religion,” ... because “[d]iscrimination ‘because of religion’ easily encompasses discrimination because of change of religion. By the same token, discrimination “because of sex” inherently includes discrimination against employees because of a change in their sex.

In so doing, a federal appellate court for the first time declared that “[d]iscrimination on the basis of transgender and transitioning status is necessarily discrimination on the basis of sex.” The Sixth Circuit thus found the EEOC should have had the opportunity to prove the funeral home violated Title VII by firing Stephens because she was transgender and announced she intended to transition from male to female.

The Sixth Circuit then turned to the funeral home’s defense to Title VII liability based on RFRA.5 In addressing the crux of the funeral home’s defense under RFRA, the Sixth Circuit evaluated whether the multiple prongs of a RFRA defense – i.e., whether the government action at issue would (1) substantially burden (2) a sincere (3) religious exercise – had been satisfied. In answering this question, since the owner argued his “purpose in life [was] to minister to the grieving,” the Sixth Circuit focused on whether the funeral home had identified how continuing to employ Stephens would substantially burden the owner’s ability to serve mourners. The court evaluated the two burdens the funeral home had identified: first, allowing a funeral director to wear a uniform intended for members of the opposite sex would create distractions for the deceased’s loved ones and hinder their healing process and, second, forcing the funeral home to violate the owner’s faith would pressure him to end his ministry to grieving people.

The Sixth Circuit found neither burden to be “substantial” as intended by RFRA. Notably, the court held as to the first burden that, as a matter of law, a religious claimant cannot rely on customers’ presumed biases to establish a substantial burden under RFRA. Likewise, as to the second burden, the court stated “simply permitting Stephens to wear attire that reflects a conception of gender that is at odds with Rost’s religious beliefs is not a substantial burden under RFRA.” In sum, the Sixth Circuit found that requiring the funeral home to tolerate Stephens’ expression of her gender or comply with Title VII by allowing Stephens to remain employed while she underwent a gender transition were not so burdensome on Rost’s religious convictions to justify discrimination.

Perhaps most importantly, the Sixth Circuit held that the EEOC had a compelling interest in combatting discrimination in the workforce. To hold to the contrary and recognize an exemption from Title VII for the funeral home – and thereby allow Stephens to suffer discrimination – was directly contrary to the EEOC’s compelling interest. And, since “enforcing Title VII is itself the least restrictive way to further the EEOC’s interest in eradicating discrimination based on sex stereotypes from the workplace,” the court reversed the district court’s decision.6

Implications for Employers

The Harris decision makes it clear that employers may not terminate or otherwise mistreat transgender employees under the guise of religious freedom. More broadly, this decision reaffirms the EEOC’s position that a claim of intentional discrimination by an employer because an individual is transgender or announces their intention to undergo a gender transition may be actionable under Title VII.

As a result, employers should review and consider revising their policies and practices to ensure they do not discriminate against employees based on their transgender status. Employers also should consider their response, and the expected response by their managers, when applicants or current employees approach them regarding their intention to undergo a gender transition. Most importantly, employers should take all steps necessary – including training their managers and employees – to try to prevent harassment, discrimination, or retaliation against transgender employees and applicants.