"Discrimination against employees, either because of their failure to conform to sex stereotypes or their transgender and transitioning status, is illegal under Title VII."
Aimee Stephens' employer (a funeral home) fired her after she announced that she intended to transition from male to female and would represent herself and dress as a woman while at work. The EEOC sued, and lost at the trial level, but the 6th Circuit reversed and held in Stephens' favor. EEOC v. R.G. &. G.R. Harris Funeral Homes (6th Cir 03/07/2018) [PDF].
Title VII prohibits employment discrimination "on the basis of … sex." Is that what happened here? Yes, says the court. And the funeral home owner's religious objections are no defense.
The 6th Circuit held:
(1) The funeral home discriminated against Stephens on the basis of her sex;
(2) The funeral home did not established that applying Title VII to the funeral home would substantially burden its owner's religious exercise, and therefore the funeral home is not entitled to a defense under the Religious Freedom Restoration Act;
(3) Even if the owner's religious exercise were substantially burdened, enforcing Title VII is the least restrictive means of furthering the government's compelling interest in eradicating workplace discrimination against Stephens.
Title VII applies to transgender status
Sex stereotyping: The 6th Circuit had previously decided – based on Price Waterhouse v. Hopkins, 490 U.S. 228 (1989) – that "discrimination based on a failure to conform to stereotypical gender norms" was no less prohibited under Title VII than discrimination based on "the biological differences between men and women." "Discrimination against employees, either because of their failure to conform to sex stereotypes or their transgender and transitioning status, is illegal under Title VII."
Dress code: The funeral home argued that it was merely requiring its employees to conform to a sex-specific dress code, which court decisions from the 9th and 6th Circuits have upheld. The 6th Circuit replied that (1) this case did not involve the question of sex-specific dress codes, (2) earlier sex-specific dress code cases were wrongly decided, and (3) it was not necessary to show that transgender persons transitioning from male to female were treated differently than transgender persons transitioning from female to male.
Chromosomes: The funeral home argued that Title VII "sex" means "chromosomally driven physiology" whereas transgender status refers to "a person's self-assigned 'gender identity'" rather than a person's sex. The court had two responses to that: "First, it is analytically impossible to fire an employee based on that employee's status as a transgender person without being motivated, at least in part, by the employee's sex." "Second, discrimination against transgender persons necessarily implicates Title VII's proscriptions against sex stereotyping." "[A] transgender person is someone who 'fails to act and/or identify with his or her gender' – i.e., someone who is inherently 'gender non-conforming.'"
Defenses based on religion
Ministerial exception: The funeral home cannot shield itself based on the "ministerial exception" (a 1st amendment component) because (1) the funeral home is not a religious organization and (2) Stephens is not a ministerial employee.
Religious Freedom Restoration Act: After a relatively lengthy discussion of the Religious Freedom Restoration Act, the court concluded that RFRA provides the funeral home with no relief because (1) continuing to employ Stephens would not, as a matter of law, substantially burden the funeral home owner's religious exercise, and (2) even if it did, the EEOC has shown that enforcing Title VII here is the least restrictive means of furthering its compelling interest in combating and eradicating sex discrimination.
(1) It's logically impossible to discriminate based on changing sexes without discriminating "on the basis of … sex" – even without going into the issue of sex stereotyping. It would be the same thing if there were discrimination based on changing religions.
(2) This case is one more illustration of where courts have used sex stereotyping theory to address issues that probably were not in the minds of the members of Congress back in 1964. We've seen it with male-on-male and female-on-female sex discrimination and with sexual orientation discrimination.