On March 7, 2018, the Sixth Circuit reversed the dismissal of a gender identity discrimination lawsuit filed by the U.S. Equal Employment Opportunity Commission against a Michigan funeral home. The EEOC brought the case, EEOC v. R.G. & G.R. Harris Funeral Homes, on behalf of Aimee Stephens, a funeral director/embalmer who was assigned male at birth and presented as a man at the time of her hire by the funeral home. The EEOC claimed that the funeral home’s owner terminated Stephens’ employment for discriminatory reasons after she disclosed her intention to transition from male to female and dress as a woman at work, in violation of Title VII of the Civil Rights Act of 1964. The funeral home’s majority owner, a devout Christian, testified that he fired Stephens because she intended to dress as a woman, and because he felt that continuing to employ Stephens would violate his religious beliefs. This testimony set the stage for the Sixth Circuit to address the conflict between anti-discrimination laws and religious freedom.
The Sixth Circuit, which includes Michigan, Ohio, Kentucky and Tennessee, has prohibited discrimination based on gender identity under Title VII since its 2004 decision in Smith v. City of Salem. Nonetheless, Stephens’ case is groundbreaking because it also addressed the impact of the Religious Freedom Restoration Act, or RFRA, which mandates that the federal government can only limit religious liberty by the “least restrictive means of furthering a compelling government interest.” Although the district court found that the funeral home was protected by its owner’s religious beliefs, the court of appeals reasoned that the compelling governmental interest in eradicating employment discrimination against transgender persons trumps business owners’ theological convictions.
The Harris decision also hinged on the fact that irrespective of its owner’s beliefs, the funeral home had virtually no religious characteristics and employed and served people from all religious backgrounds. In fact, the funeral home made a concerted effort to avoid offending people of different religions, down to avoiding religious figures in its decoration scheme. The court’s reasoning could apply to other businesses that provide services associated with religious ceremonies, or that sell religious items, but that do not have an explicitly religious purpose or mission (i.e., wedding caterers or greeting card shops). It could also apply to secular businesses, like restaurants, that happen to have religious owners.
Had the funeral home been affiliated with or operated according to the tenets of a specific faith, Stephens’ case may have ended differently. The mere act of a court deciding whether an expressed religious preference is pretext for unlawful discrimination can raise issues of excessive governmental entanglement with religion, in violation of the First Amendment’s establishment and free exercise clauses.
Some legal commentators have compared the Harris decision to the Second Circuit’s February 2018 decision in Zarda v. Altitude Express (covering Connecticut, New York and Vermont) and the Seventh Circuit’s April 2017 decision in Hively v. Ivy Tech (covering Illinois, Indiana and Wisconsin), holding that Title VII prohibits sexual orientation discrimination. However, it is important to remember that sexual orientation and gender identity are distinct concepts. In fact, the Sixth Circuit held that Title VII did not cover sexual orientation discrimination in Vickers v. Fairfield Medical Center, a 2006 decision that remains binding within the Sixth Circuit. Still, the Harris decision is part of the recent trend of courts broadly construing the meaning of “sex discrimination” and increasing workplace protections under federal law for employees covered by the LGBT umbrella.
Given this trend, the Sixth Circuit could reevaluate its stance on sexual orientation discrimination if given the opportunity to reconsider the issue. Bipartisan independent federal agencies, like the EEOC, continue to maintain that both sexual orientation and gender identity are federally protected from discrimination. Twenty states (including California, Connecticut, Illinois, Massachusetts and New Jersey) and Washington, D.C., have enacted laws that affirmatively protect both categories, and 12 more states have similar legislation pending.
In states that have not passed statewide laws, counties and cities (including Cleveland, Philadelphia, Saint Louis and Indianapolis) have passed ordinances prohibiting employment discrimination based on sexual orientation or gender identity. These laws are significant because they expressly recognize sexual orientation and gender identity as protected categories, leaving no room for courts to find to the contrary. State and local laws are also important because even in federal circuits that take a broader view of Title VII, employers are only covered if they have 15 or more employees. State and local anti-discrimination laws often have a smaller threshold that triggers compliance requirements. In some jurisdictions, employers with just one employee are subject to state and local requirements.
On the other hand, three states — Arkansas, North Carolina and Tennessee — have passed legislation that prohibits local governments from enacting their own (and invariably, more stringent) anti-discrimination laws. According to GLAAD’s 2018 Accelerating Acceptance report, which measures American attitudes toward LGBTQ persons and causes, 2017 marked the first overall decline in LGBTQ support and acceptance since the annual survey was launched in 2014. The survey also found that 55 percent of LGBTQ Americans experienced sexual orientation or gender identity discrimination in 2017 — a 25 percent increase from the 44 percent who reported discrimination the year before.
As this patchwork of different state and local laws has developed, the status of gay, lesbian and transgender employees has remained unsettled under federal law. Just last March, the Eleventh Circuit (covering Alabama, Florida and Georgia) ruled that sexual orientation discrimination is not unlawful sex discrimination under Title VII. Reversing course from the Obama administration, Attorney General Jeff Sessions has formally rescinded guidance from the U.S. Department of Justice equating gender identity discrimination with unlawful sex discrimination. In the recent Zarda case in the Second Circuit, the DOJ filed an unsolicited amicus brief with the court, arguing that sexual orientation is also not protected by federal anti-discrimination laws. Under Sessions, the DOJ has argued that Title VII should not be construed to include sexual orientation and gender identity discrimination unless and until Congress amends Title VII to cover those additional categories.
For employers, the most important lesson of the Harris decision is that secular employers cannot rely on the religious beliefs of ownership or management to justify discrimination against transgender employees. In addition, because of the many recent developments at the local, state, and circuit court level, employers need to be mindful of the laws that apply in all jurisdictions where they have employees, and make sure that their employment policies and practices are in line with those requirements.
Looking ahead, these recent developments make it more likely that the U.S. Supreme Courtwill address the issue of whether Title VII includes gender identity and sexual orientation discrimination, and clarify this issue for employers and employees across the country. However, it will take some time for a case to reach the Supreme Court, and then be fully briefed, argued and decided. In the meantime, employers with questions about the impact of this decision, and other recent trends regarding sexual orientation, gender identity and religious expression in the workplace should contact counsel with expertise in this area.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of the firm, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
 EEOC v. R.G. & G.R. Harris Funeral Homes Inc., No. 16-2424 (6th Cir. March 7, 2018), available at http://www.opn.ca6.uscourts.gov/opinions.pdf/18a0045p-06.pdf.
 378 F.3d 566 (6th Cir. 2004).