Caitlyn Jenner has dominated the national public interest stories and social media of late. However sensational the news has made this particular story, the issues surrounding transgender individuals are increasingly impacting employers.

Recently, the Eastern District of Michigan permitted one of the first sex-discrimination cases over a transgender employee’s firing to proceed. The Court refused to dismiss the case despite the fact that transgender persons are not a protected class under Title VII, finding instead that transgender employees are like other employees who are permitted to sue their employers over sex stereotypes. The Eastern District of Michigan is part of the Sixth Circuit and should this case proceed to the Sixth Circuit upon appeal, its decision would be binding upon Ohio employers as well as Michigan employers.

In EEOC v. R.G. & G.R. Harris Funeral Homes, Inc, the U.S. District Court Eastern District of Michigan Southern Division, Amiee Stephens, a transgender woman, had been employed with R.G. & G.R. Harris Funeral Homes, Inc. in Michigan since October 2007 as a Funeral Director. She was hired and proceeded to work identifying as a male employee. On July 31, 2013, Stephens informed her employer and co-workers in a letter that she was undergoing a gender transition from male to female and would begin dressing in appropriate female business attire at the workplace.  According to the Complaint, on August 15, 2013, her employer fired her, telling her that what she was “proposing to do” was unacceptable.

On behalf of Stephens, the EEOC brought an employment discrimination lawsuit against the Funeral Home, asserting the that the Funeral Home’s decision to fire Stephens was motivated by sex-based considerations and violated Title VII. Specifically, the Complaint alleged that the Funeral Home fired Stephens because of Stephens’ transition from male to female and/or because Stephens did not conform to the Funeral Home’s sex or gender based preferences, expectations or stereotypes. The key allegation was that the termination was based on gender stereotypes. The EEOC also alleged that the Funeral Home engaged in an unlawful employment practice in violation of Title VII by providing a clothing allowance to male employees and failing to provide a similar allowance to female employees because of their sex.In response, the Funeral Home filed a motion to dismiss arguing that the claim was without merit as transgender employees are not a protected class under Title VII. The motion did not address the EEOC’s claim based on the alleged disparate treatment in relation to the clothing allowance. The District Court denied the motion to dismiss the case.

At the outset, the District Court clearly stated that sexual orientation, transgender or transsexual status is not currently a protected class under Title VII. Neither the legislature nor the Supreme Court have established such a protected class. Notably, if the EEOC had based the lawsuit on an allegation that transgender individuals should have protected legal status, the Court almost certainly would have dismissed the case. However, the Court instead found that the EEOC’s complaint asserted that the Funeral Home terminated Stephens because she failed to conform to the Funeral Home’s sex or gender based preferences, expectations or stereotypes.

Although transgender status is not a protected class, Title VII does protect transgender persons from discrimination by their employers for failing to act in accordance with their perceived sex or gender. Hence, the Court concluded that a transgender person just like any other person could bring a sex-stereotyping gender-discrimination claim under Title VII. The Court concluded that the Funeral Home terminated Stephens for failing to conform to sex stereotypes and thus the EEOC had sufficiently plead a sex-stereotyping gender-discrimination claim under Title  VII. The Court denied the motion to dismiss and Stephens’ claim will be permitted to proceed.  We will continue to monitor the case and provide updates.

Similar cases are popping up in other jurisdictions as well. The EEOC filed a similar complaint against a Florida based eye clinic. The eye clinic settled with the agency earlier this month. The clinic agreed to pay $150,000, to adopt and implement a gender and transgender discrimination policy and to create training for its managers and employees. In addition, OSHA has recently issued guidelines for transgender bathrooms.

Unless Congress changes the language in Title VII or the United States Supreme Court issues a decision holding that transgender individuals are a protected class, for now, transgender employees cannot bring a lawsuit under Title VII as a protected class. However, going forward, employers may increasingly find themselves dealing with issues surrounding transgender employees in the workforce. Hence, employers should consider evaluating this issue now rather than waiting for lawsuits to arise. It is critical for employers to address the issue by creating policies and incorporating the issue into ongoing anti-harassment training for all levels of employees.