Employers cannot discriminate against employees based on their transgender or transitioning status, despite (at least in some cases) the employer’s sincere religious objections. Those are the key takeaways of the 6th Circuit’s landmark decision in EEOC v. R.G. & G.R. Employers who are subject to Title VII, particularly those in the 6th Circuit (i.e., Kentucky, Michigan, Ohio and Tennessee), should review their policies to ensure that they comply with this decision.

In EEOC v. R.G., the Equal Employment Opportunity Commission (EEOC) filed suit under Title VII after a Michigan funeral director, Aimee Stephens, was fired because of her intent to transition from male to female. The owner of the funeral home, Thomas Rost, is a lifelong Christian who believes that employing a transgender funeral director will make him complicit “in supporting the idea that sex is a changeable social construct rather than an immutable God-given gift.” Rost also believes that employing a transgender funeral director will distract his clients and interfere with their healing process, will interfere with his calling to serve God by ministering to grieving people, and will pressure him to leave the funeral industry and end his ministry.

The 6th Circuit identified two ways that the funeral home violated Title VII. First, it is well-established that Title VII prohibits discrimination based on sex stereotypes, and that occurs when an employer fires an employee because he or she intends to dress like a member of the opposite sex. Second, discrimination on the basis of transgender and transitioning status violates Title VII because “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.”

Next, the 6th Circuit considered whether Rost’s sincerely-held religious beliefs provide a defense to liability under Title VII. Religious institutions are protected from certain discrimination claims where the action taken is critical to the religious function of the institution. This is called the “ministerial exception.” The court held that Title VII’s ministerial exception does not apply because the funeral home is not a religious institution and Stephens was not a ministerial employee. The court further held that Rost did not satisfy the requirements of the Religious Freedom Restoration Act (RFRA), which bars the government from enforcing generally-applicable rules that substantially burden a person’s exercise of religion unless the government’s action is the least restrictive means of furthering a compelling government interest.

Rost identified two burdens on his exercise of religion but the 6th Circuit concluded that neither of them was justified under RFRA. Rost first argued that Stephens’s appearance would distract clients and hamper Rost’s ability to minister to them. The 6th Sixth Circuit rejected this argument because, as a matter of law, “a religious claimant cannot rely on customers’ presumed biases to establish a substantial burden under RFRA.” The court further stated that even if the customers’ biases were substantiated by evidence in the record, it would refuse to conclude that discriminatory policies were essential to a business or to the owner’s religious exercise.

Rost also argued that RFRA applied because he was required to choose between engaging in conduct that violates his religious beliefs or being penalized for engaging in such conduct. The 6th Circuit disagreed and held that “as a matter of law, tolerating Stephens’s understanding of her sex and gender identity is not tantamount to supporting it.” In other words, “bare compliance with Title VII—without actually assisting or facilitating Stephens’s transition efforts—does not amount to an endorsement of Stephens’s views.” The court reasoned that this outcome was no different from Rost’s admitted decision to employ people with non-Christian religious views or no religious views. “At bottom, the fact that Rost sincerely believes that he is being compelled to make such an endorsement does not make it so.”

EEOC v. R.G. is likely to lead to more claims by transgender and transitioning employees who will seek protection under Title VII. Although the issue will not be settled until the Supreme Court rules on it, employers should be aware of this decision and, at least in the 6th Circuit, modify their EEO policies to include transgender and transitioning employees as a protected class. Those employers will also want to instruct their HR staff and operations supervisors and managers regarding the potential legal implications of treating employees differently based on their transgender and transitioning status.