It is well-known that sex discrimination violates Title VII of the Civil Rights Act of 1964. What has been less clear is whether discrimination based on transgender status falls within the definition of “sex discrimination.” In other words, are Michigan employers permitted to fire or discipline employees based on their transgender status?

The Sixth Circuit Court of Appeals recently addressed this question in Stephens v. R.G. & G.R. Harris Funeral Homes, Inc. That case involved a funeral director “assigned male at birth” who notified her employer that she planned to transition to and present as a woman. The funeral home’s owner fired the funeral director because she “wanted to dress as a woman.”

The court held that “discrimination on the basis of transgender and transitioning status is necessarily discrimination on the basis of sex” in violation of Title VII. According to the court, the funeral home could not terminate its funeral director based on her transgender status without being “motivated, at least in part, by the employee’s sex.”

The court rejected the funeral home’s freedom of religion defense. Although the funeral home owner testified that he sincerely believed “that the Bible teaches that a person’s sex is an immutable God-given gift” and that permitting the employee to “deny their sex” would violate God’s commands, the court held that compliance with Title VII would not substantially burden the owner’s religious exercise.

This case presents a cautionary tale for employers within the Sixth Circuit (i.e., Michigan, Ohio, Kentucky and Tennessee), where the decision is binding. Employers should refrain from taking adverse action against employees on the basis of transgender or transitioning status. And as always, employers should regularly review their policies to ensure compliance with pertinent legal developments.

If you need help in complying with state and federal employment laws, call Wright Beamer at (248) 477-6300.