Court Holds Religious Freedom Restoration Act Is Defense To Firing Of Transgender Employee

Last year the United States Supreme Court held that the Religious Freedom Restoration Act (“RFRA”) allowed Hobby Lobby to avoid providing health insurance coverage under the ACA for methods of contraception because doing so violated the sincerely held religious beliefs of the company’s owners. Last week in EEOC v. R.G. and G.R. Harris Funeral Homes, Inc. the United States District Court for the Eastern District of Michigan held that RFRA could provide a defense to a sex discrimination case under Title VII.

In Harris Funeral Homes it was undisputed that the Funeral Home fired a male employee, Stephens, because Stephens intended to “dress as a woman” while at work. Stephens is transgender and transitioning from male to female. The EEOC alleged that the termination violated Title VII because Stephens was terminated due to his transgender status or his gender identity. The court rejected that argument because transgender status and gender identity are not protected classes under Title VII. The EEOC also argued that Stephen’s termination was sex discrimination because Stephens did not conform to the Funeral Home’s sex/gender based stereotype.

The Funeral Home argued that it was entitled to an exemption under RFRA because allowing Stephens to dress as a woman at work would impose a substantial burden on its ability to conduct business in accordance with its sincerely held religious beliefs. RFRA prohibits the government from substantially burdening a person’s exercise of religion. After the RFRA defense was asserted the burden shifted to the EEOC to show that its efforts to prevent the Funeral Home from enforcing its dress code were (a) in furtherance of a compelling governmental interest and (b) the least restrictive means of furthering that compelling governmental interest.

The court held that the EEOC failed to show filing suit for sex discrimination was the least restrictive means of furthering the compelling governmental interest. For example, the court reasoned that if the EEOC’s interest was truly eliminating gender stereotypes, it could have proposed a gender neutral dress code as a less restrictive means of furthering the governmental interest.

Some take aways for employers:

  1. Transgender and sexual orientation are not protected classes under Title VII. However, they might be protected under applicable state or local law;
  2. Discrimination based on the failure to conform to a sex stereotype (e.g. a male employee is not masculine enough) is sex discrimination under Title VII;
  3. For RFRA to apply the government must be taking action against the employer. A suit by an employee, for example, would not be subject to a RFRA defense;
  4. RFRA also requires that an employer’s sincerely held religious belief be impacted by the action in question. This is more likely to be the case when the employer is a closely held corporation; and
  5. The Harris Funeral Homes decision may be appealed to the Sixth Circuit where it could be reversed.

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