By Gerald L. Maatman Jr. and Howard M. Wexler

As we have previously reported, the EEOC is pursuing test cases to establish legal protections for transgender workers under Title VII’s prohibition against “sex” discrimination and harassment as part of its strategic mission even though no federal statute, including Title VII, explicitly prohibits employment discrimination based on gender identity or expression. To this end, the EEOC filed two lawsuits on September 25, 2014 on behalf of transgender workers – EEOC v. Lakeland Eye Clinic, P.A. (Middle District of Florida) and EEOC v. R.G. & G.R. Harris Funeral Homes Inc. (Eastern District of Michigan) — seeking to expand the interpretation of federal civil rights laws..

On April 9, 2015, U.S. District Court Judge Mary S. Scriven approved a consent decree entered into between the EEOC and Lakeland Eye Clinic, P.A. settling one of these two lawsuits.

Less than two weeks later, on April 21, 2015, U.S. District Court Judge Sean F. Cox denied R.G. & G.R. Harris Funeral Homes Inc.’s (“Funeral Homes”) motion to dismiss the complaint in EEOC v. R.G. & G.R. Harris Funeral Homes Inc. for failure to state a claim, thereby allowing the case to proceed to discovery. Judge Cox’s decision is an important read for employers.

Case Background

In EEOC v. R.G. & G.R. Harris Funeral Homes, the EEOC alleges that a Detroit-based funeral home illegally fired a funeral director and embalmer named Aimee Stephens (“Stephens”), weeks after Stephens gave the funeral home a letter saying she was undergoing a gender transition from male to female. She was allegedly terminated, and told by the owner of the employer that what she was “proposing to do” was “unacceptable.” Id. at 1.

Recognizing that transgendered, or transsexual status is currently not a protected class under Title VII, the EEOC alleges that “the Funeral Home’s decision to fire Stephens was motivated by sex-based considerations, in that the Funeral Home fired Stephens because Stephens is transgendered, because of Stephen’s transition from male to female, and/or because Stephens did not conform to the defendant employer’s sex – or gender-based preferences, expectations, or stereotypes.” (emphasis added). Id. The Funeral Home filed a motion to dismiss on the basis that Title VII does not protect transgendered individuals.

Court’s Decision

Acknowledging that Title VII does not protect transgendered individuals, the Court noted that “had the EEOC alleged that the Funeral Home fired Stephens based solely on Stephens’ status as a transgendered person” it would be inclined to grant the Funeral Home’s motion to dismiss. Id. at 10. However, as the EEOC did not allege that the Funeral Home fired Stephens solely because of transgendered status, rather, Judge Cox also found it significant that the EEOC also asserts that the Funeral Home fired Stephens because she did not conform to the Funeral Home’s sex or gender-based preferences, expectations, or stereotypes. Id. at 11.

In reaching its decision to deny the motion to dismiss, the Court acknowledged that “even though transgendered/transsexual status is currently not a protected class under Title VII, Title VII nevertheless ‘protects transsexuals from discrimination for failing to act in accordance and/or identify with their perceived sex or gender.’” Id. at 11-12. Since the EEOC, in part, based its theory of liability on the Funeral Home’s alleged sex-based considerations – that Stephens did not conform to the Funeral Homes sex-based or gender-based preferences, expectations or stereotypes – the Court reasoned that the EEOC had sufficiently plead a sex-stereotyping gender-discrimination claim under Title VII. Id. as 22-23.

In sum, Judge Cox’s decision gives the EEOC a “work around” solution to assert viable claims to achieve relief for a transgendered worker, albeit not explicitly based on the theory that transgendered status is itself a protected category.

Implications for Employers

The theories of liability articulated by the EEOC in this case closely follow the EEOC’s prior landmark administrative ruling titled Macy v. Bureau of Alcohol, Tobacco, Firearms and Explosives, EEOC Appeal No. 0120120821 (April 23, 2012) (previously discussed here), in which it asserted that transgender individuals may state a claim for sex discrimination under Title VII.

Notably, Judge Cox observed in his decision denying the Funeral Home’s motion to dismiss that the Commission “appears to seek a more expansive interpretation of sex under Title VII that would include transgendered persons as a protected class.” Given that the EEOC also alleged discrimination based on sex or gender-based preferences, the Court did not have to reach this issue. However, the Court did note that “there is no Sixth Circuit or Supreme Court authority to support the EEOC’s position that transgendered status is a protected class under Title VII.” Id. at 11.

We expect that EEOC-initiated ligation on behalf of transgendered individuals will continue to increase given the Commission’s enforcement strategy and desire to “push the envelope” in this area. As we previously advised employers must be mindful of issues related to gender identity and/or expression that might arise during interviewing, hiring, discipline, promotion and termination decisions. Employers should be particularly vigilant when an employee identifies as transgender, or announces a plan to undergo a gender transition. Stay tuned!

Readers can also find this post on our Workplace Class Action blog here.