In 2012, the EEOC ruled in Macy v. Holder that Title VII’s prohibition against sex discrimination included discrimination against transgender employees. The unanimous decision was the first time the EEOC held that transgender people are protected from discrimination by federal law. Its decision was binding on federal employers and made legal protection accessible to employees experiencing workplace discrimination based on gender identity.

No Article III court has yet to establish that transgender status is a protected class under Title VII. However, some circuits, like the Sixth and Tenth circuits, have found that Title VII protects transgender employees from sex discrimination under the gender-stereotyping theory of sex discrimination. In Price Waterhouse Coopers v. Hopkins, partners sexually discriminated against Ann Hopkins, a senior manager up for partnership, because they criticized her for failing to conform to female stereotypes. Though she was an “outstanding professional” with “independence and integrity,” she was aggressive and macho. She was told to walk, talk, and dress more femininely and wear make-up and jewelry.

If employers discriminate against women who fail to wear dresses or makeup, then employers also discriminate against men who do wear dresses or makeup and do not meet normative expectations of masculinity. Transgender individuals face sex discrimination when employers make decisions based on whether they acted in accordance to the stereotypes of their biological sex. The EEOC has successfully brought many suits under this gender-stereotyping theory; consent decrees have required employers to pay damages, retain experts to develop trainings on LGBT workplace issues, and more. However, developments towards greater protections have been met with increasing resistance through the Religious Freedom Restoration Act (RFRA).

Religious Exemptions from Title VII Discrimination Protections

EEOC v. R.G. & G.R. Harris Funeral Homes, Inc. was one of EEOC’s first lawsuits alleging sex discrimination on the basis of transgender rights. Amiee Stephens had been fired after she had given her employer notice that she was transitioning from male to female and would begin dressing in female-appropriate attire as per the employer’s dress code. Though the court acknowledged transgender individuals’ right to protection from sex discrimination under Title VII, it found that the employer was entitled to a RFRA exemption from Title VII compliance.

In 1990, the Supreme Court upheld the denial of unemployment benefits to members of the Native American Church who had been terminated for sacramental use of peyote. The Court ruled that religion-neutral laws burdening a particular religious practice did not need to be justified by a compelling governmental interest. In response, Congress passed RFRA to provide greater protection to religious liberty. Under RFRA’s strict scrutiny standard, the government may substantially burden a person’s exercise of religion only when application of the burden is the least restrictive means of furthering a compelling governmental interest.

For many years, RFRA did little to materially alter the religious liberty landscape. But the Court’s 2014 decision in Burwell v. Hobby Lobby gave RFRA new power. For-profit corporations objected on religious grounds to the Affordable Care Act’s requirement that employee insurance benefits include coverage for contraceptives. Reasoning that the government could accommodate the claimants’ objections without compromising its interest in women’s health, the Court granted an exemption under RFRA. Title VII had allowed religious organizations to prefer coreligionists, and courts had allowed religious organizations to avoid nondiscrimination obligations when hiring certain religious employees. But now RFRA authorized a broader class of exemptions for nonsectarian, for-profit organizations.

The Supreme Court in Hobby Lobby minimized the burden RFRA places on the religious claimant. It warned judges not to second-guess the reasonableness of religious beliefs and encouraged judges to simply determine whether beliefs were sincerely held. Judges have no business resolving questions of “religion and moral philosophy, namely, the circumstances under which it is wrong for a person to perform an act that is innocent in itself but has the effect of enabling or facilitating the commission of an immoral act by another.”

Hobby Lobby has shaped litigation in the employment discrimination context.  The district court in Harris found that the employer sincerely believed that if he were to permit Stephens to wear a skirt-suit uniform, he would be violating God’s commands by “supporting the idea that sex is a changeable social construct rather than an immutable God-given gift.” Despite the high probability that giving legal effect to such religious beliefs could wholly undermine Title VII protections, the court found that the owner would be substantially burdened by employing Stephens and would face significant pressure to sell the business. Because the EEOC could have advocated for a less restrictive alternative like a gender-neutral dress code, its policy did not meet RFRA’s demanding standard.

On February 10, the EEOC appealed the decision to the Sixth Circuit. It argued that allowing an employee to dress like a woman would not substantially burden the employer’s religious practices, especially because the owner was not compelled to facilitate Stephens’ transition and because the burden of employing Stephens would not be substantial. Further, there was no less restrictive alternative, since a gender-neutral dress code would not equally further the government’s compelling interest of eradicating sex discrimination. The Sixth Circuit is now considering the appeal.

What’s Next? Battles Outside Federal Courts

The fight for transgender protections has stalled in Congress. In 2016, Democratic representatives introduced the Do No Harm Act in to modify RFRA to prevent discrimination. But no action has been taken in the Republican-controlled House since the House Judiciary committee referred the bill to a Subcommittee that May. The bill has 36 Democratic co-sponsors.

RFRA does not apply to states. However, 21 states have enacted their own RFRAs, which vary in the degree to which they expand religious rights. For example, Indiana and South Carolina explicitly allow for-profit businesses to assert a right to the “free exercise of religion,” whereas Louisiana and Pennsylvania explicitly exclude them. Indiana, Arkansas and Oklahoma also provide RFRA protection to all judicial and administrative proceedings, allowing parties to cite RFRA in private suits regardless of whether a government entity is a party. However, at least 19 other states have passed state laws that prohibit discrimination against transgender people. Furthermore, Governors in five states have issued executive orders banning discrimination against transgender state workers.

The battle between Title VII protections and religious exemptions wages on between state and local governments. At least 225 cities and counties under Home Rule have banned gender identity discrimination. But states have challenged local ordinances by introducing express preemption bills, which go farther than just exempting religious businesses from anti-discrimination protections. In 2011, Tennessee specifically nullified existing ordinances and restricted the creation of new ordinances not already covered by statewide anti-discrimination laws. Similar preemption bills succeeded in Arkansas in 2015, and in North Carolina in 2016. Bills are now pending in Oklahoma and Texas. As anti-discrimination protections for the LGBT community are increasingly likely to come from local governments, advocates must be vigilant of preemption bills created to “bring uniformity” to discrimination laws across states. They must continue to fight and ally with businesses and other community groups as they did to defeat bills in Michigan, West Virginia, Missouri, and Indiana, and in 2015, Texas and North Carolina.