Religious Liberty v. Gender Identity – Sixth Circuit Grants Summary Judgment to EEOC in Transgender Discrimination CaseLike the recent proliferation of sexual harassment discussions in the workplace, issues concerning transgender employees are slowly but surely confronting employers and policies that may reinforce sex and gender stereotypes. How should employers react if (and let’s be honest, when) they learn that an employee is transitioning from one sex to another? What are the potential consequences of adverse employment actions based on transgender status? EEOC v. R.G. & G.R. Harris Funeral Homes, Inc. illustrates not only the expansion of the definition of sex discrimination under Title VII, but also the fragility of defenses to Title VII based on religious beliefs.

Background

Aimee Stephens was biologically male and presented herself as male during the six years that she was employed as a funeral director at R.G. and G.R. Harris Funeral Homes. Stephens informed the funeral home owner, Thomas Rost, that she would be having sex reassignment surgery and begin presenting herself and dressing as a woman at work. A few weeks later, Rost terminated her, asserting that he sincerely believed that a person’s sex was an immutable God-given gift and allowing Stephens to present herself as a woman would violate his religious beliefs.

Stephens filed an EEOC charge alleging that she was terminated because of her sex. The EEOC made a reasonable cause determination against the funeral home, was unable to conciliate the charge, and ultimately sued the funeral home for violating Title VII by terminating Stephens on the basis of her transgender or transitioning status and her refusal to conform to sex-based stereotypes.

Funeral Home Prevails in District Court

The funeral home argued that it did not violate Title VII by requiring Stephens to comply with a sex-specific dress code because the policy equally burdened male and female employees. Alternatively, the funeral home argued that it should not be forced to comply with Title VII because employing Stephens while she presented herself as a woman would constitute an unjustified substantial burden on Rost’s sincerely held religious beliefs in violation of the Religious Freedom Restoration Act (RFRA).

At the summary judgment stage, the district court ruled that Stephens could not pursue a Title VII claim based on her transgender or transitioning status. Nevertheless, the district court found direct evidence that the funeral home had discriminated against Stephens on the basis of her sex because Stephens failed to conform to the funeral home’s sex or gender-based stereotypes. Despite its direct evidence finding, the district court granted summary judgment to the funeral home, holding that the RFRA precluded the EEOC from enforcing Title VII against the funeral home, as doing so would substantially burden Rost and the funeral home’s religious exercise. The court found that the EEOC had failed to demonstrate that enforcing Title VII was the least restrictive means to achieve its presumably compelling interest in ensuring that Stephens was not discriminated against on the basis of her sex.

Sixth Circuit Reverses District Court and Grants Summary Judgment to EEOC

In a detailed opinion, the Sixth Circuit not only reversed the district court, but granted summary judgment to the EEOC. First, the Court agreed that the funeral home engaged in improper sex stereotyping when it terminated Stephens for wishing to present herself in a manner that contradicted the funeral home’s expectation of how a biological male should present himself. Highlighting Price Waterhouse v. Hopkins and its own decision in Smith v. City of Salem (also involving a transgender employee), the Sixth Circuit stated that the funeral home’s decision to fire Stephens “fell squarely within the ambit of sex-based discrimination” that these opinions forbid. The Court also noted that the funeral home failed to establish a non-discriminatory basis for Stephens’ termination and even admitted that she was not fired for performance-related issues.

Next, the Sixth Circuit ruled that discrimination on the basis of transgender and transitioning status violated Title VII. The Court explained that discrimination “because of sex” inherently included discrimination because of a change in sex. It added that:

“[A] transgender person is someone who ‘fails to act and/or identify with his or her gender’—i.e., someone who is inherently ‘gender-nonconforming.’”

Title VII required gender to be irrelevant to employment decisions, and gender was not irrelevant if an employee’s attempt to change his or her sex led to an adverse employment decision.

Regarding the funeral home’s RFRA defense, the Sixth Circuit explained that the funeral home had not met its burden. Under RFRA, the funeral home had to demonstrate that the government action at issue—i.e., the enforcement of Title VII—would substantially burden a sincere religious exercise. Although the Court conceded the sincere religious exercise, it held that the burdens that the funeral home identified were not substantial. In addressing the funeral home’s argument that allowing a funeral director to wear the uniform of the opposite sex would distract the loved ones of the deceased and hinder their healing process, the Sixth Circuit held that a religious claimant could not rely on customers’ presumed biases to establish a substantial burden under the RFRA. In addressing the funeral home’s second argument that forcing the funeral home to violate Rost’s faith would significantly pressure him to leave the funeral industry, the Sixth Circuit held that tolerating Stephens’ understanding of her sex and gender identity was not tantamount to supporting it, and bare compliance with Title VII did not amount to an endorsement of Stephens’ views regarding the mutability of sex. Because the funeral home did not establish that Rost’s religious exercise would be substantially burdened by requiring the funeral home to comply with Title VII, its RFRA defense failed. Still, “in the interest of completeness,” the Court clarified that even if Rost’s religious exercise was substantially burdened, enforcing Title VII was the least restrictive means of furthering the government’s compelling interest in eradicating workplace discrimination against Stephens.

Takeaways

The Sixth Circuit’s opinion undeniably illustrates the extent to which the federal government will go to enforce anti-discrimination laws as they relate to the LGTQI community. This case is one of the EEOC’s first lawsuits on behalf of a transgender individual and it would not be unrealistic to believe that more will follow. Consequently, employers should pay close attention to transgender rights in the workplace and the rulings of other circuit courts on related issues.

Employers should consider these guidelines:

  • Remain cognizant of your responsibility to prevent and address any form of sex discrimination, whether it involves sexual harassment, sex or gender stereotypes, gender identity, and/or disparate treatment on the basis of sex.
  • Properly train employees and supervisors on how to communicate, interact with, and/or discipline one another in ways that avoid hostile, offensive, or discriminatory conduct.
  • Ensure that any adverse employment action is supported by a legitimate, non-discriminatory reason, preferably one that is performance-related or involves the violation a known employment policy or procedure.

As demonstrated here, there is no guarantee that a person or institution’s religious beliefs will be a sufficient defense to evade liability under Title VII.

Pay the Man! (Or Woman)—But Differently? 11th Circuit Reinstates Sex Discrimination Pay ClaimWhen you promote someone into a position, do you have to pay him what you paid his predecessor? As with so many things – it depends. Can you pay less if the promotee has less experience and a lower prior salary than the predecessor? Maybe. However, if the new promotee is a female replacing a male make sure you can defend any pay differential under both the Equal Pay Act (EPA) and Title VII. In Bowen v. Manheim Remarketing, the Eleventh Circuit examines just such a pay disparity and concludes that a reasonable jury could find that it was based on sex.

Background

Qunesha Bowen worked for Manheim for three years as a car detailer. In 2005, Manheim promoted her to arbitration manager and gave her a hefty raise — about $6,000 (around 23 percent) —which was about $14,000 below her male predecessor’s salary. She did not catch up to her predecessor’s salary for six years. When she learned of the disparity, she sued for sex discrimination under the EPA and Title VII.

Manheim moved for summary judgment explaining that the pay differential between Bowen and her predecessor was not based on sex. In establishing both its affirmative defense under the EPA and its legitimate nondiscriminatory reason under Title VII, Manheim argued that the predecessor’s longer experience with the company (six years versus Bowen’s three years), prior management and mechanical experience (which Bowen lacked), and his $46,350 salary prior to promotion (as compared to Bowen’s $26,000) justified the pay differential. For her part, Bowen offered evidence that her performance was good, her pay was at the bottom of the pay range and, importantly, testimony from a company Human Resources manager who had reviewed company pay records and concluded that female employees were paid less than their male counterparts. The HR manager also reported conversations she had with Bowen’s supervisors (who set her pay) that suggested a bias against women. For example, she reported that Bowen’s general manager said he would be a “laughing stock” if he hired a female assistant general manager and he would never have a woman work as a mechanic.

The District Court granted summary judgment in favor of Manheim, finding that the company showed the pay disparity was based on “factors other than sex” and no reasonable jury could conclude it was sex discrimination.

Eleventh Circuit Reversal

In a fairly succinct opinion, the Eleventh Circuit reversed, finding sufficient evidence to let a jury decide whether Bowen’s salary was lower than her predecessor’s because of her sex.  The court noted that not only was Bowen’s salary significantly lower than her predecessor’s, it was significantly lower than the salary range midpoint:

Manheim did not simply pay Bowen’s male predecessor a much greater starting salary; it set the predecessor’s salary near the midpoint of the compensation range for arbitration managers but consistently set Bowen’s salary at the bottom of the range. A jury could find that prior salary and prior experience alone do not explain Manheim’s disparate approach to Bowen’s salary over time. Once Bowen established herself as an effective arbitration manager, prior salary and prior experience would not seem to justify treating her different than the predecessor.

The court also noted that in proving its affirmative defense under the EPA, Manheim had to prove that none of its decision-makers were influenced by sex bias and the HR manager’s testimony provided evidence that Bowen’s managers took sex into account in personnel matters. The court further found that Bowen offered sufficient evidence from which a jury could find that sex was “a motivating factor” for the pay disparity.

Takeaways

As always, in reviewing an order on summary judgment, we have to remember that the court must consider the facts in the light most favorable to the plaintiff. We don’t know what the disputed facts will show and what the jury will conclude. With that said, here are some things that this decision made me think about:

  • Keep an eye on your pay ranges. If you have established pay ranges, be sure to compare everyone in a particular job or department. Make sure you can explain why someone is at the bottom of the range while their coworkers are at the middle.
  • Keep a close eye on pay comparators – particularly if comparators are different sexes. While Title VII requires a plaintiff to establish intentional discrimination, under the EPA a plaintiff only needs to establish a pay disparity with one male comparator and then the employer bears the burden to prove that the disparity is based on a factor other than sex and the decision-makers were not influenced by sex. The Eleventh Circuit makes it clear in this decision that a decision-maker’s comments about any personnel matter can be relevant.
  • Don’t discount a predecessor as a comparator. In this case, Bowen pointed not to a coworker but to a predecessor as her comparator, and the court said that was fine. If there are good reasons to pay a new person less than a predecessor, you can do it, but be careful. For example, if you pay Jane less than her predecessor, Bob, because he had been doing the job for three years, make sure that when Jane hits her three-year anniversary her pay looks a lot like Bob’s did (or that you have concrete reasons that it doesn’t—like her documented performance).
  • If Human Resources (with or without legal counsel) is going to look at pay differentials, think about how you will use or react to any unpleasant conclusions. If the audit reflects that women are paid less than men, take concrete steps to address the differences and do it quickly. You may want to perform such audits with legal counsel so that the results can be privileged.
  • Don’t forget that pay claims are a gift that keeps giving. This case was filed in 2015 – almost 10 years after Bowen’s promotion. While she can only go back a couple of years on her backpay, she was still able to challenge the 2005 decision because every paycheck renewed her statute of limitations (per the Ledbetter Fair Pay Act).

Pay disparities can crop up any time, and you have to be vigilant. Sometimes you have to pay someone more for a job than the predecessor because they won’t take it otherwise. On the other hand, sometimes you can replace someone with a less expensive employee. If either happens, make sure you have thought about how you can defend a discrimination claim.

University Learns a New Lesson: Transgender Discrimination Landmark Verdict in OklahomaIn a landmark case, an eight-person jury (six women and two men) awarded a transgender professor, Rachel Tudor, more than $1.1 million in her claim that her former employer discriminated against her on the basis of her sex.

The Facts

Tudor was hired by Southeastern Oklahoma State University (part of the Regional University System of Oklahoma) in 2004 as a tenure-track assistant professor in the English Department. In 2007, she began transitioning from male to female, becoming the university’s first openly transgender professor.

Tudor notified the university that she would be presenting as a woman for the 2007-2008 school year. According to Tudor, she then received a call from human resources informing her she would not be fired provided she follow certain rules, including that she not use the women’s restroom, wear short skirts, or wear makeup that would be deemed harassing to male colleagues. She testified that another individual told her that she should take safety precautions, because some people were openly hostile to transgender people.

Two years later, in October 2009, Tudor applied for tenure. The university’s tenure committee voted in favor of extending tenure to Tudor; however, university administrators rejected the recommendation, telling Tudor she should withdraw her application for tenure and take more time to strengthen her tenure portfolio. Tudor did not withdraw her application, and the university did not grant her tenure. Later, the university denied her an opportunity to reapply for tenure, and, in 2011, terminated her for failure to attain tenure prior to the end of her seventh year at the university.

The jury hearing the case found that the university and Regional University System of Oklahoma discriminated against Tudor based on her gender when they denied her both tenure and the opportunity to reapply for tenure. The jury also found that the defendants retaliated against Tudor by denying her the opportunity to reapply for tenure.

Takeaways

The case is important to the ever evolving anti-discrimination case law. It is one of the first cases in which a court has determined that transgender status is protected under Title VII. Not surprisingly, not all courts who have considered this issue agree. The Supreme Court has not considered the issue, but it will certainly be confronted with the issue sooner rather than later. It is also the first jury verdict we have heard about regarding a transgender person’s discrimination claims.

Cautious employers will handle concerns regarding transgender status like it is covered under Title VII—assuming that discrimination based on transgender status is sex discrimination. Given this verdict (and a big one at that), we are likely to start seeing more sex discrimination claims from transgender employees.