Key Point 8-21.2. Many state civil rights laws prohibit employers with a specified number of employees from discriminating in any employment decision on the basis of the sexual orientation of an employee or applicant for employment. Such laws generally exempt religious organizations.
A federal appeals court ruled that an employer could be sued for violating federal employment discrimination law for dismissing a transgender employee on the basis of its deeply-held religious beliefs.
An adult male (the “plaintiff”) was born biologically male. While living and presenting as a man, he worked as a funeral director at a closely held for-profit corporation that operates three funeral homes in Michigan. The owner of the funeral homes has been a Christian for over 65 years and owns 95.4 percent of the company. He asserts “that God has called him to serve grieving people” and “that his purpose in life is to minister to the grieving.” To that end, the funeral home’s website contains a mission statement that states that the funeral home’s “highest priority is to honor God in all that we do as a company and as individuals” and includes a verse of Scripture on the bottom of the mission statement webpage.
The funeral home itself, however, is not affiliated with a church; it does not claim to have a religious purpose in its articles of incorporation; it is open every day, including Christian holidays; and it serves clients of all faiths. Although the funeral home places the Bible, Daily Bread devotionals, and “Jesus Cards” in public places within the funeral homes, it does not decorate its rooms with “visible religious figures . . . to avoid offending people of different religions.” The funeral home hires employees belonging to any faith or no faith.
The plaintiff was terminated from the funeral home by its owner shortly after he disclosed that he intended to transition from male to female and would represent himself and dress as a woman while at work. He provided the owner with a letter stating that he had struggled with “a gender identity disorder” his “entire life,” and had “decided to become the person that his mind already is.”
The plaintiff filed a complaint with the Equal Employment Opportunity Commission (EEOC), which investigated his allegation that he had been terminated as a result of unlawful sex discrimination. The EEOC sued the funeral home claiming that it had violated Title VII of the Civil Rights Act of 1964 (Title VII) by terminating the plaintiff’s employment on the basis of his transgender or transitioning status and his refusal to conform to sex-based stereotypes.
The funeral home argued that requiring it to employ the plaintiff while he dressed and represented himself as a woman would constitute an unjustified substantial burden on the sincerely held religious beliefs of both the home and its owner in violation of the Religious Freedom Restoration Act (RFRA).
A federal district court in Michigan determined that there was “direct evidence to support a claim of employment discrimination” against the plaintiff on the basis of his sex, in violation of Title VII. However, the court nevertheless found in the funeral home’s favor because it concluded that the RFRA precluded the EEOC from enforcing Title VII against the funeral home as doing so would substantially burden the exercise of religion by the funeral home and its owner. The case was appealed.
The appeals court began its opinion by addressing Title VII. This federal statue bars sex discrimination in employment decisions by employers with at least 15 employees and that are engaged in interstate commerce. The trial court concluded that Title VII’s ban on sex discrimination does not extend to a person’s transgender and transitioning status, but the appeals court disagreed, noting that “it is analytically impossible to fire an employee based on that employee’s status as a transgender person without being motivated, at least in part, by the employee’s sex.”
In responding to the funeral home’s argument that Congress, in enacting Title VII in 1964, understood “sex” to refer only to a person’s “physiology and reproductive role,” and not a person’s “self-assigned gender identity,” the court noted that “statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.”
The Religious Freedom Restoration Act
Congress enacted the RFRA in 1993 to reinstate and broaden the First Amendment guaranty of religious freedom. To that end, RFRA precludes the government from “substantially burdening a person’s exercise of religion even if the burden results from a rule of general applicability,” unless the government “demonstrates that application of the burden . . . (1) is in furtherance of a compelling governmental interest; and (2) is the least restrictive means of furthering that compelling governmental interest.” As a result, “to assert a viable defense under RFRA, a religious claimant must demonstrate that the government action at issue would (1) substantially burden (2) a sincere (3) religious exercise.” The court concluded that RFRA did not apply since no religious exercise was substantially burdened. The alleged burden cited by the funeral home was “the assumption that a transgender funeral director would so disturb clients as to ‘hinder healing.’” The court added, “We hold as a matter of law that a religious claimant cannot rely on customers’ presumed biases to establish a substantial burden under RFRA.”
The court also rejected the funeral home’s argument that requiring it to refrain from firing an employee with different religious views from the owner “does not, as a matter of law, mean that he is endorsing or supporting those views. Indeed, his own behavior suggests that he sees the difference between employment and endorsement, as he employs individuals of any or no faith, and permits employees to wear Jewish head coverings for Jewish services. . . . At bottom, the fact that the owner sincerely believes that he is being compelled to make such an endorsement does not make it so.”
The ministerial exception
The court rejected the relevance of the “ministerial exception” to this case. The ministerial exception generally bars the civil courts from interfering with internal church employment disputes involving ministers. The funeral home argued that the exception applied because it applies both to religious and nonreligious entities, and the plaintiff was a ministerial employee. The court disagreed on both counts. It insisted that the exception only applies to religious organizations: “The ministerial exception applies only to religious institutions . . . . While an institution need not be a church, diocese, or synagogue, or an entity operated by a traditional religious organization, to qualify for the exception, the institution must be marked by clear or obvious religious characteristics.” But the funeral home “has virtually no religious characteristics. . . . It does not purport or seek to establish and advance Christian values. . . . It is not affiliated with any church; its articles of incorporation do not avow any religious purpose; its employees are not required to hold any particular religious views; and it employs and serves individuals of all religions.” Nor was the plaintiff a “minister.” The United States Supreme Court has identified four factors to assist courts in applying the ministerial exception: (1) whether the employee’s title “conveys a religious—as opposed to secular—meaning”; (2) whether the title reflects “a significant degree of religious training” that sets the employee “apart from laypersons”; (3) whether the employee serves “as an ambassador of the faith” and serves a “leadership role within [the] church, school, and community”; and (4) whether the employee performs “important religious functions . . . for the religious organization.” Hosanna-Tabor Evangelical Lutheran Church & School v. EEOC, 565 U.S. 171 (2012). The plaintiff met none of these characteristics. The court concluded that the plaintiff “was not a ministerial employee and the funeral home is not a religious institution, and therefore the ministerial exception plays no role in this case.”
What this means for churches
This case is significant for the following reasons:
1. The court ruled that Title VII’s prohibition of sex discrimination in employment extended to a person’s transgender or transitioning status. The impact of this aspect of the court’s ruling is minimized by the following factors: (1) Title VII only applies to employers with 15 or more employees, a threshed that is satisfied by few churches (most states have enacted their own employment discrimination laws that generally have a lower threshold). (2) Title VII contains a religious exemption that allows religions organizations to discriminate on the basis of religion in the employment of any person for any position. While this exemption does not apply to sex discrimination, some churches have successfully defended against claims of sex discrimination by characterizing them as “religious” discrimination because they implicate a church’s biblical standards. The same argument could be made in claims of discrimination based on a person’s transgender or transitioning status. Before taking any action that could be viewed as discriminatory based on the transgender or transitioning status of an employee or applicant for employment, a church should consult with legal counsel.
2. The court concluded that the RFRA did not excuse the funeral home’s discriminatory practices because no sincerely-held religious belief or practice was “substantially burdened.” In the Hobby Lobby case in 2014, the United States Supreme Court ruled that the RFRA did not permit the United States Department of Health and Human Services (HHS) to demand that three closely held corporations provide health-insurance coverage for methods of contraception that violated the sincerely held religious beliefs of the companies’ owners. Burwell v. Hobby Lobby Stores, Inc., 1134 S.Ct. 2751 (2014). The Court concluded that regulations imposing this obligation violated RFRA, which prohibits the federal government from taking any action that (1) substantially burdens the exercise of religion, (2) unless that action constitutes the least restrictive means of serving a compelling government interest. In holding that the HHS mandate was unlawful, the Court rejected HHS’s argument that the owners of the companies forfeited all RFRA protection when they decided to organize their businesses as closely held corporations.
RFRA was violated in the Hobby Lobby case because the challenged HHS regulations substantially burdened the exercise of religion. The owners of the businesses had religious objections to abortion, and according to their religious beliefs four of the contraceptive methods mandated by HHS regulations under the Affordable Care Act are abortifacients. If the owners complied with the HHS mandate, they believed they would be facilitating abortions, and if they did not comply, they would pay a very heavy price—as much as $1.3 million per day, or about $475 million per year, in the case of one of the companies. The Court concluded: “If these consequences do not amount to a substantial burden, it is hard to see what would.”
The Hobby Lobby case, and RFRA, may provide a defense to the application of federal laws to small business owners if a law substantially burdens their exercise of religion and the government has other options of furthering its interests that are less restrictive of religious freedom.
EEOC v. R.G., 884 F.3d 560 (6th Cir. 2018).