Transgender status is a protected trait under Title VII of the Civil Rights Act of 1964, said a federal appeals court in a Wednesday ruling involving a transgendered individual’s termination by a funeral home that overturns a lower court decision.

Aimee Stephens informed her employer and co-workers around July 31, 2013, at Detroit-based R.G. & G.R. Harris Funeral Homes Inc., that she was undergoing a gender transition to female from male and intended to start dressing as a female, according to the ruling by the 6th U.S. Circuit Court of Appeals in Cincinnati in Equal Employment Opportunity Commission v. R.G. & G.R. Harris Funeral Homes Inc. 

She was fired about two weeks later, with the company’s owner stating that “what she was proposing to do” was unacceptable, according to the ruling.

The EEOC said in a September 2014 lawsuit filed on her behalf that the funeral home violated Title VII of the Civil Rights Act of 1964 in terminating her. 

“Transgender is not a protected class under Title VII,” U.S. District Court Judge Sean F. Cox in Detroit said in his 2015 ruling in the case. “Thus, if the EEOC’s complaint had alleged that the funeral home fired Stephens based solely upon Stephens’ status as a transgender person, then this court would agree with the funeral home that the EEOC’s complaint fails to state a claim under Title VII,” the ruling states.

But the EEOC’s complaint also asserts Ms. Stephens was fired because she did not conform to “sex- or-gender-based preferences, expectations or stereotypes,” said the District Court ruling.

“Binding 6th Circuit precedent establishes that any person without regard to labels such as transgender can assert a sex-stereotyping gender discrimination claim under Title VII … if that person’s failure to conform to sex stereotypes was the driving force behind the termination,” Judge Cox ruled.

A unanimous three-judge appeals court panel said, “The district court correctly determined that Stephens was fired because of her failure to conform to sex stereotyping in violation of Title VII”.

However, it erred “in finding that Stephens could not alternatively pursue a claim that she was discriminated against on the basis of her transgender and transitioning status,” said the ruling.

“Discrimination on the basis of transgender and transitioning status is necessarily discrimination on the basis of sex, and thus the EEOC should have had the opportunity to prove that the Funeral Home violated Title VII by firing Stephens because she is transgender and transitioning from male to female,” said the decision.

The appeals court also overturned the ruling as to whether the EEOC’s enforcement efforts must give way to the Religious Freedom Restoration Act, which “prohibits the government from enforcing a religiously neutral law against an individual if that law substantially burdens the individual’s religious exercise and is not the least restrictive way to further compelling government interest.”

“We hold that the Funeral Home does not qualify for the ministerial exception to Title VII; the Funeral Home’s religious exercise would not be substantially burdened by continuing to employ Stephens without discriminating against her on the basis of sex stereotypes; the EEOC has established that it has a compelling interest in ensuring the Funeral Home complies with Title VII; and the enforcement of Title VII is necessarily the least restrictive way to achieve that compelling interest,” said the ruling.

The appeals court said it disagreed also with the lower court in holding the funeral home had violated Title II by administering a discriminatory-clothing allowance policy, in providing male, but not female, employees workers with a clothing benefit.

The case was remanded for further proceedings.