The 6th Circuit Court of Appeals on Wednesday once again held that workplace anti-discrimination laws extend to protections for transgender workers.

A three-judge panel on the court found that R.G. & G.R. Harris Funeral Homes Inc. in Detroit violated Title VII anti-discrimination laws when it fired its funeral director after she told its owner Thomas Rost that she planned to transition from male to female and would be representing herself as a woman while at work.

The court rejected Rost’s claim that being required to employ Aimee Stephens, formerly known as Anthony, while she dresses as a woman would constitute an unjustified substantial burden on his sincerely held religious beliefs in violation of the Religious Freedom Restoration Act.

Attorneys urged the court to rule that the funeral home qualifies for the “ministerial exception” to Title VII, but it said Stephens was not a ministerial employee and the funeral home is not a religious institution.

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The court’s ruling reverses a lower court's summary judgment in favor of Rost.

“Discrimination on the basis of transgender and transitioning status is necessarily discrimination on the basis of sex, and thus the [Equal Employment Opportunity Commission] 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,” judge Karen Nelson Moore wrote in the appeals court’s opinion.

The American Civil Liberties Union called the decision “an exciting and important victory for transgender people and allied communities across the country.”

“In too many workplaces around the country, coming out as trans is a fireable offense, as our client Aimee Stephens personally experienced,” John Knight, a senior staff attorney with ACLU’s LGBT & HIV Project, said in a statement.

ACLU of Michigan represented Stephens in the case.

“But this ruling affirms that that is illegal, setting an important precedent confirming that transgender people are protected by Title VII of the Civil Rights Act," Knight added. "It also ensures that employers will not be able to use their religious beliefs against trans employees, ruling that there is no ‘right to discriminate’ in the workplace.”

Whether Title VII anti-discrimination laws in employment extend to sexual orientation and gender identity is an issue that's been has been widely disputed.

While several federal appeals courts have held that it does, Attorney General Jeff Sessions Jefferson (Jeff) Beauregard SessionsGOP set to release controversial Biden report Trump's policies on refugees are as simple as ABCs Ocasio-Cortez, Velázquez call for convention to decide Puerto Rico status MORE has argued it doesn't.

“The essential element of sex discrimination under Title VII is that employees of one sex must be treated worse than similarly situated employees of the other sex, and sexual orientation discrimination simply does not have that effect,” the Justice Department argued in an amicus brief it filed in a sex discrimination case before the 2nd Circuit in July. “Moreover, whatever this Court would say about the question were it writing on a blank slate, Congress has made clear through its actions and inactions in this area that Title VII’s prohibition of sex discrimination does not encompass sexual orientation discrimination.”

The case will now be sent back to the lower court.

Dan Korobkin, ACLU of Michigan’s deputy legal director, said he doesn’t know what the legal remedy will be, but cases of this nature often result in some sort of compensation for the person’s loss of employment.

In a statement, Alliance Defending Freedom (ADF), which represented the funeral home, said it is consulting with its client and considering their option for an appeal.

In a statement, ADF senior counsel Gary McCaleb said the court misread past precedent that has long protected

"Court opinions should interpret legal terms according to their plain meaning when Congress passed the law,” McCaleb said. “This opinion instead re-writes federal law and is directly contrary to decisions from other federal appellate courts.”

—Updated at 5:20 p.m. Brett Samuels contributed.