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In June 2025, a federal court ruling limits the EEOC’s former LGBTQ+ workplace guidance, the Third Circuit emphasizes stronger standards for religious accommodations in an Atlantic City beard ban case, and Philadelphia’s new POWER Act sets a bold precedent for local worker protections and employer accountability. Get the latest details in this month’s update.

Federal Court Strikes Key Portions of EEOC’s 2024 Guidance on Gender Identity and Sexual Orientation

The U.S. District Court for the Northern District of Texas recently ruled that key portions of the EEOC’s updated guidance on sexual orientation and gender identity under Title VII exceeded the agency’s authority. The court’s decision in Texas v. EEOC vacated sections of the guidance that defined “sex” to include sexual orientation and gender identity and that categorized issues like pronoun usage, dress codes, and bathroom access as sex-based harassment. Though issued by a Texas court, the ruling has national impact, barring enforcement of those vacated provisions.

The EEOC had relied on the Supreme Court’s 2020 decision in Bostock v. Clayton County, which held that Title VII prohibits discrimination based on sexual orientation or gender identity. However, the Texas court found that the EEOC went beyond Bostock, which did not address workplace policies on dress, bathrooms, or pronouns.

The ruling follows a January executive order from President Trump’s administration affirming a policy of recognizing only male and female sexes and rejecting gender identity as a legal concept. EEOC Commissioner Andrea Lucas, aligned with this view, has expressed support for rescinding the contested guidance, though the commission lacks the quorum needed to formally do so.

In response, the EEOC has labeled the vacated guidance portions on its website, while the rest of the 2024 guidance remains in effect. Employers are advised to proceed cautiously, recognizing that many state and local laws still protect LGBTQ+ workers, and that further legal challenges are likely. Employers are also encouraged to consider employee well-being and internal values when shaping antidiscrimination policies amid this legal uncertainty.

Third Circuit Revives Religious Bias Suit Over Beard Ban in Atlantic City Fire Department

A divided Third Circuit panel ruled that Atlantic City may have failed to properly accommodate a fire department worker’s religious beliefs, partially reviving a lawsuit brought by an air mask technician who was denied a beard exemption under the city’s grooming policy.

In Alexander Smith v. City of Atlantic City, et al., No. 23-3265, in the U.S. Court of Appeals for the Third Circuit, Smith, a Christian, requested permission to grow a beard, citing religious reasons – specifically, his belief that wearing a beard emulates Jesus and biblical prophets. The city denied his request, citing safety concerns that beards interfere with air mask seals. Smith was later suspended for 40 days after refusing to fight a fire during a tropical storm, claiming he lacked recent training.

The Court of Appeals upheld dismissal of Smith’s retaliation and equal protection claims but reinstated his Title VII failure-to-accommodate and First Amendment free exercise claims. The majority found the city may have been able to tailor its policy, such as reassigning Smith to non-firefighting duties or testing mask fit with a beard, without compromising safety.

The court also criticized the lower court for relying on the city’s “good faith” efforts, clarifying that such efforts do not excuse a Title VII violation.

The ruling allows Smith to pursue claims that the city failed to reasonably accommodate his religious beliefs and grants him temporary relief to grow his beard. The Third Circuit’s decision reinforces the stricter standard recently set by Groff v. DeJoy for religious accommodations under Title VII. The court made clear in Groff that employers must show a substantial hardship — not just minimal inconvenience — to deny a request. On the whole, the Third Circuit’s ruling reflects the growing expectation that employers take religious accommodation requests seriously and evaluate them with greater care.

Philadelphia Enacts POWER Act, Setting New Standard for Worker Protections

Philadelphia Mayor Cherelle Parker recently signed the Protect Our Workers, Enforce Rights (POWER) Act, after its unanimous passage by City Council earlier that month. Effective immediately, the law strengthens protections for over 750,000 workers and significantly increases employer accountability under local labor laws. The POWER Act amends Title 9 of the Philadelphia Code related to paid sick leave, wage theft, domestic worker protections, fair workweek law, victims of retaliation, and enforcement of worker protection ordinances.

The POWER Act applies to all employers within city limits and introduces stricter anti-retaliation rules, expanded enforcement authority, and new rights for employees. Key provisions include a rebuttable presumption of retaliation if adverse action is taken within 90 days of a worker engaging in protected activity, such as filing a complaint or opposing unlawful practices. The Act also provides strong protections for immigrant workers, enabling the Office of Worker Protections (OWP) to support applications for U and T visas or deferred action where appropriate.

For tipped employees, the POWER Act increases the paid sick leave rate by averaging wages across related service positions, as defined by the Pennsylvania Department of Labor & Industry. Employers must also maintain detailed records of hours worked and paid sick leave for at least three years, up from the previous two-year requirement.

The Act also allows workers to receive direct compensation for violations and empowers the OWP to impose civil penalties, conduct investigations, and even suspend business licenses for repeated violations. Employers with three or more violations will be listed in a public “bad actors” database.

For the first time, employees can file private civil lawsuits without first exhausting administrative remedies, provided they give written notice and a 15-day window to resolve the issue – unless the violation involves willful misconduct or retaliation.

Given the Act’s sweeping scope and immediate effect, Philadelphia employers must act quickly to ensure compliance. This includes reviewing workplace policies, updating payroll systems, maintaining detailed records, and carefully assessing any employment actions following protected worker activity. Noncompliance could result in fines, lawsuits, or business suspensions, making proactive compliance essential.

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment. Jeff also practices in commercial litigation as well as counsels businesses on commercial contract matters. 

On June 5, 2025, the U.S. Supreme Court unanimously struck down the “background circumstances” rule in Ames v. Ohio Department of Youth Services, reshaping how employment discrimination claims are evaluated under Title VII of the Civil Rights Act. The now-invalidated rule had required plaintiffs from majority groups—typically white or male employees—to provide extra evidence showing their employer might discriminate against the majority.  This particular case involved Marlean Ames, a straight woman who alleged sex and sexual orientation discrimination when a gay male colleague was promoted over her. Justice Ketanji Brown Jackson, writing for the Court, emphasized that this added burden conflicted with Title VII’s plain language, which guarantees equal protection for all individuals, regardless of majority or minority status. The Court ruled that all discrimination claims under Title VII must follow the same legal framework, without extra evidentiary demands based on group identity. 

This decision resolves a long-standing circuit split and ensures uniform treatment of employment discrimination claims nationwide.  Moving forward, the case serves as a reminder that employers must focus on equal employment for all individuals, regardless of any perceived status as a member of the “majority”.  If you have any questions about the potential impact of the Court’s decision, including how to develop nondiscrimination policies, the attorneys at MacElree Harvey can provide the guidance you may need. 

Jeff Burke is an attorney at MacElree Harvey, Ltd., working in the firm’s Employment and Litigation practice groups. Jeff counsels businesses and individuals on employment practices and policies, executive compensation, employee hiring and separation issues, non-competition and other restrictive covenants, wage and hour disputes, and other employment-related matters. Jeff represents businesses and individuals in employment litigation such as employment contract disputes, workforce classification audits, and discrimination claims based upon age, sex, race, religion, disability, sexual harassment, and hostile work environment. Jeff also practices in commercial litigation as well as counsels businesses on commercial contract matters.