As our readers know, the EEOC filed two lawsuits last fall against private employers, alleging discrimination against transgender individuals: one case against a medical practice in Florida, and the other against a funeral home operation in the Detroit area.

And as I reported last week, the Florida case settled for $150,000 plus some training and other non-monetary terms.

Meanwhile, the defendants in the Michigan case filed a motion to dismiss the EEOC's lawsuit, and their motion was denied on Wednesday. Judge Sean Cox rejected the EEOC's position that "gender identity" discrimination was a protected category under Title VII but will still allow the case to go forward on a theory of "sex stereotyping," which the Supreme Court has said is a violation of Title VII. Judge Cox's decision contains an excellent discussion of the sex stereotyping issue.

The allegations in the Michigan case are straightforward. The EEOC claims that Amiee Stephens was a funeral director/embalmer for the defendants since 2007. In 2013, she announced that she was beginning the transition from male to female, planned to present as a female, and requested understanding. Shortly afterward, she was terminated "because 'what she was proposing to do' was unacceptable." The EEOC also alleges that the funeral home provided a clothing allowance to male, but not female, employees.

Employers should be aware that a "motion to dismiss" is filed at the earliest stages of a lawsuit and is based on nothing other than the allegations in the lawsuit and applicable law. At this very early stage, the court is required to assume that all of the allegations in the lawsuit are true, and the employer is not allowed to present any evidence in its defense. If the allegations -- even if true -- don't create a valid legal claim, then the suit can be dismissed. Otherwise, the parties proceed with the litigation.

Denial of a motion to dismiss does not mean that the allegations in the lawsuit actually are true or that the employer will not win at a later stage.