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Title VII of the Civil Rights Act explicitly prohibits discrimination because of sex in matters of employment. Florida is free to prevent teachers from teaching things, but they cannot fire people for their own sexual identity, per federal law.
Meanwhile, Title II of CRA covers interstate commerce and prohibits discrimination because of race, color, religion, or national origin - but not sex. Under Federal Law, if your business has a lot of out of state customers (primarily hospitality) or includes supply chains that cross state lines, you can't discriminate on race, etc but you can discriminate on sex.
The 14th Amendment states that the law must apply to everyone equally. However, this only applies to governments (and their contractors) - a black person cannot be refused to be heard in court and a gay person cannot be refused a marriage.
The way US law is supposed to work is that states can set their own laws where Federal Law doesn't cover it. However, they must do this within the bounds of Federal Law. This is why we have 1st Amendment challenges against state laws that fill in the gaps of federal law - a business can discriminate based on sex, or any other reason (so long as they don't fall under Title II), even if state law says otherwise.
US law is so shit. It's unnecessarily hard to read, distributed across multiple yet interwoven jurisdictions, and full of holes. But hey, at least it isn't financial regulations - reading those will cause a sane person to lose the will to live.
TL;DR This should be a slam dunk for the teacher, per Federal Law: Title VII of the Civil Rights Act, which overrules anything the states write. However, who knows how the current Supreme Court might try to spin it - if they even opt to hear it (they absolutely should).
The teacher will make millions from the settlement, paid squarely out of the pocket of working Floridians. And despite that, half the state will continue voting for politicians and supporting police whose actions have no real consequences for them - the tax payers will foot the bill for their actions. Until we start hitting these people in their own pocket books and pensions, their behavior won't change.
This may not be the slam dunk you think it is. To the best of my understanding, the current coverage under title vii for gender and sexuality has only been extended so far as "would this behaviour be unacceptable for the opposite sex?"
Florida could argue (within the scope of existing supreme Court decisions) that the use of certain "new" titles are never acceptable, regardless of the person's sex.
As written, the rule is illegal, but it could possibly be upheld in the context of this specific case.
They would have to argue that sex and gender are not the same thing in court, under oath. It's been a longstanding argument for the GOP that they are the same. And if they argue biological sex and gender are not 1:1, then they're acknowledging that a different gender identity than one's birth sex is possible, and setting that precedent immediately takes the wind out of a lot of their arguments on transgender folk.
They'll be happy to say one thing in public and argue another in court. For example, when Fox News argued that a reasonable person is not expected to believe anything Tucker Carlson is saying.
Yeah, that's why I said "should".