The rights of the teacher, John Kluge, to exercise his religious beliefs were outweighed by the potential disruption that his conduct could have on the learning environment at Brownsburg High School in the Indianapolis suburbs, the Chicago-based 7th U.S. Circuit Court of Appeals said.

Kluge said his Christian religious beliefs barred him from complying with a school policy requiring faculty to use students' preferred names and pronouns.

The school initially allowed Kluge to call students by their last names but reneged after receiving complaints from students and faculty, according to court filings. He said he resigned in 2018 after he was told he would be fired.

Kluge sued the school district in 2019, accusing it of violating a federal law that prohibits workplace discrimination based on religion. He was seeking to get his job back and unspecified money damages.

Kluge is represented by the Alliance Defending Freedom, a conservative Christian legal group. Rory Gray, a lawyer with the group, said he was evaluating Kluge's options.

“The 7th Circuit’s ruling shows why the Supreme Court needs to fix the standard for accommodating religious employees," Gray said in a statement.

Lawyers for the school did not respond to a request for comment.

Federal law only requires employers to accommodate workers' religious beliefs if it would not cause them an undue hardship.

Kluge in his lawsuit argued that allowing him to call students by their last names would not create a burden for the school.

The 7th Circuit on Friday disagreed, upholding an Indiana federal judge's ruling that dismissed the case.

"Kluge's last-names-only practice stigmatized the transgender students and caused them demonstrable emotional harm," Circuit Judge Ilana Rovner wrote for the court.

In a dissenting opinion, Circuit Judge Michael Brennan said it was unclear whether the school could have mitigated any disruptions resulting from Kluge's conduct, and that a jury should decide whether his rights were violated.