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SCOTUS Decides That A Position Transfer May Violate Title VII If An Employee is Worse Off Due to Discriminatory Reasons
Friday, April 19, 2024

Employers contemplating a forced transfer of a worker will need to grapple with a new standard set out by the US Supreme Court under Title VII of the Civil Rights Act of 1964, the law that makes it unlawful to discriminate against workers based on various protected characteristics. The Supreme Court in Muldrow v. City of St. Louis issued an important ruling that clarifies the evidentiary standard employees must meet when asserting a discriminatory transfer claim against an employer under Title VII. Prior to the Court’s decision, there was a Circuit split with most courts holding that an employee had to show a significant employment disadvantage to prevail on a claim that their transfer violated Title VII. In its opinion, the Supreme Court held instead that an employee must show (i) the employer’s action was discriminatory, and (ii) that the employee suffered “some harm” respecting an “identifiable term or condition of employment” to state a claim for discrimination under Title VII. The majority noted that the Court’s “some harm” standard is a downward departure from the type of evidence that lower courts had traditionally required to show discrimination under Title VII – namely, that an employee must suffer “significant,” “material,” or “serious” harm to have an actionable claim. 

Although the Court explicitly limits its decision to discriminatory transfers in employment, some lower courts may apply Muldrow’s reasoning to other types of discrimination claims under Title VII. That prospect could have consequences for employers on the scrutiny that must be given to other types of employment actions, including how employers make day-to-day employment decisions, implement diversity initiatives, and defend lawsuits alleging discrimination under Title VII. 

Background

Muldrow centers around a St. Louis Police Department sergeant, Sergeant Muldrow, who was forcibly transferred from a position in the department’s intelligence division to the department’s Fifth District division and replaced by a male officer who allegedly claimed the male officer was better suited for the dangerous work of the division than Sergeant Muldrow. Although Muldrow retained the same pay and title, she claimed the transfer changed other conditions of her employment, including her schedule, overtime opportunities, prestige, and comfort of work clothing. Sergeant Muldrow alleged that her forced lateral transfer within the department was motivated by gender bias and violated Title VII.

Both the District Court and the United States Court of Appeals for the Eighth Circuit ruled against Muldrow, finding that she failed to establish gender discrimination under Title VII because she had not proven the forced lateral transfer amounted to “a tangible change in working conditions that produced a material employment disadvantage.” The Eighth Circuit emphasized that Muldrow had not introduced evidence showing the transfer resulted in “a diminution to her title, salary, or benefits.” The court also reasoned that the change in her job responsibilities was insufficient to satisfy the “material disadvantage” standard. The Eighth Circuit concluded that Muldrow could not proceed with her Title VII claim.

Muldrow then appealed to the Supreme Court, arguing that the heightened “material employment disadvantage” evidentiary standard – and those like it employed in other Circuit Courts of Appeals nationwide – had no basis in the text of Title VII. Title VII, Muldrow argued, merely requires that an employee provide evidence of discrimination “with respect to [her] compensation, terms, conditions, or privileges of employment.” The Supreme Court eventually accepted her appeal on the following question: Whether Title VII of the Civil Rights Act of 1964 prohibits discrimination in transfer decisions absent a separate court determination that the transfer decision caused a significant disadvantage.

No Significant Disadvantage Required

On April 17, 2024, six members of the Court agreed in part with Muldrow. The Court did not endorse Muldrow’s view that discrimination with respect to “compensation, terms, conditions, or privileges of employment” was all that was needed to bring a claim under Title VII. Rather, the Court set forth a standard not advanced by any party in the litigation: The “some harm” standard. Under that standard, the Court held that, along with showing discrimination, the “transferee must show some harm respecting an identifiable term or condition of employment.” In reaching this holding, the Court explicitly held that its decision overruled any Circuit Court of Appeals which had used a “significant,” “material,” or “serious” harm or injury standard. The Court was also careful to dispel an argument advanced by the City of St. Louis that reading a lesser evidentiary standard into Title VII discrimination claims would inevitably apply to retaliation claims too. 

The Impact Of Muldrow On Title VII Cases

The impact of Muldrow and how it will be interpreted by lower courts is yet to be seen. In fact, the justices themselves are unable to agree on this point. Despite agreeing with the Court’s articulated evidentiary threshold, three Justices (Justices Alito, Thomas, and Kavanaugh) – who concurred in judgment only – had various takes on how drastic this new standard is in reality. Notably, Justice Alito called the Court’s opinion “unhelpful,” predicting that lower courts will have no idea how to interpret the phrase “some harm” and will merely pay lip service to the phrase in the adjudication of cases. On the other hand, Justice Kavanaugh predicted that the “some harm” standard adopted by the Court would align with his preferred lesser standard of having to only show discrimination with respect to a term or condition of employment. Justice Kavanaugh mused that the “some harm” standard and the “discrimination” only standard would come out to the same result in “99 out of 100 discriminatory-transfer cases, if not in all 100.” Justice Thomas, on the other hand, seems to believe the Court’s articulated standard won’t change the lower court’s treatment of Title VII claims in practice.

The Practical Impact of Muldrow On Employer Practices

For employers, the Supreme Court’s decision is likely to impact three general areas of their day-to-day employment decisions:

Transfer Decisions. Perhaps the most obvious area that Muldrow will have the greatest affect is in forced transfer decisions. Before Muldrow, in most states, employers could take refuge that decisions that were neither economically disadvantageous nor tangible employment actions (e.g., hiring, firing, and the like) were unlikely to present significant liability risk to an employer. After Muldrow, however, transfers should be more carefully reviewed and the reasons for them sufficiently documented, recognizing that an employee may have a viable claim if they can show the decision was due to discrimination and caused “some harm” relating to a term, condition, or privilege of employment. In fact, the Court presented several examples of how “claims that failed under the significance standards could now succeed.” For example, the engineering technician assigned to a new jobsite which required the technician to work in a “wind tunnel” would now be considered a harm relating to a term, condition, or privilege of employment. Employers may want to revisit their transfer process and encourage decision-makers and human resource professionals to look at the effect of their transfer decisions when considering such moves. Employers may need to consider or enact new transfer policies to grapple with the effects of Muldrow.

It is important to remember, however, that the Supreme Court is not saying that employers cannot force transfers on employees, even if the transfer makes the employee less well off. The Supreme Court is saying to do so for discriminatory reasons could violate Title VII if there is some harm to the employee. Thus, while the burden of proof may have changed, the fundamental principle has not: employers should take steps to ensure their employment decisions are made for legitimate non-discriminatory reasons that can be supported if challenged.

Employment Litigation. At first glance, Muldrow looks like it will affect employment litigation in three main ways. First, since Muldrow’s analysis is grounded in the text of Title VII, it seems probable (if not likely) that lower courts will apply it outside the forced transfer context.

Second, despite Justice Alito’s and Justice Thomas’s arguments to the contrary, the Court did seem to articulate a different framework for how courts should analyze discrimination claims under Title VII. First, the employee must show “some injury.” Then, that injury must “concern the terms or conditions of her employment.” And finally (and most importantly) the new standard “requires that the employer have acted for discriminatory reasons – ‘because of sex’ or race or other protected trait…’” For that step, the “court may consider whether a less harmful act is, in a given context, less suggestive of intentional discrimination.” Much is still unclear, but it will be important to monitor how courts interpret these limitations on employee discrimination lawsuits under Title VII. Once again, the upshot here is that employers will want to ensure they have sound decisions for employment decisions that rest on legitimate, non-discriminatory reasons.

Finally, the battleground in litigation over damages will likely take on increased significance. Indeed, Justice Kavanaugh made this observation in his concurrence, where he noted that “the fact that a transfer may not involve a change in compensation can affect the amount of any damages, as Muldrow’s attorney acknowledged.”

Diversity Programs. The most hot button area that Muldrow may interject itself is diversity initiatives like DEI programs. When the Court initially accepted Muldrow, experts noted that a broad ruling may place at risk DEI programs or other initiatives geared to advance minority opportunities. In the past, challenges to such programs were unsuccessful because challengers had to articulate that they were harmed by the employer’s diversity practices. Although the Supreme Court has retained a “some harm” standard, which on its face is likely to “save” DEI programs, it remains to be seen how high of an evidentiary burden this is for plaintiffs in actual practice. As noted above, Justice Kavanaugh believes that the “some harm” standard will result in the same outcome as a “discrimination only” standard in 99 out of 100 cases, and maybe 100 out of 100. If he is right, then DEI programs and other diversity initiatives may present more risk, especially in the “reverse discrimination” context.

Muldrow’s application to various aspects of the employment relationship will be subject to much debate, discussion, and analysis for some time to come. Employers may wish to revisit their current practices to ensure there are adequate processes in place to vet and document decisions that impact the terms and conditions of employment. Ultimately, however, while Muldrow may change the standard courts must apply in Title VII litigation going forward in transfer cases, it does not change the fundamental principle that employers have long striven to operate under – decisions that impact a term or condition of employment should not be based on discriminatory reasons. 

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