Supreme Court Rejects Requirement of Materially Adverse or Significant Changes in Terms and Conditions of Employment to Prove Discriminatory Lateral Transfers

This morning, in a long-awaited decision without any dissents, the Supreme Court reversed the summary judgment dismissal of a sex discrimination lawsuit on the grounds that the plaintiff is not required to prove that an involuntary lateral transfer significantly affected the terms and conditions of her employment.   Muldrow v. City of St. Louise, MO, No. 22-193 (4/17/24).  In particular, the plaintiff alleged that, even though her pay and title remained the same after the transfer, she was denied the use of an unmarked vehicle to use after her shift, was required to sometimes work weekends and no longer worked with higher ranking officers.   “Although an employee must show some harm from a forced transfer to prevail in a Title VII suit, she need not show that the injury satisfies a significance test.”  Nonetheless, the Court observed that the significance of the changed working conditions may be considered in assessing whether the employer intentionally discriminated.  “[A] court may consider whether a less harmful act is, in a given context, less suggestive of intentional discrimination.”

According to the Court’s opinion, when a new commander took over, the plaintiff was involuntarily transferred from a plainclothes officer position in the Intelligence Division (where she had worked for almost 10 years) to a uniformed officer position in another department supervising patrol officers.  The new commander allegedly called her “Mrs.” instead of “Sergeant” and indicated that a male officer was better suited for the Division’s dangerous work.   Her pay and rank remained the same following the transfer.  However, she “no longer worked with high-ranking officials on the departmental priorities lodged in the Intelligence Division” and “also lost access to an unmarked take-home vehicle and had a less regular schedule involving weekend shifts.”   She lost a “prestigious” role for an “administrative” role.  She alleged that she was transferred because of her sex in violation of Title VII.  However, the trial and appellate courts granted judgment to the city employer on the grounds that she had not suffered any materially significant adverse affects from the transfer and she only suffered minor changes in her working conditions.   The  Supreme Court reversed.

The plaintiff’s involuntary “transfer  . . .  implicated “terms” and “conditions” of [her] employment, changing nothing less than the what, where, and when of her police work.”

Title VII makes it unlawful for an employer “to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.” §2000e–2(a)(1).

This “language requires [the plaintiff] to show that the transfer brought about some ‘disadvantageous’ change in an employment term or condition.  . . . . The words ‘discriminate against,’ we have explained, refer to ‘differences in treatment that injure’ employees.”  Title VII “targets practices that “treat[] a person worse” because of sex or other protected trait.”  The Court has clarified in the past that the “terms [or] conditions” statutory language  “is not used ‘in the narrow contractual sense’; it covers more than the ‘economic or tangible.’”  Nonetheless, it limits that kinds of harm that is actionable.  “To make out a Title VII discrimination claim, a transferee must show some harm respecting an identifiable term or condition of employment.”

What the transferee does not have to show, according to the relevant text, is that the harm incurred was “significant.”  . . . . Or serious, or substantial, or any similar adjective suggesting that the disadvantage to the employee must exceed a heightened bar . . . “Discriminate against” means treat worse, here based on sex.  . . . But neither that phrase nor any other says anything about how much worse. There is nothing in the provision to distinguish, as the courts below did, between transfers causing significant disadvantages and transfers causing not-so-significant ones. And there is nothing to otherwise establish an elevated threshold of harm. To demand “significance” is to add words—and significant words, as it were—to the statute Congress enacted. It is to impose a new requirement on a Title VII claimant, so that the law as applied demands something more of her than the law as written. And that difference can make a real difference for complaining transferees. Many forced transfers leave workers worse off respecting employment terms or conditions. (After all, a transfer is not usually forced when it leaves the employee better off.) But now add another question— whether the harm is significant. As appellate decisions reveal, the answers can lie in the eye of the beholder—and can disregard varied kinds of disadvantage.

The Court rejected the employer’s policy argument that removing the significance factor will open the litigation floodgates and discovery issues:

In the City’s view, a significant-injury requirement is needed to prevent transferred employees from “swamp[ing] courts and employers” with insubstantial lawsuits requiring “burdensome discovery and trials.”  . . . . As we have explained, the anti-discrimination provision at issue requires that the employee show some injury.  . . . It requires that the injury asserted concern the terms or conditions of her employment. . . . Perhaps most notably, it requires that the employer have acted for discriminatory reasons—“because of ” sex or race or other protected trait. §2000e–2(a)(1). And in addressing that issue, a court may consider whether a less harmful act is, in a given context, less suggestive of intentional discrimination. So courts retain multiple ways to dispose of meritless Title VII claims challenging transfer decisions. But even supposing the City’s worst predictions come true, that would be the result of the statute Congress drafted.  As we noted in another Title VII decision, we will not “add words to the law” to achieve what some employers might think “a desirable result.” . . . Had Congress wanted to limit liability for job transfers to those causing a significant disadvantage, it could have done so.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Affirms Dismissal of All But Two Claims of Religious Discrimination Based on COVID-19 Vaccine Mandate

Last month, the Sixth Circuit affirmed the dismissal of all but two claims filed by employees who claimed that the hospital employer’s initial blanket denial of their religious objections to the COVID-19 vaccine constituted religious discrimination in violation of Title VII and the Ohio Civil Rights Act.   Saval v. MetroHealth System, No. 23-3672 (6^th Cir. 3/20/24).   The employer had reversed its decision and ultimately granted all of the religious exemption requests.  Thus, the employees who remained employed never suffered any concrete injury to justify litigation from “conclusory” allegations of the emotional distress caused over 36 days while they were forced choose between their jobs and their religious convictions or from the employer’s ability to reverse course again in the future.  Several of the employees had resigned before the employer denied the exemption requests, and thus, also lacked any injury from the employer’s initial denial decision.  However, two employees could sue for disparate treatment and failure to accommodate when they resigned more than 18 days after their requests were denied even though the employer had granted some medical exemption requests. 

According to the Court’s opinion, in August 2021, the hospital announced that all employees needed to obtain the vaccine by the end of October unless they requested a valid medical or religious exemption.  The employer received hundreds of exemption requests and stayed the compliance deadline for those employees while it worked through each of the requests.  While the employer granted some medical exemption requests, it denied all of the religious exemption requests in February on the grounds that the employees could not perform their jobs remotely, no reasonable accommodation was available and it would be an undue hardship to the employer.   It gave the employees 45 days to comply, but 36 days later, abruptly changed course on March 15 and granted all of the exemption requests.   Nine employees resigned before that 36^th day and filed suit.  They were joined by 36 other employees who remained employed by the hospital.  The trial court granted the employer’s motion to dismiss for lack of standing (i.e., were still employed and suffered no injury from the temporary denial) and failure to state a claim.  The Court affirmed the dismissal for all but the first two plaintiffs who had resigned after their exemptions had been denied but before the hospital reversed its decision. 

The Court affirmed dismissal for lack of standing because 36 employees did not suffer any injury from the temporary denial of the exemption requests.  It rejected their claims of mental anguish from having to chose between their jobs and their religious beliefs and threat that the employer could reverse its decision again in the future.  The Court found their allegations of past distress to be too conclusory to be actionable and “fears about a future denial were ‘contingent on future events that may never come to pass, which is a much ‘too speculative’ state of affairs ‘to satisfy the well-established requirement that threatened injury must be ‘certainly impending.’”

The Court analyzed the allegations of the first nine employees to determine whether they stated valid claims for constructive discharge -- i.e., whether they were forced to resign.  Six of these nine could not establish constructive discharge because they had resigned before their exemption requests had been denied in February.  An additional employee’s claim was denied because she had never filed a formal exemption request.

The Court’s majority agreed that the first two plaintiffs stated valid claims for constructive discharge because they requested exemptions, those exemptions were denied, they were denied the right to appeal and they were given a date to comply or be fired.   The trial court had determined that they resigned prematurely (albeit more than halfway through the 45 day period), but the Court disagreed.

The Court also reversed the trial court that these plaintiffs failed to state a claim for religious discrimination: “Plaintiffs 1 and 2 allege [the employer] failed to accommodate their religious beliefs by blanket-denying their vaccine exemption requests. They also assert that [it] treated them differently because of their religion.”  The first two employees “just need to plausibly allege that they were denied a religious accommodation and treated differently because of their religion.”

Further, these two employees alleged a plausible claim of failure to accommodate.  “The heart of the failure-to-accommodate claim is that an employer discharges (or otherwise discriminates against) an employee for failing a job-related requirement instead of abiding by its “statutory obligation to make reasonable accommodation for the religious observances” of its employees.”

The Court also found that these two employees plausibly plead a disparate treatment case.  They “alleged that [the employer] categorically denied all religious exemption requests while granting some nonreligious exemption requests—that is, that [it] treated them differently with respect to a condition of employment because of their religion.”

In concurring, one judge questioned whether this was really a constructive discharge case when the employees had been told when they would be terminated and could have sought a preliminary injunction to prevent an unlawful job termination. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Sixth Circuit Affirms Enforcement of Technically Deficient Investigatory Subpoena on Affiliate Employer Over Objections to Relevance and Burden

Last month, the Sixth Circuit affirmed enforcement of an EEOC investigatory subpoena served on an affiliate company of the Charging Party’s alleged employer.   EEOC v. Ferrellgas, LP, No. 23-1719 (6^th Cir. 3/26/24).  After addressing and rejecting a number of technical objections to service of the subpoena and alleged waiver of objections, the Court observed that the employer had not shown that the subpoena was unduly burdensome by merely describing the amount of time and effort to comply.  Proving undue burden is a comparative exercise and the employer failed to also explain how limited (or not) its resources were in light of the burden imposed.   The subpoena was also not overly broad because the Charging Party’s allegations touched on similar issues and the EEOC is given broad powers to investigate most employment-related issues. 

According to the Court’s opinion, the operating partnership, holding company and affiliate corporation all had similar names.  The Charge named the holding company as the employer, but the EEOC served its Request for Information (RFI) on the affiliate corporation.  HR and outside counsel responded to the RFI, provided some requested documents, objected to the RFI’s scope (but not to the addressee)  and did not identify which of the entities employed either of them.  The investigation continued for almost two years.  The EEOC then mailed a subpoena to outside counsel, who provided some responsive documents and objected to the scope of the subpoena, but did not challenge the addressee or manner of service.  The EEOC then sent another RFI to HR, but the only response was an objection that it should have been sent instead to outside counsel.   The EEOC then mailed a subpoena addressed to the corporate affiliate but sent to outside counsel, which objected not to the corporate addressee, but to the fact that it was overly broad, was unduly burdensome, was not sent by certified mail and was not signed.   The EEOC then sent the identical, but signed, subpoena by certified mail.  Without filing a formal objection with the EEOC, outside counsel reiterated its objection to the scope of the subpoena.  The EEOC then obtained enforcement of the subpoena from federal court against the operating partnership (not the named employer or corporate affiliate named in the subpoena) and this appeal ensued. 

The Court rejected the respondents’ objection to manner of service because it had already directed the EEOC several times to communicate only with outside counsel. “To hold otherwise would reward duplicity and allow potential defendants to easily avoid the Commission’s subpoenas. What is more, it would ‘create a rule that would allow a lawyer with actual notice of a subpoena to take no action, in hope that the [Commission] will not seek enforcement, and to make objections only if enforcement proceedings ensue.’”  In addition, “when ‘[a]ctual notice reached counsel promptly and counsel responded on the merits,’ service not in strict conformity with the  . . .  regulations does not preclude a district court’s enforcement of a  . . . subpoena.”

The Court agreed that the respondent raised a valid objection that the EEOC had served it with a subpoena whose response date pre-dated the service date (making compliance an impossibility) and identified an entity other than the employer identified in the Charge or even the entity named in the federal court enforcement action.  “[A]t a surface level, the Commission issued a subpoena with an invalid response date and now seeks court enforcement of that subpoena against an entity that was not, strictly speaking, the target of the subpoena itself.  These technical oversights are blameworthy, and the Commission should have rectified them well before this juncture.”   Nonetheless, the Court refused to “exalt form over substance” because the respondents had failed to raise any of these objections to the EEOC.   Moreover, one purpose of the EEOC’s investigatory process involves identifying the correct defendant employer.  Finally, the EEOC’s errors did not prevent the respondents from raising substantive objections to the subpoena to the EEOC, federal court or appellate court.

Similarly, while the Court agreed that EEOC regulations only gave the respondent 5 days to object to a subpoena, it refused to enforce that deadline here because service of the subpoena was not technically correct. “It is self-evident, [respondents] argues, that an employer’s obligation to exhaust its administrative remedies under § 161(1) and 29 C.F.R. § 1601.16(b)(1), if it exists at all, is contingent upon proper service of a subpoena that complies with the statute and its implementing regulations. This argument carries considerable logical force, and we find support for it in our caselaw.”

The Court rejected the employer’s argument that the subpoena was overly broad in seeking information about its hiring practices when the Charge was focused only on compensation and termination issues.    Courts do not strictly construe relevance against the EEOC “and have afforded the Commission access to virtually any material that might cast light on the allegations against the employer.”  Moreover, in this case, the Charging Party had also made allegations about discriminatory statements made to her during her job interview and her initial job assignment, making inquiries into those matters relevant.  In addition,

The application and hiring information that the Commission seeks could cast light on whether [respondents] discriminated against other job applicants — in the same region and during the same timeframe as [Charging Party’s] employment — based on sex or race. In turn, that information might illuminate whether [it] discriminated against [her] on those same bases but in other employment contexts — i.e., in her pay and termination.

The Court also rejected the employer’s arguments that the subpoena was unduly burdensome.   

“[W]hether a subpoena is overly burdensome turns on the nature of the materials sought and the difficulty the employer will face in producing them.”  . . .  Given its “fact-intensive” nature, the burdensomeness inquiry is “generally not amenable to broad per se rules.”  . . . . The employer bears the obligation to show that compliance would impose an undue burden.

First, the respondent only provided an unsigned and undated declaration, which is not valid evidence in any legal proceeding.   In any event, the argument was unpersuasive because it only described the amount of effort that would be required to respond and did not also describe the respondent’s available resources.  The respondent

“fails to explain why they represent an undue burden. Assessing whether the burden of compliance is undue is a comparative exercise; what is unduly burdensome to a small business with a handful of employees may not be unduly burdensome to a Fortune 500 company. . . . While [its] figures provide an estimate of the burden it might face, [it] offers up no baseline against which we can compare its estimates to decide whether the burden it faces is undue. Merely pointing out that compliance with the subpoena will divert employee attention from ordinary tasks is insufficient — if that were enough, then nearly every EEOC subpoena would fail. We are not blind to the fact that compliance with the Commission’s subpoena will require significant time and effort, but without some metric of how significant that time and effort is, we cannot find that an employer has met its burden to show that compliance would be unduly burdensome.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

FCRA Preempts Employee's Defamation and Tortious Interference Claims Against Employer Who Gave Negative Reference to Consumer Reporting Agency

On Tuesday, the Sixth Circuit affirmed an employer’s summary judgment on a defamation and tortious interference claim brought by a former employee who claimed that he had been defamed and prevented from obtaining new employment based on a negative job reference that the defendant employer provided to a consumer reporting agency.   McKenna v. Dillon Transp. LLC, No. 23-5568 (6^th Cir. 4/2/24).  The Court agreed that the plaintiff’s state law claims were pre-empted by the Fair Credit Reporting Act.   The Court rejected the plaintiff’s argument that a similar federal statute governing employment/safety references of commercial drivers provided liability for his claims because it did not specifically pre-empt the FCRA and was compatible with it. 

According to the Court’s opinion, the defendant employer provided information to a consumer reporting agency about the plaintiff after he was fired following an accident in which his tractor trailer overturned.  The agency provides information about drivers to employers who inquire about hiring that driver, but there was no evidence that anyone had ever inquired about the plaintiff.  The plaintiff then sued the employer for defamation and tortious interference, blaming its report for his inability to find another job.  The trial court granted summary judgment to the employer on the grounds that state law claims were preempted by the FCRA.

The Court observed that it had previously held that § 1681t(b)(1)(F)of the FCRA “preempts state common law claims involving a furnisher’s reporting of information to consumer reporting agencies.”  The plaintiff argued that a different federal statute applied.  The DOT requires employers to investigate a driver’s safety record before hiring and the governing statute likewise pre-empts state laws that impose liability upon employers for providing such information.  However, unlike the FCRA, the transportation statute does not exempt employers who knowingly provide false information about a driver’s safety record.

The Court rejected the plaintiff’s argument on a number of grounds.  First, there was no evidence that any employer had requested information about his safety record, which would be necessary to implicate this statute.  Second, it was questionable whether the defendant employer’s statements were “knowingly” false, rather than merely negligently false.   Finally, the Court did not find the transportation statute to necessarily repeal or be inconsistent with the FCRA.  “The two preemption statutes here complement each other, so they can coexist.”

15 U.S.C. § 1681t stops states from regulating false reports to consumer reporting agencies, including agencies that provide background checks. 49 U.S.C. § 508 blocks specific causes of action against those who answer a motor carrier’s request for employment information. One regulates the consumer reporting industry. Another regulates the hiring of commercial drivers. The statutes have different textual purposes and scopes, and neither swallows the other. Communications between motor carriers about driver applicants would only fall under § 508. And only 15 U.S.C. § 1681t would cover cases without a request for records or an individual under consideration for employment. That the FCRA is a more general law that covers more conduct than 49 U.S.C. § 508 doesn’t change this. Greater specificity only matters if two complementary acts cannot be implemented at the same time. . . .  And the statutes do not conflict—one simply provides more protection for companies in Dillon’s position. So we give both statutes full effect rather than resorting to the specific-general canon. Dillon can invoke one preemption clause even if it cannot invoke the other.

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.

Ohio Courts of Appeal Refused Enforcement of Arbitration Clauses

Last month, two Ohio Courts of Appeal ruled against employers attempting to enforce arbitration clauses.   In the first, the Court affirmed the denial of a motion to compel arbitration and held that the trial court was not required to hold a jury trial on the enforceability of the clause.  Costin v. Midwest Vision Partners LLC, 2024-Ohio-463.  The parties had amended the plaintiff’s employment agreement upon his termination of employment and specified which clauses of his former agreement would survive termination of his employment.  The arbitration clause was not one of the provisions that the amended agreement listed as surviving his employment termination. Accordingly, the trial court could grant summary judgment on that issue.   In the second case, the Court reversed and remanded the dispute where the plaintiff’s age discrimination claim had been stayed pending arbitration because the trial court had failed to consider the plaintiff’s argument that the "loser pays" provision of the arbitration clause was unconscionable, contrary to public policy and unenforceable.   Grimm v. Professional Dental Alliance, LLC, 2024-Ohio-637. 

NOTICE: This summary is designed merely to inform and alert you of recent legal developments. It does not constitute legal advice and does not apply to any particular situation because different facts could lead to different results. Information here can change or be amended without notice. Readers should not act upon this information without legal advice. If you have any questions about anything you have read, you should consult with or retain an employment attorney.