Employment Discrimination Cases – The Evolution of Adverse Employment Action

Employment discrimination under federal laws such as Title VII of the Civil Rights Act of 1964, the Americans with Disabilities Act, and the Age Discrimination in Employment Act, state it is unlawful for an employer to discriminate against you as an employee with respect to your compensation, terms, conditions or privileges of employment, because of your race, color, religion, sex, national origin, age or disability. The problem—as we’ve discussed in each of our posts in this series on employment discrimination laws covering the workplace—is that the various federal courts often disagree on the meaning of both statutory and judicially created terms and phrases.

For example, the courts must determine what type and level of employment discrimination action your employer must take in order for it to constitute unlawful employment discrimination regarding your compensation, terms, conditions or privileges of employment. For the sake of clarity and simplicity, the federal courts collectively adopted the phrase adverse employment action for this required element of any employment discrimination claim.

But clarity and simplicity flew out the window when those same courts became split about the meaning of their own term. To make matters worse, the U.S. Court of Appeals for the Fifth Circuit, which covers Texas, appears to be a house divided within itself as well, with some judges favoring a stricter interpretation and some a looser interpretation of adverse employment action.

The good news for our clients is that Kilgore & Kilgore has been directly involved in some of the key Fifth Circuit rulings on what constitutes an adverse employment action in an employment discrimination case. Our experienced employment law attorneys are well suited to handle your employment discrimination claim in Texas. If you believe you are the victim of an employment discrimination, contact Kilgore & Kilgore, click here. We offer a free review of the facts of your case.

The division in the federal circuit courts over what constitutes an adverse employment action breaks down into two main camps. The first camp, comprised of a majority of the federal circuit courts, has ruled that an adverse employment action occurs when an employer’s action is materially adverse to an employee. The second camp, which historically has included the Fifth Circuit, takes a stricter approach, ruling that an adverse employment action consists only of ultimate employment decisions such as hiring, granting leave, discharging, promoting, compensating and demoting an employee.

In 2004, Kilgore & Kilgore was successfully involved in one of the most important, and most often cited, cases in this area of employment law. In Pegram v. Honeywell, Inc., Kilgore & Kilgore’s client filed a race discrimination claim in which we argued on his behalf that a transfer to a different position constituted an adverse employment action. In its opinion, the Fifth Circuit panel reaffirmed the strict ultimate employment decision standard and stated that our client’s “claim that his reassignment… was a less prestigious or desirable transfer, without more, does not lift him over the hurdle of summary judgment for the purpose of an adverse employment action.”

However, the court also stated that an employment transfer may qualify as an adverse employment action if the change makes the job objectively worse. Kilgore & Kilgore was able to convince the court that our client’s earnings potential had been reduced as a result of the discriminatory transfer. The Fifth Circuit therefore overturned the district court and ruled in our client’s favor, finding that there was a genuine issue of material fact as to whether the transfer created a demotion sufficient to constitute an adverse employment action, even under its strict ultimate employment decision standard.

Following the Pegram v. Honeywell, Inc. decision, the Fifth Circuit made a series of rulings regarding adverse employment actions based on different fact patterns, the most important of which was its 2007 decision in Alvarado v. Texas Rangers, where the panel ruled that “denial of a transfer may be the objective equivalent of the denial of a promotion, and thus qualify as an adverse employment action, even if the new position would not have entailed an increase in pay or other tangible benefits.”

This set the stage for another case successfully argued by Kilgore & Kilgore in front of the Fifth Circuit. In the 2012 case of Schirle v. Sokudo USA, our client filed a claim for employment discrimination based on national origin when he was stripped of his European executive responsibilities. The Fifth Circuit opinion first cited Pegram v. Honeywell, Inc. in restating that adverse employment actions are limited to ultimate employment decisions. But the opinion then went on to state that “it is recognized that a significant diminishment of material responsibilities, citing the U.S. Supreme Court case, Burlington Indus., Inc. v. Ellerth, that led other federal circuit courts to adopt the looser materially adverse employment action standard… or a demotion, citing Pegram once again, also constitutes an adverse employment action.” Based on this analysis, the Fifth Circuit ruled in favor of our client, stating that the loss of his European sales responsibilities was a diminishment of material responsibilities significant enough to satisfy the adverse employment action element of his prima facie case of employment discrimination.

The Schirle v. Sokudo USA decision laid the foundation for and played a key role in the most recent, and most controversial, of the Fifth Circuit’s line of adverse employment action cases. In its 2014 decision in Thompson v. City of Waco, Texas, the court further extended, in a published opinion, the standard that had evolved through cases such as Pegram, Alvarodo and Schirle, to a situation where an employee’s job responsibilities were significantly diminished, but he retained his same position and title. The Fifth Circuit majority ruling acknowledged previous cases, including Pegram v. Honeywell, Inc., which held that that the mere loss of some job responsibilities does not constitute an adverse employment action.

But the opinion went on to state that, “this does not mean that a change in or loss of job responsibilities can never form the basis of an actionable discrimination claim …. In certain instances, a change in or loss of job responsibilities, similar to the transfer and reassignment contexts, may be so significant and material that it rises to the level of an adverse employment action. See Schirle v. Sokudo USA, LLC.”

The Fifth Circuit noted that the plaintiff in Thompson v. City of Waco alleged more than a mere loss of some job responsibilities. He alleged facts that, taken as true, plausibly suggested that his employer changed his job description to such an extent that he no longer occupied the position he had previously performed, hence it was a de facto demotion. Citing Alvarado v. Texas Rangers, the majority opinion stated that, “we previously have held that an employment decision ‘need not result in a decrease in pay, title, or grade’ to constitute a demotion; ‘it can be a demotion if the new position proves objectively worse, such as being less prestigious or less interesting or providing less room for advancement.’” The majority then concluded that Thompson plausibly alleged that he was subject to the equivalent of a demotion due to the significant changes to his job responsibilities.

The adoption of the easier material adverse employment action standard is good news for those wishing to file employment discrimination claims in the Fifth Circuit. However, this fact did not go unnoticed by those judges on the Fifth Circuit who wish to adhere to the strict standard. First, the justice who dissented from the Thompson v. City of Waco decision accused the majority of using legal smoke and mirrors in order to avoid the strict Fifth Circuit standard of ultimate employment decisions. Subsequently, after the entire Fifth Circuit voted not to rehear the case en banc, another justice filed a dissent complaining that the law governing adverse employment actions in the Fifth Circuit had been subject to such a degree of “panel ping-pong” that “a particular panel can find language, and indeed even legal principles, that likely will support any conclusion that it may reach.” He went on to conclude that “in short, our cases give district judges and litigants no guidance as they attempt to thread their way through our confusion. They deserve better. We should give them better.”

Where does that leave the law regarding adverse employment actions in the Fifth Circuit? At best, it is uncertain. While the state of the law is unclear, what is clear is that the legal standard for what constitutes an adverse employment action has clearly shifted, through the course of Pegram to Alvarado to Schirle to Thompson, in the direction of employees. It is also clear that Kilgore & Kilgore has been instrumental in both protecting the interests of its clients in front of the Fifth Circuit, and in moving the ball forward for all employees who have been discriminated against, making it easier for them to receive justice under the law.

From these high profile cases in the U.S. Court of Appeals for the Fifth Circuit, our employment law attorneys have gleaned a depth of experience in employment discrimination cases in Texas. This includes not just legal experience in a complicated area of employment law, but invaluable practical experience and familiarity with the courts and the judges. This helps every employment discrimination client as we bring claims on behalf of employees against large, medium and small employers in federal and state courts. When it comes to employment discrimination lawsuits, there really is no substitute for experience. To learn more about employment discrimination, click on this link Employment Discrimination Law. To contact Kilgore & Kilgore, click here. We offer a free review of the facts of your case.

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