SCOTUS decides that a position transfer may violate Title VII if an employee is worse off due to discriminatory reasons

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 clarified 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.

Background

Muldrow centers around a St. Louis Police Department sergeant 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. 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. Muldrow alleged that her forced lateral transfer was motivated by gender bias and violated Title VII.

On appeal, the United States Court of Appeals for the Eighth Circuit ruled against Muldrow, finding 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 court reasoned that the change in her job responsibilities was insufficient to satisfy the "material disadvantage" standard.

No significant disadvantage required

Muldrow appealed to the Supreme Court, arguing 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."

On April 17, 2024, six members of the Court agreed in part with Muldrow. Although the Court did not endorse Muldrow's broad interpretation of Title VII, the Court held that, along with showing discrimination, the "transferee must show some harm respecting an identifiable term or condition of employment."

The impact of Muldrow

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, Justices Alito, Thomas, and Kavanaugh - who concurred in judgment only - had various takes on much of a change this new standard is in reality. Justice Alito predicted that lower courts will not know how to interpret the phrase "some harm" and may only pay lip service to the phrase in the adjudication of cases. Justice Kavanaugh predicted 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 seems to believe the Court's articulated standard won't change the lower court's treatment of claims in practice.

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

Transfer decisions. The most obvious area that Muldrow will impact is in forced transfer decisions. Before Muldrow, in most states, employers could take refuge that if decisions were neither economically disadvantageous nor tangible employment actions they were unlikely to present significant liability risk. After Muldrow, 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. Employers may need to consider or enact new transfer policies to grapple with the effects of Muldrow.

Employment litigation. Muldrow is likely to impact employment litigation under Title VII, including outside the forced transfer context. At least some courts are likely to come out differently under the "some harm" standard, making summary judgment more challenging to obtain.

As Justice Kavanaugh noted, it is also likely that damages issues will potentially take on increased significance in cases.

Diversity programs. Muldrow may also impact DEI initiatives. In the past, challengers of such programs had to articulate harm caused by the employer's diversity practices. It remains to be seen how the "some harm" standard will be applied in this context. If Justice Kavanaugh is right that the "some harm" standard will result in the same outcome as a "discrimination only" standard in 99 out of 100 cases, DEI programs 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. 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 employment decisions may not be based on discriminatory reasons.