Supreme Court Signals Siding With Employee In Discrimination Case. What That Means For Employers

Examining the potential ripple effects of Muldrow ruling

The U.S. Supreme Court heard a case on December 6, 2023, that could have important implications for employers regarding transfers and employees’ ability to bring discrimination claims. A broad ruling by the high court could also send ripple effects to diversity, equity, and inclusion programs, jeopardizing their legality when it comes to hiring, firing, promotions, and salaries. 

The justices’ questions during oral arguments in Muldrow v. City of St. Louis signal that a majority of the Court will likely rule in favor of the employee. The case involves a female police officer who, in a sex discrimination lawsuit, alleges she was transferred to a less prestigious position due to her gender. The Eighth Circuit Court of Appeals dismissed the claim because the officer did not allege that the transfer resulted in termination, demotion, or loss of pay. 

How far the Court’s decision will reach — and what implications it will have for employers — will depend on how broad the ruling is. It is not yet clear when a decision will come. 

Based on the justice’s oral arguments, it appears likely the Supreme Court, at a minimum, will determine that all employee transfers based on a protected classification will create actionable claims under Title VII of the Civil Rights Act of 1964. The Act prohibits employers from discriminating against employees based on race, color, religion, sex, and national origin. Under the Court’s expected ruling, an employee can bring those claims regardless of whether an employee’s transfer results in some tangible harm like a pay cut, loss of prestige or responsibility, deterioration in working conditions, or impediments to promotion or advancement. 

A broader ruling could interpret Title VII to authorize lawsuits based on any employment decision — no matter how minor — that impacts an employee’s terms, conditions, or privileges of employment. Either way, employers should bet on Muldrow widening Title VII’s reach. Consequently, employers need to be on guard against increased litigation and a lowered barrier to state a claim for relief. Claims that courts previously dismissed because the employee did not allege tangible harm or an economic detriment will likely now survive dismissal. 

In addition to a potential increase in claims, employers can prepare another way: they should carefully document the legitimate, non-discriminatory business reasons for all workplace decisions, even minor ones. Additionally, employers should be mindful that even decisions that benefit a specific group of employees could support a valid Title VII claim if the decision was based on a protected classification, like sex. 

Ramifications of a Broad Ruling, Including on DEI Programs

There are other possible implications of a broad ruling in Muldrow. 

That sort of ruling might put many diversity, equity, and inclusion (DEI) programs on the chopping block. Before Muldrow, those kinds of programs were generally lawful as long as the select group of employees they benefitted did not get an advantage in hiring, firing, promotions, or salaries.

After Muldrow, many DEI programs, such as race-based decisions for mentoring or training, could give rise to a claim even though those employment decisions did not cause any tangible harm to the groups who cannot participate in the race-restricted benefit. Courts are already seeing more claims challenging corporate DEI programs following the Supreme Court’s June 2023 ruling that race-conscious admissions programs at Harvard University and the University of North Carolina were unlawful. 

Anything but a narrow, fact-intensive ruling in Muldrow will pour fuel on that fire. For those reasons, if the Supreme Court finds that Muldrow’s transfer was an adverse employment action, then employers would be wise to scrutinize any DEI-motivated changes, regardless of whether the employer was simply trying to address discriminatory imbalances in the workforce. That could impact employee affinity groups, internship programs, and similar DEI initiatives. 

Beyond DEI programs, a broad ruling could have spillover effects for three anti-discrimination statutes.
 
The Age Discrimination in Employment Act (ADEA), the Americans with Disabilities Act (ADA), and Section 1981 of the Civil Rights Act of 1866 could all be impacted by a broad ruling, given that they are interpreted similarly to Title VII. Section 1981 prohibits discrimination on the basis of race in the formation of contracts, including employment contracts. It is especially problematic through the lens of a broad Muldrow ruling since Section 1981 has a longer statute of limitations and no requirement to exhaust administrative remedies before litigation. 

What a Broad Ruling Would Look Like

As justices mull an opinion on Muldrow, it is important to consider how Title VII has already been interpreted. 

Some circuit courts currently view Title VII to only prohibit transfers that cause some identifiable harm, such as reduction in pay, serious deterioration of working conditions, or change of prestige. Other circuits disagree, arguing that all discriminatory transfers are actionable. 

When an opinion comes out, the justices will decide which of these interpretations is correct. The employee, in this case, argues that any transfer decision — and indeed, any decision that impacts the terms, conditions, or privileges of employment — based on a protected classification (race, sex, gender, religion, and national origin) would support a valid federal claim. 

In other words, Muldrow will decide whether the employee affected by a transfer must show additional harm over and above the discriminatory decision itself. The tenor of the justices’ questioning last week suggests they will establish that an employee does not need to show additional harm to bring a claim based on a discriminatory transfer. 

Brandon Moulard and Jonathan Crotty are employment attorneys at Parker Poe in Atlanta and Charlotte, North Carolina.