Title VII Protects Both Current and Former Employees From Discriminatory Adverse Employment Actions
Title VII of the Civil Rights Act makes it an unlawful employment practice for an employer to discriminate against “any individual" on the basis of membership in a protected class. In a reminder to employers, the 4th U.S. Circuit Court of Appeals has reiterated the generally accepted interpretation that in this language, Title VII explicitly allows former employees, as well as current ones, to bring an action under that statute. Gerner v. County of Chesterfield, 4th Cir., No.11-1218, 3/16/12.
Karla Gerner was employed by Chesterfield County, Virginia, for over 25 years, with twelve of those years as the County’s Human Resources Director. In 2009, Gerner was informed that her job was being eliminated due to a reorganization of the department, and was told that she was entitled to three months of pay and benefits as a severance, if she would resign and sign a waiver of legal claims against the County. Gerner ultimately declined that offer and was fired, effective December 15, 2009.
Gerner filed a lawsuit, alleging that certain male counterparts – also former directors of County departments – had received “sweetheart” deals of up to six months of pay and benefits, or were placed into positions with less responsibility while continuing their prior pay, in order to allow them to “enhance their retirement benefits.” The district court granted the County’s motion to dismiss Gerner’s complaint, holding that the terms and conditions of the severance package did not constitute an adverse employment action. That court found that the County’s offer of a “less favorable severance package" did not constitute an adverse employment action for two reasons. First, the court held that severance benefits must be a "contractual entitlement" to provide the basis of an adverse employment action under Title VII; and second, the court held that because the offer of the severance package was made after Gerner had been terminated, it could not constitute an adverse employment action.
The Fourth Circuit reversed that decision on both grounds. First, it cited the U.S. Supreme Court’s holding in Hishon v. King & Spalding, 467 U.S. 69 (1984), which precludes the argument that an employment benefit must be a contractual right in order for its denial to provide the basis for a Title VII claim. In Hishon, the Supreme Court held that any "benefit that is part and parcel of the employment relationship may not be doled out in a discriminatory fashion, even if the employer would be free under the employment contract simply not to provide the benefit at all." The Hishon Court clearly stated that benefits that an employer is under no obligation to furnish by any express or implied contract may qualify as a “privilege” of employment under Title VII, and may provide the basis for a Title VII claim, as long as the benefit is "part and parcel of the employment relationship." In Gerner’s situation, in which she did not voluntarily ask for removal from her position, but was offered the severance in return for resignation and a release of claims, the severance was deemed to be the required “part and parcel” of the relationship.
The Fourth Circuit addressed the district court’s holding that Gerner did not suffer an adverse action because she was terminated before being denied the severance, and found that rationale lacking, as well. The Court pointed to the language of Title VII, protecting “any individual,” and again cited to the Supreme Court’s opinion in Hishon (“A benefit need not accrue before a person’s employment is completed to be a term, condition, or privilege of that employment relationship") to support the fact that an employment benefit can constitute an adverse action, even if it related to a former employee. According to the fourth Circuit, to limit actionable adverse employment actions to those taken while an individual is currently employed would be inconsistent with Title VII’s “principal goal” of "eliminat[ing] discrimination in employment."
While most employers, if asked, would say that an individual’s severance is related to that person’s employment, and would recognize that denial of or unequal benefits could constitute an adverse employment action supporting a Title VII claim, the Fourth Circuit opinion leaves no room for doubt: former employees can bring a claim for issues related to their separation from employment, including a claim based upon the terms of any offer of severance.