Last week, the Fifth Court of Appeals – which has appellate jurisdiction over Texas federal courts – issued an employee-friendly decision that expands the types of discrimination claims that can be brought under Title VII of the Civil Rights Act of 1964, amended (“Title VII”). For nearly three decades, Fifth Circuit precedent held that adverse employment actions for purposes of Title VII discrimination claims were limited only to “ultimate employment actions” such as decisions to hire, fire, demote, promote, or modify compensation. In Hamilton v. Dallas County (5th Cir. Aug. 18, 2023), the Fifth Circuit reversed that precedent and held that a plaintiff need not prove an ultimate employment action to state a valid discrimination claim.

The Hamilton case involved a sex-based scheduling policy adopted by the Dallas County Sheriff’s Department. The Department gave its detention officers two days off per week, but, under the policy, only male officers could select full weekends off. Female officers could pick either two weekdays off or one weekend day plus one weekday. In short, full weekends were never an option for female officers. The Department did not dispute that this policy was sex-based. A group of female officers sued the Department claiming that the policy violated Title VII’s prohibition against sex-based discrimination in the workplace. The trial court dismissed the lawsuit based on the Fifth Circuit precedent limiting Title VII claims to ultimate employment actions. Specifically, the trial court found that denying employees a specific schedule (i.e. weekends off) was not an ultimate employment action. On appeal, a Fifth Circuit panel initially affirmed the dismissal for the same reason but urged for the full court to hear the case en banc to determine whether the ultimate employment action definition was consistent with the text of Title VII. While a panel of Fifth Circuit judges are bound by prior precedent, the full court can hear the case en banc – meaning all of the Fifth Circuit judges hear the case – and overrule past precedent. That is exactly what happened as the Fifth Circuit agreed to re-hear the case en banc.

On re-hearing, the court looked at the statutory text of Title VII and noted that the law makes no mention of the term “ultimate employment action.” Rather, Section 703(a) of Title VII not only prohibits discrimination with respect to hiring, firing, and compensation but also discrimination with respect to the “terms, conditions, or privileges of employment.” As the court stated, “terms, conditions, or privileges of employment” is a broad catch-all category which must encompass non-ultimate employment actions. Accordingly, the Fifth Circuit reversed the trial court and held that a Title VII claim can be premised on the broad definition of adverse employment action which includes discrimination with respect to the terms, conditions, or privileges of employment.

What does this mean for employers going forward? More Title VII discrimination claims based on actions other than hiring, firing, compensation, promotion, or demotion will be brought and will survive longer in litigation. By extension, there will be a related increase in retaliation claims based on an expanded definition of “protected activity” that will now include complaints about discrimination that go beyond ultimate employment actions.

After Hamilton, what is an adverse employment action? We know that ultimate employment actions will always be an adverse employment action. Beyond that, it is difficult to know because the Fifth Circuit opted not to define the minimum level of harm that a plaintiff must show for discrimination with respect to the terms, conditions, or privileges of employment. This raises the question as to whether Title VII now extends to de minimis discrimination or actions that are discriminatory in nature but have no material impact on employees. For example, a plant supervisor gives all his male employees tickets to a day baseball game and allows them to leave 1.5 hours early to attend the game. He does not make the same offer to the female employees and admits that he was motivated by gender. Does this one-time occurrence which had an immaterial impact on the female employees give rise to an actionable discrimination claim? Under the old precedent, no. Under the new one, maybe.

What about discipline? Generally, disciplinary write-ups were not actionable claims under the prior precedent. Now, written warnings or even performance improvement plans will likely fall within the scope of an adverse employment action because they certainly relate to the terms, conditions, or privileges of employment. It is unknown whether coachings or verbal warnings will make the cut. As Judge Jones described the Hamilton decision in her concurring opinion, “The majority holding amounts to this: we hold that speeding is illegal, but we will not say now what speed is illegal under what circumstances.”

Stay tuned, however, because we might get some clarity in 2024 as the United States Supreme Court has agreed to decide a similar issue in Muldrow v. City of St. Louis. In that case, the Supreme Court will review whether a job transfer with no change in title, salary, benefits, or responsibilities is an adverse employment action for purposes of Title VII. It is expected that the Supreme Court will provide some guidance on what type of injury is sufficient to constitute an adverse employment action.

What should employers do? Train your managers and supervisors to understand that actionable discrimination goes beyond hiring, firing, and compensation decisions. Review your employment policies to ensure that discrimination “based on the terms, conditions, or privileges of employment is strictly prohibited.”

Please feel free to contact Kemp Smith’s Labor and Employment Department if you have any questions.