The 4th Circuit CoA Holds that Discrimination in the Offers of Severance Agreements can be Actionable Under Title VII

In Gerner v. County of Chesterfield, Karla Gerner was a twenty-five employee of the county whose position was eliminated in a reorganization.  She was offered a severance agreement that included three months of pay, which she rejected.  The county then terminated her without any severance.  She filed suit under Title VII, alleging sex discrimination in that male counterparts received better severance offers than she did, citing four examples.  The district court granted the defendant’s motion to dismiss based on there being no adverse employment action.

The Fourth Circuit unanimously reversed.  In Hishon v. King & Spalding, 467 U.S. 69 (1984), 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.”  Id. at 75.  In situations like that at hand, in which an employee did not volunteer for a change in employment benefits or retain a job in lieu of a new benefit, courts have consistently recognized that the discriminatory denial of a non-contractual employment benefit constitutes an adverse employment action.  The district court thus erred in concluding a discriminatory denial of a favorable severance offer – a non-required benefit – could not be an adverse employment action.  The district court also erred in concluding that any discriminatory action took place after the employment ended.  First, Gerner alleged that she was still employed when she got the poor severance offer.  Second, even if she were not, “Title VII protects both current and former employees from discriminatory adverse employment actions.”  The Court thus reversed and remanded for the district court to determine if the severance offer was “part and parcel of the employment relationship.”

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