Supreme Court Creates a New Employment Law Test, Leaving Employers Scratching Their Heads

The Supreme Court has upended employment law precedent, changing the standard for how to assess an employee’s claim that he or she was transferred for discriminatory reasons.

In the past, many courts required a “significant” change in working conditions before the employee could make an actionable claim based on transfer. For example, in Cole v. Wake County Board of Education, the Fourth Circuit rejected the claim from a school principal who was forced into a non-school-based administrative role supervising less employees. In the words of the court, the harm of being transferred simply wasn’t “significant.” That was a reliable standard until yesterday, when the Supreme Court specifically criticized Cole and cases like it and came up with a new test for whether a transfer is actionable.

In Muldrow v. City of St. Louis, the Supreme Court held that a claim of discriminatory transfer is viable if the employee can show “some harm.” If that sounds like a vague test that would be hard to apply, you’re not alone. Justice Alito bluntly stated in his concurrence, “I have no idea what this means, and I can just imagine how this guidance will be greeted by lower court judges.”

Justice Kagan, who authored the Muldrow opinion, didn’t seem especially worried about the impact on courts. She reasoned that plaintiffs still must prove their employer acted with discriminatory intent, which is a heavy burden. And even if courts and employers are swamped with lawsuits by transferred employees because of the Muldrow decision, Justice Kagan said the Court wasn’t going to read a “significant harm” requirement into the statute when Congress hadn’t done so.

So, what does this mean for employers who want to transfer an employee but are afraid it could lead to liability?

1. Document your legitimate business reasons for transferring someone.
Regardless of whether the person is harmed, if you have a non-discriminatory reason for the transfer, that will operate as a defense. With that in mind, here’s a good rule of thumb: An outsider should be able to look at your written records alone and—without talking to anyone—be able to figure out why the person needed to be transferred.

2. When you transfer someone, consider the impact on them.
Think about the employee’s pay, schedule, convenience, prestige, career prospects, relationships, office space, and anything else that might be implicated. It won’t take much before a person experiences “some harm.” The more pressing question, as Justice Kavanaugh pointed out in his concurrence, is whether the transfer is rooted in discrimination. All the more reason to document your legitimate reasons for transferring someone.

3. Never use a transfer to punish someone.
Punitive transfers are obvious to everyone and only serve to create an environment of fear and insecurity. Transfer people because that’s what’s best for the organization and the employee. If there’s anything vindictive in the mix, it increases the likelihood that a court will question the validity of the business reasons you have for the transfer.

Only time and case law will tell what the “some harm” standard means as courts figure it out, case by case. The Muldrow opinion is another reminder of how important it is to have reliable employment counsel on hand whenever you’re dealing with employee relations. It’s a hard enough area for employers as it is, and cases like Muldrow don’t make it any easier.