In April 2024, we wrote about the Federal Trade Commission’s (FTC) issuance of a “Final Rule” banning employee non-compete clauses, scheduled to take effect on September 4, 2024. Over the last few months, three federal courts have addressed whether a preliminary injunction should stay the rule’s effective date pending the conclusion of lawsuits challenging the FTC’s legal authority to issue the rule.

As we previously reported, in Ryan LLC v. Federal Trade Commission, the United States District Court for the Northern District of Texas issued a preliminary injunction preventing the rule from taking effect, but only regarding the plaintiff in the case. The court further held, however, that it would decide by August 30, 2024, whether to issue a permanent injunction.

Last month, a federal court in Pennsylvania refused to follow the Texas court’s lead and declined to issue an injunction in ATS Tree Services, LLC v. Federal Trade Commission. As we previously noted, although this decision was a setback for employers, it would be rendered irrelevant if the Texas court ultimately decided later this month that the FTC exceeded its authority in issuing the non-compete ban rule.

Last week, on August 14, 2024, a Florida federal court addressed the non-compete ban in Properties of the Villages, Inc. v. Federal Trade Commission and entered a limited preliminary injunction preventing the rule from taking effect and, like the Texas federal court, limited the preliminary injunction to the parties in the case. The court based its decision on the “major questions doctrine,” which prevents a federal agency from issuing substantive rules without express congressional authorization where such rules would have “extraordinary economic and political significance.” Indeed, the court found that the FTC rule would significantly impact the economy by modifying an area of law that has always been the province of state law.

It appears increasingly likely that the FTC rule will never become effective. In addition to the Texas and Florida decisions enjoining the FTC ban, the U.S. Supreme Court recently overruled a 40-year-old precedent granting federal agencies significant deference in interpreting laws through agency rules and regulations. The Supreme Court’s decision provides an alternative basis to vacate the FTC’s rule. In any event, speculation will end in the next ten days, and we will know whether the FTC rule will upend countless non-compete agreements or end up in the dustbin of failed political pitches.

We will continue to monitor developments on this issue. In the meantime, please contact Salvatore Gangemi at sgangemi@murthalaw.com or at 203.653.5436 if you have any questions.

In a 4-3 decision, the Connecticut Supreme Court adopted the federal Title VII standard for determining who is a “supervisor” under the Connecticut Fair Employment Practice Act (CFEPA). The determination of “supervisor” status is critical under Title VII and the Connecticut Fair Employment Practices Act because an employer is presumptively automatically liable for a hostile work environment perpetuated by a supervisor, although an employer can rebut that presumption by asserting that (1) the employer exercised reasonable care to prevent and correct promptly any harassing behavior, and (2) the harassed employee unreasonably failed to take advantage of any preventive or corrective opportunities offered by the employer to avoid harm.

In O’Reggio v. Commission on Human Rights and Opportunities, et al., decided on August 1, 2024, a narrow majority declined to adopt a much broader definition of “supervisor,” opting instead to accept the definition applied under Title VII as expressed in the U.S. Supreme Court’s 2013 decision in Vance v. Ball State University. Consequently, according to O’Reggio, in the case of a hostile work environment, an employer is vicariously liable for the acts of a harasser if the harasser has the power to take tangible employment actions. (If the harasser is a coworker of the employee being harassed, then the harassed employee is required to prove the employer’s negligence in failing to prevent the harassment from taking place).

The dissent argued that the majority should have adopted a broader definition of “supervisor,” in line with the remedial nature of the CFEPA. In dismissing this argument, the majority stated that the legislature has been “on notice” of federal and state courts’ consistent interpretation of “supervisor” and has failed to enact legislation adopting a broader definition. Indeed, according to the court, “[t]he legislature . . . has not expressly set forth its intent for us to adopt such a definition. To the extent that the legislature wishes to define the term ‘supervisor’ more broadly, it is of course free to adopt legislation directing that approach. . . .”

Employers should not interpret the court’s decision as relieving them from liability for the acts of their non-supervisory employees. As stated above, an employer can still be liable for harassment committed by a non-supervisor if it acted negligently in preventing the harassment from happening in the first place. Nevertheless, O’Reggio demonstrates the court’s restraint in expanding employee rights without legislation reflecting a clear intent to do so.

Please contact Salvatore Gangemi at sgangemi@murthalaw.com or at 203.653.5436 if you have any questions. 

Earlier this month, we wrote about a Texas federal court’s issuance of a limited preliminary injunction staying the Federal Trade Commission’s (FTC) rule banning non-compete clauses for the plaintiffs in that case. Despite not issuing a preliminary nationwide ban, the Texas federal court stated it would render a final decision on August 30, 2024, before the rule becomes effective on September 4, 2024. Based on language contained in the Texas federal court’s opinion on the preliminary injunction, it appears likely that the Texas federal court will ultimately issue a permanent injunction, effectively killing the FTC’s non-compete ban. 

However, on July 23, 2024, a federal court in Pennsylvania refused to follow the Texas court’s lead and decided not to enjoin the FTC’s non-compete ban temporarily. Unlike the Texas federal court, the Pennsylvania federal court ruled that the plaintiff did not satisfy its burden of establishing the need for a preliminary injunction. According to the July 23rd opinion, the plaintiff (1) failed to demonstrate that it would suffer irreparable harm in the absence of a preliminary injunction and (2) would not likely succeed on the merits of the case upon its conclusion. According to the court, any alleged harm to the plaintiff was based merely on “speculative risk.” The court dismissed the plaintiff’s concerns over protecting proprietary information by stating that the plaintiff failed to explain why it could not use alternative methods to safeguard such information, for example, through a narrowly tailored non-disclosure agreement. Finally, the court held that the plaintiff could not show a “likelihood of success on the merits” because, among other things, the FTC was within its authority to issue substantive rules, like banning non-compete clauses, to prevent unfair methods of competition.  

Despite this setback for employers, the case likely will be rendered moot by the Texas federal court’s final decision, which, as stated above, is scheduled to be decided by the end of August. Nevertheless, the Pennsylvania federal court’s opinion underscores courts’ lack of consensus on the FTC’s role and authority. If the FTC ultimately appeals an unfavorable decision, which will depend on several factors, including who is elected President in November, the scope of the FTC’s authority may be ultimately decided by the Supreme Court.  

We will continue to keep you informed of these developments. 

In the meantime, please contact Salvatore Gangemi at sgangemi@murthalaw.com or at 203.653.5436 if you have any questions. 

We previously wrote about the Federal Trade Commission’s (FTC) issuance of a rule banning non-compete clauses in employment. The FTC’s issuance of its final rule banning non-compete clauses constituted an unprecedented intrusion into matters of state law, which governed non-compete clauses. Nevertheless, it appears now that the FTC’s non-compete ban is beginning to unravel.

Last week, the United States District Court for the Northern District of Texas in Ryan LLC v. Federal Trade Commission, issued a preliminary injunction against the Federal Trade Commission’s rule banning non-compete clauses in employment. The preliminary injunction does not apply to all employers, but only to the parties in the case – Plaintiff Ryan LLC, and Plaintiff-Intervenors Chamber of Commerce of the United States of America; Business Roundtable; Texas Association of Business; and Longview Chamber of Commerce. Although business groups had hoped for a nationwide preliminary injunction, the court found that the plaintiffs did not sufficiently brief a justification for such broad injunctive relief. In any event, the court stated that it will rule on the ultimate merits of the non-compete ban by no later than August 30, 2024, in advance of the ban’s effective date of September 4, 2024. Based on the court’s opinion supporting its issuance of the preliminary injunction, the court will likely hold that the FTC’s non-compete ban is invalid.

Issuance of the Preliminary Injunction

In order to secure a preliminary injunction, a moving party must show that (i) it has a substantial likelihood of success on the merits; (ii) irreparable harm would result without the issuance of a preliminary injunction; and (iii) the balance of equities and public interest weigh in favor of issuing a preliminary injunction. The Texas court in Ryan LLC found that the plaintiffs satisfied each of these requirements.

Likelihood of Success on the Merits

The court found that the plaintiffs would likely succeed on the merits based on its determination that the FTC lacked authority to create “substantive” rules, despite its general authority to regulate “unfair methods of competition.” The court, on page 21, also found that the non-compete ban was arbitrary and capricious, “because it is unreasonably overbroad without a reasonable explanation. It imposes a one-size-fits-all approach with no end date. . . .” Consequently, the court reasoned that the first element of the preliminary injunction analysis, i.e., the plaintiffs’ ultimate likelihood of success on the merits, was satisfied.

Irreparable Harm

The court found that the plaintiffs adequately showed that the failure to issue a preliminary injunction would constitute irreparable harm. Citing appellate precedent, the court noted on page 26 that the “‘nonrecoverable’ costs of complying with a putatively invalid regulation typically constitutes irreparable harm.” The FTC failed to rebut the contention that aggrieved plaintiffs would have an opportunity to recover costs spent from complying with the ban if it later turned out that the ban was found to be invalid. Indeed, the FTC enjoys sovereign immunity for claims against monetary damages. As a result, the nonrecoverable costs of compliance would constitute irreparable harm under the circumstances.

Balance of Equities and Public Interest

According to the court, the plaintiffs and public interest would suffer injury if the preliminary injunctive relief were not granted. Maintenance of the status quo would prevent the ban’s negative economic impact, while inflicting no harm on the FTC.

Individual vs. Nationwide Preliminary Injunction

Although the court found in favor of issuing a preliminary injunction prohibiting the enforcement of the non-compete ban to the plaintiffs in the case, it refused to grant a nationwide ban that would have stayed the rule’s application to all businesses. The court stated on page 31 that “Plaintiffs have offered virtually no briefing (or basis) that would support ‘universal’ or ‘nationwide’ injunctive relief.” As far as the court was concerned, nationwide injunctive relief was not necessary to provide plaintiffs with the complete relief sought.

What Does this Mean?

Based on the Texas court’s decision in Ryan LLC v. FTC, it is likely that the court will ultimately rule that the non-compete ban rule is invalid. The court announced that its ultimate decision will come before the rule is scheduled to go into effect. In the meantime, there is another case pending in a Pennsylvania federal court, ATS Tree Services LLC v, Federal Trade Commission, in which the plaintiff has sought a preliminary injunction against the non-compete ban rule. Oral argument is scheduled for July 10, 2024, and it is possible that this case could result in a nationwide preliminary injunction or an invalidation of the non-compete ban before the court in Texas issues its merits-based decision.

Although not addressed in the Texas court’s opinion, the United States Supreme Court’s very recent June 28th decisions in Loper Bright v. Raimondo and Relentless v. Department of Commerce, might affect a court’s decision on whether to enforce the FTC non-compete ban. The Supreme Court in Loper Bright overruled the longstanding “Chevron” rule, which required a court to defer to a federal agency’s administrative agency rulemaking authority. Based on the Supreme Court’s decision, a court may but is not required to defer to the FTC’s rulemaking authority. Instead, under the new standard, “Courts must exercise their independent judgment in deciding whether an agency has acted within its statutory authority as the [Administrative Procedure Act] requires.”

What Comes Next?

We will continue to monitor these developments, although so far it looks as if the FTC’s non-compete ban will not survive in its current form.

In the meantime, please contact Salvatore Gangemi at sgangemi@murthalaw.com or at 203.653.5436 if you have any questions.

On May 21, 2024, Governor Ned Lamont signed into law new legislation that significantly expands Connecticut’s paid sick leave law to apply to nearly all private employers in the state over the next three years. The law provides for eligible employees to accrue paid sick time beginning upon hire at a rate of one hour for every 30 hours worked, up to a maximum of 40 hours per year, which they can then utilize after their 120th calendar day of employment.

Under the state’s existing paid sick leave law, originally passed in 2012, private-sector employers with 50 or more employees are required to provide paid sick time to all “service workers.” The new legislation, however, applies to all private-sector employees with the exception of seasonal employees and certain unionized construction workers, and will be phased in based on the size of an employer’s workforce as follows: effective January 1, 2025, for employers with 25 or more employees; effective January 1, 2026, for employers with 11 or more employees; and effective January 1, 2027, for employers with one or more employees.

Under the new law, covered workers may use paid sick leave for any of the following qualifying reasons:

  • The employee’s illness, injury or health condition, or that of the employee’s family member, whose definition includes a child (both minor and adult), spouse, parent, grandparent, sibling and anyone related to the employee by blood or close association that makes them akin to family;
  • The medical diagnosis, care or treatment of the employee or the employee’s family member;
  • Preventive medical care for the employee or the employee’s family member;
  • A mental health wellness day for the employee;
  • Certain purposes when an employee or the employee’s family member is a victim of family violence or sexual assault;
  • Closure of the employer’s place of business or a family member’s school or place of care due to a public health emergency; or
  • A determination that the employee or the employee’s family member poses a risk to the health of others due to a communicable disease.

Significantly, however, the law prohibits employers from requiring any documentation that the employee took the paid sick leave for a qualifying reason.

Employers that already offer other paid leave, including vacation, personal days or PTO, under the same or better terms than the legislation will be deemed to be in compliance with the new law. Otherwise, employers that were previously exempt from the law should note the date when they must begin providing paid sick leave and should review their policies to ensure that they comply with all elements of the new law.

The attorneys in Murtha Cullina’s Labor & Employment practice will continue to follow and report on any significant developments regarding this legislation. If you have any questions, please do not hesitate to contact Emily McDonough Souza at esouza@murthalaw.com or at 203.772.7711.

New York has amended its sick leave law (Labor Law § 196-b) to provide paid prenatal personal leave to all employees. Effective January 1, 2025, all employers shall be required to provide their employees with 20 hours of paid prenatal personal leave per 52-week period. Prenatal personal leave is leave taken by an employee “during their pregnancy or related to such pregnancy,” including for physical examinations, medical procedures, monitoring and testing, and discussions related to pregnancy with a health care provider. Prenatal personal leave may be taken in hourly increments.

Unlike overlapping leaves that run concurrently, prenatal personal leave is in addition to the paid or unpaid sick leave already required by New York law. Moreover, unlike sick leave currently required in New York, an employee qualifies for paid prenatal personal leave immediately upon hire.

Similar to current requirements applicable to sick leave, an employer shall be prohibited from requiring an employee to disclose confidential information relating to an absence qualifying for paid prenatal personal leave. Thus, the law precludes an employer from requiring that an employee provide a doctor’s note with substantive detail concerning leave.

The Department of Labor will likely issue guidance prior to the amendment’s effective date. The guidance may also address what constitutes a leave “related to . . . pregnancy,” which will likely be broader than traditional notions of prenatal care. In the meantime, employers should be prepared for this change and revise their handbooks and policies to reflect it.

Murtha Cullina’s Labor and Employment practice will monitor the Department of Labor’s release of guidance interpreting the amendment, as well as issues relating to the amendment’s implementation. If you have any questions, please do not hesitate to contact Sal Gangemi at sgangemi@murthalaw.com or at 203.653.5436.

On April 23, 2024, the U.S. Department of Labor (DOL) issued a final rule substantially raising the salary thresholds for certain employees to qualify for overtime exemptions under the federal Fair Labor Standards Act (FLSA).

The FLSA generally requires covered employers to pay employees a minimum wage and, for employees who work more than 40 hours a week, overtime pay of at least 1.5 times an employee’s regular rate. However, the law currently exempts from its overtime requirements those who are employed in “white collar” positions whose duties satisfy the FLSA’s “duties” test applicable to executive, administrative and professional employees, provided that such an individual’s annualized salary is at least $35,568.

Beginning July 1, 2024, the recently released final rule calls for an increase in the compensation threshold for executive, administrative and professional employees to $43,888 per year.  Thereafter, beginning January 1, 2025, the final rule will raise the compensation threshold for such employees to $58,656 per year. Updates to the earnings thresholds shall be calculated every three years based on wage data.

If the rule—which is likely to face legal challenges that could delay implementation—goes into effect, it is expected to result in about four million U.S. employees losing their exempt status. Affected employers should consider either raising the salaries paid to such employees to maintain the exemption or reclassifying their positions as non-exempt and paying them overtime for any hours worked over 40 per week.

The attorneys at Murtha Cullina will continue to monitor the implementation of this rule, including any legal challenges. If you have any questions, please do not hesitate to contact Emily McDonough Souza at esouza@murthalaw.com or at 203.772.7711.

On April 15, 2024, the U.S. Equal Employment Opportunity Commission (EEOC) issued its final rule and interpretive guidance implementing the Pregnant Workers Fairness Act (PWFA). The federal law, which went into effect June 27, 2023, and applies to employers with 15 or more employees, expands protections for qualified employees and applicants with regard to reasonable accommodations for “known limitations” related to pregnancy, childbirth or related medical conditions. It was intended to aid in filling accommodations gaps left in the Americans with Disabilities Act (ADA) and Title VII of the Civil Rights Act of 1964.

Among other things, the final rule—which was published on April 19, 2024, and will take effect 60 days later—provides:

  • That the phrase “pregnancy, childbirth, or related medical conditions” must be read to include current pregnancy, past pregnancy, potential pregnancy, lactation, use of contraception, menstruation, infertility and fertility treatment, miscarriage, stillbirth, or having or choosing not to have an abortion;
  • That the physical or mental condition in question can be modest, minor or episodic, and there is no requirement that conditions rise to a specific severity threshold;
  • That an employer may request to obtain medical documentation for a qualifying condition in only limited circumstances outlined in the guidance, thereby rejecting the ADA’s approach to supporting documentation;
  • That employers are encouraged to respond expeditiously to employees’ requests and to consider granting an accommodation request on an interim basis even if additional information is still needed, given the temporary nature of pregnancy-related conditions;
  • That four specific accommodations (carrying/keeping water in or nearby the employee’s work area; taking additional restroom breaks; sitting instead of standing while working; taking breaks to eat or drink) be deemed de facto reasonable as not imposing an undue hardship in virtually all cases; and
  • That other reasonable accommodations to address known limitations under the law may include telework or remote work; job restructuring; reserved parking; and schedule changes, part-time work, and paid or unpaid leave.

Notably, of the more than 100,000 comments the agency received in response to the proposed rule, approximately 54,000 asked the EEOC to exclude abortion from its definition of related medical conditions.

Employers should familiarize themselves with the final regulations in order to better understand the requirements under the PWFA and ensure compliance in their policies and processes.

If you have any questions about the final regulations, please do not hesitate to contact Emily McDonough Souza at esouza@murthalaw.com or at 203.772.7711.

Two days ago, the Federal Trade Commission (FTC) issued its “Final Rule” banning non-compete clauses in employment. Until now, the FTC never officially declared that such clauses constituted an “unfair method of competition.” The Final Rule seeks to upend centuries of state law governing the use of non-compete clauses in employment, including state laws that already limit or ban their use. The federal government’s encroachment into traditional state law is not necessarily unprecedented, but in this case, will likely fail.

Generally, the laws of most states will allow enforcement of a non-compete clause provided that it both protects a legitimate interest (e.g., confidential information and customer goodwill) and does not impose a greater burden than necessary to protect that interest. Other factors that determine the enforceability of a non-compete clause consider the impact on the employee and the public.

By a strict party line vote of 3-2, the FTC’s unelected commissioners have decided that businesses should not be entitled to the protection of non-compete agreements, regardless of whether they have a legitimate interest worthy of protection.

What is the FTC Anyway?

The FTC was created by the Federal Trade Commission Act (FTCA) , which Congress passed in 1914, in an effort to tighten and enhance the antitrust prohibitions of the Sherman Antitrust Act of 1890. The Sherman Act was intended to preserve “free and unfettered competition as the rule of trade.” Together with the federal Clayton Act, the Sherman Act prohibited unlawful mergers and business practices that harm consumers. The FTCA purported to ban “unfair methods of competition” and “unfair or deceptive acts or practices.” The FTC is a federal executive agency, comprising five commissioners, who each serve seven-year terms. Commissioners are nominated by the President and confirmed by the Senate. Only three FTC members can be of the same political party, and, in fact, the Final Rule was passed by a 3-2 vote, along party lines. The President selects the Chair out of the five-member commission.

The FTC seeks to expand its authority by concluding that unfair methods of competition include non-compete clauses, which it has the power to ban, despite the lack of congressional authority indicating that the FTC can create substantive (as opposed to procedural) rules that are tantamount to laws that a legislature would pass. Of course, legislators are elected to office by the people, while FTC commissioners are appointed by the President.

The Final Rule’s Prohibitions

The Final Rule contains separate provisions defining unfair methods of competition for two categories of workers. For non-senior executive employees (most workers), an unfair method of competition includes requiring the employee (i) to enter into, or attempt to enter into, a non-compete clause; (ii) to enforce a non-compete clause; or (iii) to represent that the employee is subject to a non-compete clause. An unfair method of competition with respect to a senior executive includes requiring the executive (i) to enter into, or attempt to enter into, a non-compete clause; (ii) to enforce, or attempt to enforce, a non-compete clause entered into after the effective date; or (iii) to represent that the senior executive is subject to a non-compete clause, where the non-compete clause was entered into after the effective date. Thus, the Final Rule will not apply retroactively to a “senior executive,” which the Final Rule defines as an employee earning over $151,164 per year, and who has “final authority to make policy decisions that control significant aspects of a business entity and does not include authority limited to advising or exerting influence over such policy decisions.” This definition ensures that only c-suite employees, and not all of them, would be considered senior executives under the Final Rule.

The Final Rule bans all non-compete clauses in employment agreements, and severance agreements. In other words, the Final Rule bans some, but not all, garden leave arrangements, in which an employee is free to enter into a reasonable non-compete agreement in exchange for severance pay covering some portion of the non-compete period. With one fell swoop, the Final Rule eliminates this “employee choice doctrine,” which could result in fewer employers agreeing to pay severance to terminated employees. In addition, the Final Rule will ban any other agreement that would function as a “de facto” non-compete clause, including non-solicitation or non-disclosure agreements.

What is the Effective Date of the Final Rule?

The Final Rule takes effect 120 days after its publication in the Federal Register, which has not yet happened. Once effective, the Final Rule will invalidate all existing non-compete clauses, except for those applying to senior executives, and prohibit new non-compete clauses for all employees, including senior executives.

In addition to invalidating pre-existing non-compete clauses, the Final Rule requires employers to send a notice to each current and former employee (except senior executives) informing them that their non-compete agreements are legally unenforceable.

What Will Happen Next?

As we predicted, lawsuits have already been filed to challenge the FTC’s Final Rule. The U.S. Chamber of Commerce and other business groups have sued the FTC, claiming that the FTC has exceeded its authority in wading into employment-related non-compete clauses. The Chamber’s lawsuit was filed in a Texas federal court and challenges the FTC’s authority to regulate this area of law and to issue substantive rules banning non-compete agreements.

Our prediction is that courts will stay (or strike) the Final Rule prior to its effective date on the grounds that Congress did not clearly authorize the FTC to regulate non-compete clauses between employers and employees. Courts will likely find that the Final Rule violates the “major questions doctrine,” which provides that an executive agency does not have the authority to resolve significant issues and rights unless Congress expressly empowers the agency to do so. For instance, in 2022, the Supreme Court applied the major questions doctrine in ruling that the Occupational Safety and Health Administration (OSHA) exceeded its authority with the issuance of its Emergency Temporary Standard (ETS) that mandated comprehensive vaccine mandates (“vaccine or test”) and stayed the enforcement of the rule. That ETS never went into effect.

What Should Employers Do?

The Final Rule will not take effect for more than four months, assuming it ever does. As a result, the best course of action now is to maintain the status quo. There is no need to eliminate reasonable non-compete clauses or assume that they are not valid simply based on the Final Rule. Employees should not assume that their non-compete obligations are no more. Nevertheless, many states, including New York and Connecticut, are considering bills that would limit the use of non-compete clauses. Regardless of whether the FTC’s Final Rule becomes effective, courts may be less likely to enforce borderline non-compete clauses unless the employer can identify a recognized protectable interest, and the restriction is not broader than necessary to protect that interest. Recognized protectible interests include the protection of trade secrets and truly confidential information, customer relationships and an employer’s investment in an employee’s reputation in the market.

We will continue to monitor the lawsuits challenging the Final Rule, as well as any further developments affecting this proposed ban.

In the meantime, please contact Salvatore Gangemi at sgangemi@murthalaw.com or at 203.653.5436 if you have any questions.

On April 17, 2024, the U.S. Supreme Court resolved a circuit split by holding that while an employee challenging an allegedly discriminatory job transfer under Title VII of the Civil Rights Act of 1964 must show that the transfer caused some identifiable disadvantage, the disadvantage need not be significant.

The allegations underlying the Muldrow v. City of St. Louis, Missouri opinion involved Jatonya Muldrow, a female police sergeant who, after working on high-profile matters in the specialized Intelligence Division of the St. Louis Police Department for several years, was transferred against her wishes to a uniformed job supervising the day-to-day activities of neighborhood patrol officers. Although her rank and pay remained the same in the new position, her duties, perks and work schedule changed. Muldrow filed suit against the City, alleging that she had suffered sex discrimination because of the involuntary transfer due to her supervisor wanting to hire a male for her job.

The district court granted summary judgment in favor of the City, holding that Muldrow could not meet a heightened injury standard of showing that her job transfer resulted in a “significant” change in working conditions producing “material employment disadvantage” in order to establish an adverse employment action under Title VII. The Eighth Circuit affirmed.

The Supreme Court, however, vacated and remanded in a unanimous decision authored by Justice Kagan, holding that “[a]lthough an employee must show some harm from a forced transfer to prevail in a Title VII suit, she need not show that the injury satisfies a significance test.” The Court concluded that the text of Title VII “nowhere establishes that high bar,” and to demand “significance” would be to add words to the statute created by Congress. Justices Alito, Thomas and Kavanaugh authored concurring opinions.

Following this decision, employers should exercise extra caution when transferring employees to different jobs. Moreover, although the Muldrow case concerned a job transfer, there is no indication that the Court’s reasoning is limited to such context; thus, it remains to be seen whether employees will begin challenging other employment actions that do not rise to the level of material adverse changes in employment terms and conditions.

The attorneys at Murtha Cullina will continue to monitor the effects of this decision, and are ready to advise on this and other Title VII issues.

Please feel free to reach out to Murtha Cullina’s Labor and Employment group if you have any questions.