Tuesday, August 8, 2017

EEOC v. AutoZone: When is something a "federal case"? (Updated 11/23/17)

This follow-up to my recent post on the Seventh Circuit's panel decision in EEOC v. AutoZone looks at the EEOC's petition for rehearing by the full court (en banc rehearing). In the panel decision, the court rejected the EEOC's claim that the defendant violated section 703(a)(2) of Title VII when it transferred a black sales manager to another store because it wanted to make the location from which he was being transferred a "predominantly Hispanic" store. The court concluded that the EEOC's claim failed because the EEOC had alleged that segregation is per se unlawful even though section 703(a)(2) requires evidence that the employee was subjected to a materially adverse employment action, meaning an action that made him materially worse off. A purely lateral transfer that does not affect an employee's pay or status would not constitute a materially adverse employment action. 

In its petition for rehearing, the EEOC contends that the panel decision is inconsistent with the plain language of 703(a)(2). In my view, although the EEOC is, of course, correct that the statutory language controls, the EEOC fails to interpret the specific language of 703(a)(2). Had the EEOC focused on  the words of 703(a)(2), it would have had difficulty showing that the provision does not require a materially adverse action.

As a starting point, it's helpful to look at the two main Title VII provisions prohibiting race discrimination. Section 703(a)(1) makes it unlawful for an employer "to fail or refuse to hire or to discharge any individual, or otherwise to discriminate against any individual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual's race." Section 703(a)(2), the provision at issue in this case, makes it unlawful for an employer "to limit, segregate, or classify his employees or applicants for employment in any way which would deprive or tend to deprive any individual of employment opportunities or otherwise adversely affect his status as an employee, because of such individual's race."

The EEOC contends that, given the different language of the two provisions, it is only necessary to allege a materially adverse employment action under 703(a)(1). The EEOC argues that section 703(a)(2) applies to the deprivation of employment opportunities, and in this case, the transfer of the black manager to another store denied him the employment opportunity of working at the store from which he was transferred. By contrast, the EEOC contends that because 703(a)(1) only applies to "terms, conditions, or privileges of employment," that section only covers materially adverse actions.

I see at least two problems with this line of argument. First, why does the EEOC think that the opportunity to work at a particular store is not a term, condition, or privilege of employment? A lateral transfer no more denies someone employment opportunities than it affects a term, condition, or privilege of employment, so the EEOC has not pointed to any relevant difference in the statutory text for its broad interpretation of 703(a)(2). A better argument would be that the term "discriminate" requires material adversity. That term is only in section 703(a)(1), and it arguably limits the kinds of race-based terms, conditions, and privileges of employment that are actionable.

Second, the EEOC overlooks the requirement that the challenged action "adversely affect [the claimant's] status as an employee." Section 703(a)(2) applies if the employer's action deprives an "individual of employment opportunities or otherwise adversely affect[s] his status as an employee." The inclusion of the term "otherwise" clarifies that 703(a)(2) does not apply to just any old denial of employment opportunities, only one that adversely affects someone's status as an employee. It seems doubtful that a purely lateral transfer could be said to adversely affect an individual's status as an employee. Thus, even though the term "discriminate" is absent from section 703(a)(2), that provision nonetheless imposes other requirements that arguably limit it to materially adverse actions.

As Congress recognizes, not every employment action should be a "federal case," and that is no less true for 703(a)(2) than for 703(a)(1).

Update (11/23/17): On November 21, 2017, the Seventh Circuit denied the EEOC's petition for en banc rehearing. In a dissent, Judge Diane Wood and two other judges criticized the panel's decision for endorsing the view that Title VII does not prohibit "separate-but-equal" workplaces.

This blog reflects the views solely of its author. It is not intended, and should not be regarded, as legal advice on how to analyze any particular set of facts.