Labor & Employment Developments Blog

Over the course of the last year, employers have faced increased claims from employees testing what constitutes an actionable adverse action under the anti-discrimination provision of Title VII of the Civil Rights Act of 1964 (“Title VII”). Emboldened by the Supreme Court’s decision in Muldrow v. City of St. Louis, 601 U.S. 346 (2024), employees have alleged that common employment practices from performance improvement plans (“PIPs”) to negative performance reviews left them “worse off,” and thus, constitute actionable adverse employment actions under Title VII. These claims have caused many employers to reconsider their past practices and policies. 

The rationale underlying the current shift can be found in Title VII itself. Pursuant to the anti-discrimination provision of Title VII, it is 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, color, religion, sex, or national origin.”  42 U. S. C. § 2000e-2(a)(1). To establish a violation of this provision, employees are required to demonstrate that an employment action resulted in a “disadvantageous” change in the terms and conditions of their employment. Prior to Muldrow, a circuit split developed regarding whether the “disadvantageous” change had to be a “materially significant.”

In Muldrow, the Court rejected the heightened standard holding that the text of Title VII does not contain a “significance test,” nor does it require an employee to show economic or tangible changes in the terms and conditions of the employee’s employment. Rather, to establish the adverse-action prong of a Title VII claim, a plaintiff must only show “some harm” regarding the terms and conditions of their employment that left them “worse off,” and that such harm “need not be significant” to violate Title VII.” While the allegations in Muldrow centered around an alleged discriminatory job transfer, employees have adapted the argument to many common employment decisions employers make on a daily basis.

Recent decisions from appellate and district courts applying the rationale in Muldrow illustrate that the range of actionable conduct is much greater than previously accepted by many courts. Performance Improvement Plans (“PIP”), negative performance reviews, and involuntary job transfers, likely meet the minimum threshold of a disadvantageous change to the terms and conditions of employment necessary to maintain a viable discrimination claim in many instances. With many cases still pending, though, it remains unclear exactly how far courts will extend the Muldrow standard.

Key Takeaways for Employers: The employee-friendly Muldrow decision has expanded the scope of viable Title VII claims and reshaped how courts review employment discrimination claims. Employers should be cautious when making disadvantageous employment decisions to ensure compliance with Title VII. The KMK Labor and Employment team is ready to provide advice and counseling as you navigate employment decisions, practices, and policies.