Differentials In Severance Packages May Give Rise To Discrimination Claims

In a game changer, the Fourth Circuit in Gerner v. County of Chesterfield, Va., No. 11-1218, 2012 U.S. App. LEXIS 5559 (4th Cir. March 16, 2012), Judge Diana Gribbon Motz, writing for a panel consisting of two district judges, held that, where the employer did not offer the female plaintiff the same “sweetheart” severance package that it had offered to four similarly situated male counterparts, the differential in treatment gives rise to a claim of gender discrimination. The district court (Hon. Henry E. Hudson) had granted the defendant’s motion to dismiss on the ground that the terms and conditions of the severance package did not constitute an actionable adverse employment action. The Fourth Circuit found that the lower court had ignored the teaching of Hishon v. King & Spalding, 467 U.S. 69 (1984), where the Supreme Court clearly stated that “benefits that [an employer] is under no obligation to furnish by an express or implied contract… may qualify as a ‘privileg[e]’ of employment under Title VII”. The Fourth Circuit went on to state that “courts have consistently recognized that the discriminatory denial of a non-contractual employment benefit constitutes an adverse employment action.” (citations omitted).

The Fourth Circuit went on to reject the contention that plaintiff’s claim failed to allege the required adverse employment action because the differential in severance only affected a former employee. Judge Motz, in rejecting that argument, stated: “To limit actionable adverse employment actions to those taken while an employee is currently employed would be inconsistent with the statutory text and Title VII’s ‘principal goal’ of ‘eliminat[ing] discrimination in employment.’” (citations omitted).
I suggest that this decision is a game changer because it now allows counsel for departing employees to demand in settlement negotiations that the employer either provide evidence of the severance paid to comparables, or to make a material representation in the severance agreement that the amount or the formula used to compute the amount paid to the departing employee is the same as that paid or used in the case of comparables. Quite obviously, the issue of comparability is of significance, and, in Gerner, the district court specifically did not address the issue of comparability raised by the defense. In the past several months, the circuits have written extensively on comparability, and those decisions should be parsed by both sides in determining whether the departing employee is comparing apples and apples or apples and oranges. See, e.g. Luna v. Corrections Corp. of Am., No. 11-10483, 2012 U.S. App. LEXIS 5516 (5th Cir. March 16, 2012); Bobo v. United Parcel Service, Inc., 665 F.3d 741 (6th Cir. 2012); Coleman v. Donahoe, 667 F.3d 835 (7th Cir. 2012); Horn v. United Parcel Services, Inc., 433 Fed. Appx. 788 (11th Cir. 2011); Lee Kraftchick, Recent Developments in the Use of Summary Judgment to Resolve Employment Discrimination Cases, The Florida Bar Journal, Volume LXXVIII, No. 3.

Please be sure to visit our website at http://RobertBFitzpatrick.com.