The Supreme Court is poised to drop another DEI shoe next year

In its June 2023 decision Students for Fair Admissions v. Harvard University (SFFA), the United States Supreme Court effectively prohibited the affirmative use of race as a “plus” factor in student admissions by both private and public academic institutions under Title VII and the Equal Protection Clause, respectively.

As a legal matter, the Supreme Court decision does not change the law relative to workplace diversity, equity, and inclusion (DEI). Both prior and subsequent to the decision, it has been unlawful for employers to consider race, gender, or another Title VII characteristic as a “plus” factor even where the goal is to increase diversity, although there are exceptions to this.   

However, there is another case pending before the Supreme Court that may restrict further what employers lawfully can do to increase diversity. Before discussing the case, we need to provide some legal background.

Title VII makes it illegal to, among other things, “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.” The question becomes what are terms, conditions, and privileges of employment?

Courts have long read into Title VII’s prohibition on discrimination a requirement that the employee asserting a claim show that he or she experienced an “adverse employment action.” That term does not appear in the statute and is entirely a creation of the courts.

And, what is an “adverse employment action?” It depends on what federal circuit you are in and what that circuit’s court of appeals has most recently said on the subject.

Over the years, courts have established their own idiosyncratic standards for how courts should make this determination. For example, in the 2nd Circuit, an adverse employment action is one that results in a “materially adverse change” to an employee’s terms, conditions, or privileges of employment. In the 3rd Circuit, the change must be “serious and tangible.” In the 7th Circuit there must be a “quantitative or qualitative change.” And in the 9th Circuit, a “material change” is sufficient.

These standards serve to screen out claims based on minor slights and annoyances that employees may experience at work.

Lately, however, the courts have begun reexamining the plain text of Title VII and, in some cases, rejecting their own judicially created tests. In just the last three years, the 6th, D.C. and 5th Circuits have modified their standards to eliminate those extratextual requirements.

In 2021, the 6th Circuit called into question prior case law requiring that an employment action be “materially adverse” to qualify as illegally discriminatory under Title VII.

In 2022, the D.C. Circuit did away with its requirement that an employee show “objectively tangible harm” resulting from alleged discrimination.

Most recently, in an August 2023 decision, the 5th Circuit overruled decades-old precedent requiring that any alleged adverse employment action be an “ultimate employment decision” such as hiring, firing, or promotion.

The rationale for these decisions is that Title VII, by its terms, does not require any additional showing beyond discrimination “with respect to . . . compensation, terms, conditions, or privileges of employment.”

The day after the Supreme Court issued its ruling in the SFFA case, it granted certiorari in a case from the 8th Circuit, Muldrow v. City of St. Louis. In Muldrow, the 8th Circuit held that a police officer’s transfer to another division, with no change to pay, rank, or status, was not an adverse employment action. Although the transfer altered some of the officer’s responsibilities and her schedule, the court reasoned it did not result in a “tangible change in working conditions that produces a material employment disadvantage,” as required by that circuit’s precedent.