US Supreme Court and CA Supreme Court Establish Materiality as Standard for What Constitutes Adverse Employment Actions in Retaliation Cases

Within the span of ten months, both the United States Supreme Court and the California Supreme Court have addressed the issue of workplace retaliation. Last August, the California Supreme Court decided Yanowitz v. L’Oreal USA, Inc. (2005) 36 Cal.4th 1028. Ten months later the United States Supreme Court decided Burlington Northern v. White (2006) 2006 WL 1698953. As set forth below, both cases demonstrate the complexity of retaliation claims and the need for employers to take preventative measures to minimize their exposure to retaliation claims.

Under both California and federal law, retaliation is generally defined as an "adverse employment action" that is taken against an employee because the employee engaged in a "protected activity." In California, retaliation is prohibited by multiple statutes including the California Fair Employment and Housing Act ("FEHA"), Government Code §§ 12900, et. seq. Under federal law, retaliation claims may be brought pursuant to Title VII of the Civil Rights Act of 1964, 29 U.S.C. §§ 2000-e, et seq. Other federal laws also prohibit retaliation. For years, both California and federal courts have struggled to articulate a consistent definition of "adverse employment action." For instance, does an employee have to suffer some substantial action, such as demotion or termination in order to state a retaliation a claim? Could an employee base a retaliation claim upon a less severe action such as a poor performance evaluation or a reassignment to another position even if the position paid the same?

In Yanowitz, the California Supreme Court attempted to conclusively define the meaning of "adverse employment action." The case was brought by Elysa Yanowitz, a regional sales manager for L’Oreal. After years of excellent performance, Yanowitz was asked by a male supervisor to fire a sales associate whom the supervisor felt was not sufficiently physically attractive. After Yanowitz refused to fire the sales associate, she suffered increasing criticism about her work performance, veiled threats of termination and unwarranted negative performance evaluations which forced her to take a disability leave. Yanowitz filed a retaliation claim against L’Oreal in which she claimed that the company retaliated against her for refusing to fire the female employee.

After determining that Yanowitz had engaged in a "protected activity" by refusing to comply with her supervisor’s demands, the Court considered whether Yanowitz suffered an "adverse employment action." The Court defined an "adverse employment action" as one that materially affects the terms, conditions or privileges of employment. In so holding, the Court rejected Yanowitz’s argument that an "adverse employment action" should be broadly defined to include any action that reasonably would deter an employee from engaging in the protected activity. Though the Court stressed that an employment action must be "material" to support a retaliation claim, the Court cautioned that all retaliation claims are fact specific and must be viewed in light of the unique circumstances of the affected employee as well as the workplace as a whole. The Court also warned that the term "terms, conditions or privileges of employment" must be interpreted broadly so as to provide "generous" protection against retaliation.

Applying this definition of "adverse employment action" to Yanowitz, the Court determined that her retaliation claim raised a triable issue sufficient to withstand summary judgment. The Court stated that L’Oreal’s actions were not mere inconveniences or insignificant changes to Yanowitz’s job. Rather, increasingly severe criticisms and negative performance evaluations were sufficient to state a retaliation claim because the actions potentially affected the terms, conditions and privileges of Yanowitz’s employment.

Nearly ten months later, the United States Supreme Court weighed in with its definition of "adverse employment action" in Burlington Northern. The Burlington case was brought by Sheila White, a forklift operator for Burlington Northern & Santa Fe Railway Co. Shortly after she was hired, White complained to Burlington officials that her immediate supervisor made derogatory comments about her gender. Shortly after White complained, Burlington informed her that it was removing her from her forklift duties and reassigning her to a laborer position because a "more senior man" should have the "less arduous" and "cleaner job" of forklift operator. After her reassignment, White was suspended for 37 days without pay for allegedly insubordinate conduct. Following an investigation, White was cleared of any wrongdoing and reinstated with full back pay. White brought a claim for retaliation against Burlington on the grounds that she was reassigned to a less desirable position and suspended in retaliation for complaining about her supervisor’s conduct.

In addressing whether White had suffered an "adverse employment action," the Court noted that federal courts have been deeply divided over the definition of "adverse employment action" for years. Some federal courts held that only "ultimate employment decisions" such as demotion or discharge can be the basis for a retaliation claim. On the other end of the spectrum, other courts held that an adverse employment action is any action that is reasonably likely to deter the charging party or others from engaging in a protected activity. Another group of federal courts treaded a middle path and held that an adverse employment action must materially affect the terms and conditions of employment; the position adopted by the California Supreme Court in L’Oreal.

The United States Supreme Court held that an adverse employment action must be an action that is "materially adverse," or something that might have "dissuaded a reasonable worker from making or supporting a charge of discrimination." Consistent with L’Oreal, the Supreme Court stressed that the employer’s action must be material and not mere petty slights or minor annoyances. However, as in L’Oreal, the Supreme Court stressed that the issue of whether an employer’s act is material depends on all the relevant circumstances and should be viewed from the plaintiff’s perspective. For example, a scheduling change may not have any material effect on most workers, though it may have a profound effect on a young mother with small children. Accordingly, the Supreme Court made clear that its definition of "materially adverse" is an elastic one that cannot be defined specifically.

Applying this standard to the facts, the Court determined that White’s reassignment to the laborer position was sufficiently "materially adverse" because she was forced to perform more arduous and dirtier duties. The Court determined that White’s reassignment could have reasonably dissuaded other workers from making or supporting a harassment complaint. The Court also remarked that while a reassignment of job duties is not automatically actionable, the question of whether reassignment is adverse must be judged from the point of view of the plaintiff in light of "all the circumstances." In addition, the Court determined that White’s 37-day suspension was materially adverse. Though White was eventually reinstated with full back pay, the Court stressed that her loss of compensation for 37 days was sufficiently adverse.

The Yanowitz and Burlington cases demonstrate that all employers must exercise caution when taking any personnel actions against employees who have engaged in some type of protected activity. Though only "material" adverse actions can support a retaliation claim, the definition of "material" constantly fluctuates depending upon a myriad of circumstances and situations. The following steps can be utilized in protecting against retaliation claims:

• Review all personnel actions that can conceivably be considered materially adverse (poor performance evaluations, reassignments, discipline, reprimands) and be able to articulate legitimate and non-discriminatory reasons for the action.
• Train supervisors to properly document legitimate grounds for all personnel actions.
• Aggressively train supervisors to not engage in retaliation and to vigilantly supervise the workforce to ensure that retaliation is not occurring.
• Update policies to emphasize that retaliation will not be tolerated and could result in termination.
• Provide a written complaint procedure to allow employees to effectively complain about retaliation and conduct an effective and swift investigation of all retaliation complaints.
• Future cases will likely further articulate and more specifically define the standards set forth in Yanowitz and Burlington. In the meantime, retaliation claims are increasingly prevalent and will likely become even more so in the future.