HR Management & Compliance

Where’s the Harm? Court Splits on Title VII Liability for Lateral Transfers

Recently, the influential U.S. Circuit Court of Appeals for the District of Columbia. Circuit ruled that denial of a lateral transfer request based on protected status is actionable under Title VII of the Civil Rights Act of 1964 without proving additional harm, such as a change in pay or benefits. Though circuit courts are split on this issue, employees will likely pursue the theory of liability across the country. Read on to learn about this developing area of the law and what you can do to prevent discrimination claims based on lateral transfers.

Discriminatory Transfers, Hypothetically Speaking

Consider this hypothetical: Sally the Salesperson submits a request to transfer to a sales position in a new location with the same title, salary, benefits, and duties as before. The only difference between her current position and her requested position is the geographic location. The employer denies her request but permits several male employees to transfer to their preferred locations.

Sally sues her employer for discrimination under Title VII for denying her requested transfer based on her sex. Could she have a valid claim for sex discrimination?

Circuit Courts Split

The answer depends on your jurisdiction. The 10th Circuit, which governs employers in Kansas and Oklahoma, has ruled an employer that denies an employee’s request for a lateral transfer isn’t liable if the position the employee requests has the same salary, benefits, and similar duties as the one the employee currently has. In other words, denying a “purely lateral transfer” isn’t a harm covered by Title VII, according to the 10th Circuit. Wheeler v. BNSF Ry. Co., 418 F. App’x 738, 746 (10th Cir., 2011).

Likewise, the 8th Circuit, which governs employers in Arkansas and Missouri, has found a lateral transfer that affected an employee’s location but didn’t change her job title, salary, benefits, or other material aspects of employment wasn’t an actionable adverse action under Title VII. Spears v. Missouri Dept of Corr. & Hum. Res., 210 F.3d 850, 854 (8th Cir., 2000).

But other courts have ruled that denying a lateral transfer based on an employee’s protected status is a harm covered by Title VII because it still affects a term, condition, or privilege of employment, even if the pay and benefits are the same.

D.C. Circuit’s Watershed Ruling

Recently, the D.C. Circuit—which is widely considered to be the “second most important court” after the U.S. Supreme Court—issued a watershed ruling about lateral transfers under Title VII that could influence federal courts across the country. In Chambers v. District of Columbia, the D.C. Circuit ruled that denial of a job transfer request based on protected status is actionable under Title VII without proving any additional harm, such as a change in pay or benefits. Instead, the court reasoned, denial of a request to transfer is, in and of itself, a harm under Title VII. As the court explained:

Refusing an employee’s request for a transfer while granting a similar request to a similarly situated employee is to treat the one employee worse than the other. Like “refus[ing] to hire” or “discharg[ing]” an employee, refusing a request for a transfer deprives the employee of a job opportunity. An employer that does this because of the employee’s “race, color, religion, sex, or national origin” has surely discriminated against the first employee because of a protected characteristic. Chambers v. D.C., 35 F.4th 870, 874 (D.C. Cir., 2022).

The Court even described the denial of a lateral transfer request as the “functional equivalent” of a refusal to hire.

Though the D.C. Circuit’s decision isn’t binding on other circuits, it holds a position of persuasive influence within the federal court system, and it is often ahead of the curve in legal developments. Employees in other jurisdictions will, in time, surely make the same argument—that the denial of a lateral transfer request based on a protected class is discrimination under Title VII, even if the transfer would have yielded the same pay and benefits.

Bottom Line

The fate of Sally the Salesperson’s discrimination claim will depend on the specific facts of her case and the law about lateral transfers in her jurisdiction. You would be prudent, however, to adopt practices now for decisions on whether to approve or deny lateral transfer requests or assignments. By establishing objective criteria for such decisions to ensure equal treatment among similarly situated employees, you can avoid liability for denials of lateral job transfers, including decisions involving jobs with the same pay and benefits. As always, you should regularly train your managers on their Title VII obligations for all hiring, firing, and transferringdecisions.

Sarah Stula is an employment and litigation attorney with the law firm Foulston Siefkin LLP in the Kansas City area. You can reach her at sstula@foulston.com.