The Fourth Circuit recently held that Title VII of the Civil Rights Act of 1964 covers biased severance offers.  It reversed the United States District Court for the Eastern District of Virginia ‘s decision that an employee’s severance offer did not constitute an adverse employment decision because it was not required under her contract and was made after her termination.

In the case at issue, Gerner v. County of Chesterfield, 3:10-cv-00885-HEH (4th Cir. Mar. 16, 2012), the plaintiff asserted that her employer violated Title VII when it offered her a less favorable severance package than those presented to male employees in similar positions.  The district court granted the defendant employer’s motion to dismiss, finding that the plaintiff failed to identify an adverse employment action.  First, it held that severance benefits must be a “contractual entitlement” to be covered by Title VII.  Second, it held that the offer did not constitute an adverse employment decision because the employer made the offer after it terminated the plaintiff’s employment.

The Fourth Circuit decisively reversed.  Severance benefits need not be provided for in an employment contract to be protected by Title VII, the court found.  It looked to the United States Supreme Court’s decision in Hishon v. King & Spalding, 467 U.S. 69 (1984), to affirm that benefits an employer does not have to provide can nonetheless qualify as a privilege of employment under Title VII if they are “part and parcel of the employment relationship.”  In other words, employers cannot unfairly dole out important employment benefits simply because they are not required.

The court also made clear that Title VII applies to potential, current, and former employees.  The court noted that Title VII makes it an unlawful employment action “’to discriminate against any individual’ on the basis of membership in a protected class.”  It also pointed out that limiting adverse employment actions under Title VII to only those involving current employees would be inconsistent with Title VII’s goal of eliminating employment discrimination.