“Terms, Conditions, or Privileges”: Fifth Circuit Applies New Hamilton Standard to Find Potential Discrimination in School District’s Failure to Pay for Superintendent Leadership Academy

As mentioned in our prior post about the Fifth Circuit’s August 2023 opinion in Hamilton v. Dallas County, employees no longer must allege discrimination in an “ultimate employment decision” to state a claim under Title VII. Instead, Hamilton established a new standard more closely tied to the statutory language of Title VII that allows employees to state a viable Title VII discrimination claim based on allegations that they faced discrimination in any “adverse employment decision.” Under Title VII, actionable “adverse employment decisions” include discrimination in hiring, firing, compensation, or in the “terms, conditions, or privileges” of employment.

In light of the new Hamilton standard, questions arose as to what kinds of adverse employment decisions would give rise to actionable Title VII claims. In its post-Hamilton case of Harrison v. Brookhaven School District, 82 F.4th 427, the Fifth Circuit provided some guidance as to what constitutes an actionable “term, condition, or privilege” of employment.

The Fifth Circuit Adopts a New Standard for Discrimination Claims and Allows Suits Based on Workplace Actions that Affect the “Terms, Conditions, and Privileges of Employment”

The Fifth Circuit Court of Appeals has broadened the scope of employment actions that may become grounds for an employment discrimination lawsuit and reversed its longstanding precedent that previously required plaintiffs to show they experienced a discriminatory ultimate employment decision, such as being hired, granted leave, discharged, promoted, or compensation issues. On August 18, 2023, the Fifth Circuit issued an en banc decision in the Felesia Hamilton, et al. v. Dallas County case and adopted a new threshold for discrimination lawsuits. The Fifth Circuit will now allow plaintiffs to sue if they claim that discrimination affected the “terms, conditions, and privileges” of their employment. This is a lower threshold than the prior “ultimate employment decision” standard.

The Fifth Circuit noted that “de minimis workplace trifles” are still insufficient to establish a discrimination claim. The Court, however, declined to give lower courts and employers more guidance on the threshold that will now apply in discrimination lawsuits and suggested the standard will be fine-tuned in future decisions. As is, the Fifth Circuit’s decision may lead to an increased number of employment discrimination lawsuits and make it more difficult for employers to obtain dismissal of claims at early stages of litigation.

The Fifth Circuit Reconsiders What Workplace Actions May Form the Basis of a Discrimination Claim

The Fifth Circuit Court of Appeals could soon broaden the scope of employment actions that may serve as grounds allowing an employee to file a discrimination claim. Currently, Fifth Circuit precedent requires plaintiffs to show they experienced a discriminatory ultimate employment decision, such as being hired, granted leave, discharged, promoted, or compensation issues. Those who claim they suffered other discriminatory conduct that falls short of the “ultimate” action bar cannot pursue a discrimination claim. The Fifth Circuit, however, may be in the process of reconsidering and eliminating that requirement.

Federal law under Title VII and the Age Discrimination in Employment Act (ADEA)—as well as parallel Texas state anti-discrimination law—prohibits employers from discriminating against any person with respect to their compensation or the “terms, conditions, or privileges” of their employment on the basis of the employee’s race, color, religion, sex, age, or national origin. The Fifth Circuit’s decisions—unlike most other federal courts nationwide—have limited the availability of discrimination claims to circumstances when an employee experiences an “adverse employment action” that constitutes an “ultimate employment decision.” In other words, Fifth Circuit precedent strictly defines and limits the types of events that alter the “terms, conditions, or privileges” of employment. The Court has repeatedly held that “ultimate employment decisions” only include events such as hiring, granting leave, discharging, promoting, or compensation. A plaintiff who has not experienced one of these adverse employment actions cannot bring a discrimination claim in Texas federal or state courts.