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Paid Suspension is not an Adverse Employment Action in Title VII Discrimination Claims

As Published in the November, 2015 Issue of the PELRAS Newsletter

Published on: Mon 8th Aug, 2016 By: Joseph M. Motto

A plaintiff must suffer an "adverse employment action" in order to state a prima facie case of discrimination under Title VII of the Civil Rights Act of 1964. "Adverse employment actions" include, among others actions, terminations, suspension, demotions, refusal to hire, failure to promote, etc. In Jones v. Southeastern Pennsylvania Transp. Auth. ("SEPTA"), 796 F.3d 323 (3d Cir. 2015), the United States Court of Appeals for the Third Circuit recently joined six of its federal sister courts in holding that a paid suspension does not constitute an adverse employment action for purposes of discrimination claims under Title VII.

Underlying Jones v. SEPTA, Jones worked as an administrative assistant from 2001 to 2010. As an hourly employee, Jones’ time reports were generated based on timesheets she submitted to her supervisor, Alfred Outlaw, for his approval.  In the course of preparing Jones’ annual performance review for 2010, Outlaw discovered discrepancies between the official records of Jones’ hours and his personal records of her absences. On December 1, 2010, Outlaw suspended Jones with pay pending an investigation into possible fraud related to her timesheets and false reporting of her time. Jones contacted SEPTA’s Equal Employment Opportunity Office the next day and complained—for the first time—that from 2001 through 2010, Outlaw harassed her by asking about her deceased husband, making unwelcome sexual comments, looking down her blouse, and assigning her work related to his personal business. Jones alleged her suspension was in retaliation for opposing Outlaw’s improper conduct.

SEPTA terminated Jones on February 22 after conducting a thorough investigation of her time reports which revealed that Jones had engaged in an elaborate scheme to defraud SEPTA of roughly $6,874. Jones subsequently initiated legal action against SEPTA in response. Jones filed a complaint in the United States District Court for the Eastern District of Pennsylvania alleging discrimination and retaliation under Title VII and corresponding state-law claims under the Pennsylvania Human Relations Act ("PHRA"). She also included claims based on the Equal Protection Clause of the United States Constitution and the Family and Medical Leave Act ("FMLA"), as well as a common law wrongful termination claim. 

At the district court level, SEPTA filed a motion for summary judgment arguing that Jones’ paid suspension was not an adverse employment action and therefore was not actionable under Title VII (or the PHRA, its state law counterpart). The district court agreed and granted summary judgment in favor of SEPTA. Jones then appealed to the Third Circuit and asked the court to consider whether a paid suspension constitutes a cognizable adverse employment action under Title VII.

Upon review, the Third Circuit decided to follow the Second, Fourth, Fifth, Sixth, Eighth, and Ninth Circuits and held that Jones’ paid suspension pending investigation into her time reports was not an adverse employment action for purposes of discrimination claims under Title VII.  The court explained that an adverse employment action is ordinarily "an action by an employer that is serious and tangible enough to alter an employee’s compensation, terms, conditions, or privileges of employment."  Moreover, while Title VII explicitly prohibits discrimination in the hiring, firing, compensation, and terms and conditions of employment, a "paid suspension is neither a refusal to hire nor a termination, and by design it does not change compensation." The court concluded that Jones did not suffer an employment action when SEPTA suspended her with pay. As for Jones’ claim that the decision to terminate her employment was the result of unlawful discrimination, the court concluded that there was no evidence linking that decision, which was the natural result of SEPTA’s investigation into allegations of time sheet fraud, to unlawful discrimination. 

Importantly, the court declined to consider whether a paid suspension could constitute an adverse employment action under Title VII in the context of retaliation claims, which are distinct from discrimination claims. Therefore, no bright line rule yet exists regarding whether a Plaintiff can successfully assert a paid suspension as a basis for a retaliation claim.