Is the Size of Your Package a Title VII Violation?

By Robyn Hagan Cain on March 23, 2012 | Last updated on March 21, 2019

It's not enough to give employees equal pay for equal work. According to the Fourth Circuit Court of Appeals, Title VII guarantees equal severance packages as well.

Last week, the Fourth Circuit ruled that a former Chester County, Va. government employee could proceed with her $1.1 million claim against the County for a Title VII violation because her severance package wasn't as ... well-endowed as those of her male counterparts.

Karla Gerner worked for Chester County for over 25 years. Twelve years after she was named the County’s Director of Human Resources Management, Gerner’s position was eliminated.

The County offered Gerner a severance package of three months’ pay and health benefits in exchange for her voluntary resignation and waiver of any cause of action against the company. Gerner declined, so the County terminated her employment without severance pay or benefits.

Gerner sued the County, alleging disparate treatment on the basis of sex in violation of Title VII of the Civil Rights Act. She claimed that the County did not offer her the same “sweetheart” severance package it “offered her similarly situated male counterparts when the County sought to terminate their employment.”

(Sidebar: As the former HR Director for the County, she would know, right? She claims the County’s male employees received six months’ severance.)

The district court dismissed Gerner’s complaint, finding that the “terms and conditions of the severance package do not constitute an actionable adverse employment action” under Title VII. The Fourth Circuit Court of Appeals disagreed.

To establish a prima facie case of gender discrimination, a plaintiff must show membership in a protected class, satisfactory job performance, adverse employment action, and that similarly-situated employees outside the protected class received more favorable treatment.

The district court granted summary judgment for the County, finding that a lesser severance package did not constitute an adverse employment action for two reasons. First, the court held that severance benefits must be a “contractual entitlement” to provide the basis of an adverse employment action under Title VII. Second, the court held that because “the offer of the severance package was made after [Gerner] had been terminated,” it could not constitute an adverse employment action.

The Fourth Circuit Court of Appeals ruled that the district court erred because the Supreme Court has held that the discriminatory denial of a non-contractual employment benefit constitutes an adverse employment action.

The district court’s alternate rationale — that Gerner suffered no adverse employment action because the County fired her before it made its allegedly discriminatory offer — failed because it ignored the well-pleaded factual allegations in Gerner’s complaint, (which a court must accept as true on summary judgment), and because Title VII protects both current and former employees from discriminatory adverse employment actions.

The size of an employee’s severance package does matter. If you want to keep your clients out of court, remind them that they must offer equal pay — even severance pay — for equal work.

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