Issues in Employment Law

December 2002

For purposes of Title VII liability, the standard for what constitutes a material adverse employment action is measured differently in different courts.

Generally, a material adverse action includes termination or demotion characterized by wage reduction, less distinguished title, material loss of benefits or significantly diminished material responsibilities. "[O]ther indices unique to a particular situation" can also constitute a material adverse action, but there is no bright line test as to what qualifies for this category; these are determined on a case-by-case basis. Employers need to be cautious as to what actions are taken against their employees, especially when the timing of the actions can suggest they are retaliatory. Please consult with us regarding what actions may be considered materially adverse given the employer's or employee's particular situation to protect yourself from liability.

In White v. Burlington Northern (Nos. 00-6780, 01-5024), the Sixth Circuit Court of Appeals stated that a job reassignment or lateral job transfer without pay or work hour changes do not generally constitute adverse employment decisions. The fact that the plaintiff's lateral job transfer resulted in more physically demanding work did not in of itself make the action materially adverse. The plaintiff was temporarily suspended for a 37-day period over the Christmas holiday, but was subsequently reinstated and awarded back pay, benefits and overtime. The court held that the fact the suspension occurred over the Christmas holiday was not a unique enough situation to qualify as materially adverse. Furthermore, the employment decision was not an "ultimate" one because the plaintiff was reinstated and made whole. However, each court will make its own case-by -case determination as to what situations are so unique as to be materially adverse.

Work, defined by the Supreme Court as any time "controlled or required by the employer" for the employer's primary benefit, in excess of 40 hours in a week must be compensated as overtime under the Fair Labor Standards Act. Employer-sponsored lectures, meetings and training programs generally qualify as compensable work.

The Portal-to-Portal Act excludes from mandatory compensation activities that are "preliminary to or postliminary to the said principal activity." Attendance to lectures, training programs and similar functions are not compensable if all of the four criteria are met: (1) they occur outside regular working hours, (2) they are voluntary, (3) they are not directly related to the job, and (4) the employee does not perform any productive work. Attendance is not considered "voluntary" if it required by the employer or if the employee believes his job would be adversely affected by nonattendance. Training furnished to potential employees is considered "voluntary." Please consult us with any questions regarding the four criteria.

In Chao v. Tradesmen Int'l, Inc. (No. 00-4434), the employer required applicants to attend a safety training course to qualify for employment. The employer allowed employees to complete the course after accepting the job. The Sixth Circuit Court of Appeals held that this training session was not compensable and did not require overtime pay, because the training was a precondition for employment communicated to the employee before giving him the job. However, employers allowing employees to complete "voluntary" activities post-hire must inform the employee that the activities are not compensated before hiring them. If this communication is communicated after the employee is hired, the training becomes "involuntary" and thus statutorily compensable.