A Notice of Termination Is an Adverse Action, Even If the Employee Is Retained

The U.S. Court of Appeals for the Third Circuit joined its sister Circuits in finding that an employee has experienced an adverse employment action when they receive a notice of termination, even if they ultimately maintain their employment with the employer.

In Fowler v. AT&T, Inc., the employee was placed on “surplus” status (company-speak for position elimination) as part of a workforce reduction. Those on surplus status may elect either immediate termination with a severance or a sixty day period in which to look for other jobs within the company. The employee elected the second and was offered another position within the company. She was subsequently selected for surplus again. This time she was not given another job offer, and her employment was terminated. She sued under both the Americans with Disabilities Act (as she was disabled) and the Age Discrimination in Employment Act (age 60).

In order to assert a discrimination claim under federal antidiscrimination laws, including the ADA and ADEA, a plaintiff must show, among other things, that they were subjected to an adverse employment action. In this case, the trial court dismissed the employee’s claim as to the first surplus selection, on the grounds that she did not suffer any adverse action since she remained employed.

The Third Circuit disagreed. It noted that the employee’s selection for surplus altered the terms and conditions of her employment, as her employment became conditional upon receipt of the notice. Thus, the Third Circuit held that “a notice of termination … is an adverse employment action even if an employee is given a window of time—small or large—before her actual discharge. Such a notice is adverse without regard to whether the employee is permitted to apply for other positions within the company, or even if she ultimately succeeds in finding another position.” In so holding, the Third Circuit joined the other Circuits to have considered the issue (D.C., Second and Tenth).

Thus, employers should be aware that employees who are selected for layoff, even if they end up continuing to work for the company, may still assert a discrimination claim based on their selection for layoff.