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Third Circuit Joins Sister Courts in Finding Suspension with Pay is not an “Adverse Employment Action” Within Meaning of Discrimination Laws

In Precia Jones v. SEPTA, the Third Circuit Court of Appeals last week joined six sister courts in finding that a suspension with pay typically does not constitute an “adverse employment action” within the meaning of Title VII and analogous Pennsylvania law.

According to SEPTA, it placed the plaintiff on paid suspension in December 2010 (pending an internal investigation) for submitting fraudulent timesheets and receiving pay for days she did not work.  The plaintiff subsequently raised complaints of sexual harassment and retaliation to SEPTA’s EEO office.  Nearly three months later, SEPTA converted the suspension to unpaid after an extensive investigation confirmed the initial determination that the plaintiff submitted fraudulent timesheets.  SEPTA ultimately discharged her in April 2011, and she filed suit against SEPTA and her supervisor alleging sexual harassment, gender discrimination and retaliation.  The trial court granted summary judgment to SEPTA, with the linchpin of that opinion being the court’s holding that the plaintiff’s initial paid suspension was not an “adverse employment action” within the meaning of the employment discrimination laws.

To make out an employment discrimination claim, a plaintiff must prove that she suffered an “adverse employment action,” which is “an action by an employer that is serious and tangible enough to alter an employee’s compensation, terms, conditions, or privileges of employment.”  Six other courts of appeals (the Second, Fourth, Fifth, Sixth, Eighth and Ninth Circuits) “have unanimously concluded that ‘placing an employee on paid administrative leave where there is no presumption of termination’ is not an adverse employment action under the substantive provision of Title VII.”  The Third Circuit adopted the reasoning of the other circuits:

[W]e think this chorus is on pitch.  A paid suspension pending an investigation of an employee’s alleged wrongdoing does not fall under any of the forms of adverse action mentioned by Title VII’s substantive provision. … A paid suspension is neither a refusal to hire nor a termination, and by design it does not change compensation.  Nor does it effect a “serious and tangible” alteration of the “terms, conditions, or privileges of employment” because “the terms and conditions of employment ordinarily include the possibility that an employee will be subject to an employer’s disciplinary policies in appropriate circumstances.”  We therefore agree with our sister courts that a suspension with pay, “without more,” is not an adverse employment action under the substantive provision of Title VII.

Notably, the Third Circuit specifically declined to consider whether a paid suspension constitutes an adverse action in the retaliation context.  It is generally easier for a plaintiff to show an adverse employment action in a retaliation claim than in a discrimination claim.  Rather, the court affirmed the dismissal of the plaintiff’s retaliation claim based on the lack of a causal link between her complaints of discrimination and her suspension and discharge.

Though the court left some amount of wiggle room for trial courts to veer off course by holding that a paid suspension “typically,” or “without more,” does not constitute an adverse employment action, it is generally a safe bet for employers to insulate themselves from an adverse employment action finding (and consequently a discrimination finding) by placing employees on paid suspension, or paid leave, pending a thorough investigation into suspected misconduct.  As distasteful as it may be to pay an employee suspected of wrongdoing, it may end up saving money in the long run by negating a discrimination claim.

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David Katz