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Does Denial of a Lateral Transfer Violate Title VII? In Some Cases, Yes, Says D.C. Circuit.

The federal courts in D.C. have long held that denial of a lateral transfer does not violate Title VII for the reason that, unlike where a promotion is denied, there is no adverse employment action when an employee is denied a purely lateral transfer. A panel of the D.C. Circuit recently decided otherwise where the employee proffered evidence that the employer’s discriminatory denial of his lateral transfer request would have an “adverse impact on the employee’s potential for career advancement.”

Samuel Ortiz-Diaz was an investigator in the United States Department of Housing and Urban Development (“HUD”). Ortiz-Diaz observed that one of his HUD supervisors, McCarty, who could exercise significant influence over Ortiz-Diaz’s career advancement opportunities, held a severe bias against minority employees, including Latinx  employees such as Ortiz-Diaz. For that reason, and fearing an adverse impact on his career if he remained employed under McCarty’s supervision, Ortiz-Diaz requested a lateral transfer to work in a different geographic region -- one that was closer to his home and family. McCarty denied his requests without explanation.

Believing he had no other options, Ortiz-Diaz resigned his position three months later in favor of a lower-paying position elsewhere in HUD. He then sued HUD, alleging that HUD’s denial of his lateral transfer request amounted to an adverse action on the basis of his race and national origin. On reconsideration of its August 2016 decision affirming summary judgment for HUD, the D.C. Circuit reversed the grant of summary judgment in its August 2017 decision in Ortiz-Diaz v. United States HUD.

Pointing to the history of Title VII and its primary objective “to achieve equality of employment opportunities and remove barriers that have operated in the past to favor an identifiable group of white employees over other employees,” the court found that Ortiz-Diaz’s allegation fell “within Title VII’s heartland.”

A lateral transfer is not an adverse employment action where it does not result in material changes in the “terms, conditions, or privileges of employment.” 42 U.S.C. § 2000e-2(a). In garden-variety failure-to-transfer cases, courts find that the circumstances giving rise to the potential transfer do not involve allegations of material adversity that would mandate transfer.

But here, the court opined that where the purpose of the transfer would be to escape a racially-biased supervisor who could stunt the employee’s career advancement, such transfer (or denial thereof) would certainly represent a change in the terms, conditions, or privileges of employment. In Ortiz-Diaz’s case, he proffered ample evidence that his transfer denials could be “career-stifling” and not merely inconvenient to him. Ortiz-Diaz’s transfer request was not borne out of a dislike for his supervisor or a preference for the personality style of a supervisor in another region; it resulted from Ortiz-Diaz’s reasonable belief that his supervisor’s anti-Latinx bias would adversely impact his future employment opportunities.

The court noted that its finding is in accord with decisions in the First, Second, and Seventh Circuits.

Employer Takeaway

While this decision only narrowly modifies earlier precedent in the D.C. Circuit, employers should take the time to learn and understand why an employee requests a transfer within an organization. An employee’s transfer request may prompt a key opportunity for an employer to discover and resolve a conflict that, left unchecked, could expose it to liability for discrimination or harassment. More practically, such a transfer request could present the employer with an opportunity to ensure that there are no artificial barriers to its employee’s career development.

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