Unequal severance packages are adverse employment actions.

Gerner v. County of Chesterfield, Va., 4th Cir., No. 11-1218 (March 16, 2012)

Unequal severance packages can constitute violations of Title VII of the Civil Rights Act of 1964, the 4th U.S. Circuit Court of Appeals decided, ruling that even though severance packages are voluntary, noncontractual benefits, employers may not offer them to employees on a discriminatory basis.

Karla Gerner had worked for Chesterfield County, Va., for more than 25 years when county officials informed her that the county was eliminating her position as director of human resources management. Officials asked her to sign a severance agreement, which offered her three months' pay and health benefits in exchange for her voluntary resignation and waiver of any cause of action against the county. Gerner declined the offer and was terminated without any severance benefits.

Gerner filed suit against the county, alleging disparate treatment on the basis of sex in violation of Title VII. She claimed that the county did not offer her the same "sweetheart" severance package that it offered her male counterparts when the county sought to terminate their employment.

The district court dismissed Gerner's claim of discrimination because "the terms and conditions nter of a severance package do not constitute an actionable adverse employment action." The a district court held that an employment benefit must be a contractual right for its denial ex or any to provide a basis for a Title VII claim.

On appeal, the 4th Circuit reversed the action for district court's dismissal of Gerner's complaint and held that the district court erred in holding that a less favorable severance package could not serve as a basis for a Title VII claim. The court held that severance packages are "part and parcel of the employment relationship," and the fact that employers are under no obligation to furnish severance packages does not permit offering such packages on a discriminatory basis.

Professional Pointer

If an employee can show that he or she was offered a less-favorable severance package on the basis of race, sex or any other protected category, the employer could face an action for unlawful discrimination.

By Emily G. Camastra, an attorney with Swerdlow Florence Sanchez Swerdlow & Wimmer, the Worklaw Network member firm in Beverly Hills, Calif.