June 24 was an auspicious day for employers. In a pair of 5-4 decisions, the Supreme Court handed them two significant victories, making harassment and retaliation cases easier to defend.

The high court decided in University of Texas Southwestern Medical Center v. Nassar that employees claiming retaliation must prove the employer’s sole motivation in taking action against them was retaliation for their claim of employer wrongdoing. In Vance v. Ball State University, the majority held that a person must be empowered to take certain employment actions such as hiring and firing to be considered a “supervisor” for purposes of determining employer liability, making it harder for employees to seek legal redress from a business for a co-worker’s harassment. In both cases, the court’s four liberal members filed strongly worded dissents.

Vance could have been a bad decision for employers but it wasn’t,” says Ogletree Deakins Shareholder Michael Fox. “Nassar is a positive because it gives us much better grounds to argue for summary judgment, and generally that is the big battle.”

The Nassar case is especially noteworthy because it breaks an extended string of Supreme Court decisions favoring plaintiffs in retaliation cases, which have become the most common type of employment discrimination actions.

“In the past seven years, the court has had the opportunity to take on a half dozen employment retaliation cases,” says Gregory Keating, a Littler Mendelson shareholder. “In each and every case, the court has adopted the broadest possible standard for establishing retaliation, the most liberal standard for interpreting the statute.” Keating says Nassar represents a “seismic shift” because the majority recognized that those broad standards enabled employees to use retaliation claims as a way to insulate themselves from negative employment actions.

In Vance the court specifically rejected the Equal Employment Opportunity Commission’s (EEOC) definition of “supervisor” as too vague, while in Nassar it rejected the EEOC’s guidance on the motivating-factor test in retaliation cases.

“I see a trend in the courts reining in interpretations by federal agencies that in essence extend their authority,” says Bernard Bobber, a Foley & Lardner partner.

Redefined Standard

The issue in Nassar traces back to 1991, when Congress amended Title VII to provide that allegations of discrimination based on race, color, religion, sex or national origin are established when the plaintiff shows that one of those protected characteristics “was a motivating factor for any employment practice, even though other factors also motivated the practice.” The section governing retaliation claims, however, was left unchanged. It states: “It shall be an unlawful employment practice for an employer to discriminate against any of his employees … because he has opposed” any unlawful employment practice. Whether Congress intended the different standards was the key argument in Nassar.

Dr. Naiel Nassar alleged that the University of Texas Southwestern Medical Center retaliated against him for complaining of alleged harassment. The jury was instructed that retaliation claims, like discrimination claims, require only a showing that retaliation was a motivating factor for the adverse action, rather than the sole reason. It returned a verdict for Nassar, and the 5th Circuit affirmed.

In a 5-4 decision, the Supreme Court reversed. The court rejected the argument that the 1991 amendments governed retaliation claims. The “plain language” of the amendment, it said, applied to “only five of the seven prohibited discriminatory actions”—actions based on the employee’s race, color, religion, sex and national origin—but not to retaliation. The court thus required plaintiffs to show that “but for” their complaints about the employer’s wrongdoing, they would not have suffered the adverse employment action.

“If there are legitimate reasons that support termination, it will be difficult for the plaintiff to claim retaliation,” Keating says. “It will be a lot easier for employers to get summary judgment.” That’s good news for inside counsel who are frustrated by being forced into costly settlements with plaintiffs they felt had been justifiably terminated.

The court rejected the argument that it should defer to a guidance manual published by the EEOC, finding that the agency’s reasons for applying the motivating-factor test were inconsistent with the statute.

Bright-line Decision

In Vance, a black employee at Ball State University who alleged she was the victim of discrimination argued that a “supervisor” has authority to control someone else’s daily activities and evaluate performance.

The Supreme Court majority agreed with the employer that a supervisor has more power than that, saying a supervisor is someone who can take “tangible employment action” against an employee. Referring to its prior decisions, the court described a tangible employment action as “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”

By narrowing the definition of “supervisor,” the high court reduced employers’ potential liability because employers are not responsible for harassment by co-workers unless they have been negligent in allowing the harassment to continue. They have strict liability for the actions of supervisors.

“The decision brings clarity to the threshold issue of who is a supervisor, which helps determine what proof structure will apply,” Bobber says.

In making this ruling, the court rejected as too broad and vague the EEOC’s definition of a supervisor as anyone who directs another employee’s work tasks.

“By giving a bright-line decision, there will be fewer times employers will have to litigate who is a supervisor, which should make cases faster and cheaper,” Fox says.