In Brandon v. Sage Corp., the Fifth Circuit Court of Appeals affirmed a decision from the Western District of Texas granting summary judgment in favor of a truck driving school. The issue in the case concerned whether the threat of a 50 percent pay cut constituted an adverse employment action sufficient to establish a prima facie case of retaliation under Title VII of the Civil Rights Act of 1964.

Margie Brandon was the director of the San Antonio, Texas campus of a truck driving school operated by Sage Corp. Brandon reported directly to Sage’s president, Gregg Aversa. In 2010, Brandon hired a truck driver, Loretta Eure, who was in the process of transitioning from female to male. 

On March 29, 2011, Sage’s National Project Director, Carmella Campanian, saw Eure through a window and asked, “What is that and who hired that?” Brandon responded that Eure was a qualified instructor. Campanian then explained that Sage did not hire “cross-gender” people and proceeded to reduce Eure’s work hours. When Brandon questioned Campanian’s decision to reduce Eure’s hours, Campanian informed Brandon that her pay would be reduced by 50 percent because she hired Eure.

On March 31, 2011, Brandon attempted to call Aversa to report Campanian’s conduct; however, Aversa was traveling at the time. Without waiting to hear back from Aversa, Brandon sent out a resignation email claiming that she felt threatened by Campanian’s pay cut statement. When Aversa returned to work the following day, he communicated that Campanian did not have the authority to cut Brandon’s pay.

Following her resignation, Brandon filed a charge of discrimination and later filed suit against Sage alleging race discrimination and retaliation. In granting summary judgment for Sage on the retaliation claim, the district court found that the threat to cut Brandon’s pay was not an adverse employment action because “[a]lthough the Fifth Circuit [had] not ruled on whether threatened pay cuts can amount to materially adverse action in the retaliation context, the few courts addressing threats of pay cuts under the materially adverse standard [had] found that they [did] not constitute materially adverse employment action.”

On appeal, the Fifth Circuit affirmed the district court’s decision. In determining whether an adverse action had occurred, the Court of Appeals first cited the applicable test: whether a reasonable employee—the average person in similarly situated circumstances—would have been dissuaded from supporting a discrimination charge as a result of the threat of a pay cut. The court also recognized that it “[did] not reject the possibility that a realistic, drastic pay cut threat might deter someone from supporting a discrimination claim in certain circumstances.” 

However, under these circumstances, the court found that no reasonable jury would find that to be the case. The court observed:

A reasonable employee in Brandon’s position would have been familiar with the company’s chain of command, the company’s grievance process, and who had the last word on final tangible employment decisions.  Therefore, a reasonable high placed employee would not have been dissuaded from engaging in protected activity as a result of threats or actions by someone outside her chain of command and who she knew had no final decision-making authority.  

Since a reasonable employee in a supervisory position would not have been dissuaded by Campanian’s statements, the court held that no adverse employment action had occurred.

Key Takeaways

Following this opinion, it is important to underscore that, in contrast to the Western District opinion and numerous decisions from other federal circuit courts, the Fifth Circuit refrained from universally ruling that a threat alone can never constitute an adverse employment action. Instead, the court issued a narrow holding focusing on the specific facts of the case, including that the plaintiff was in a high-level supervisory position and should have known that the individual who made the threat had no authority to bring it to fruition.

Consequently, while this decision is clearly a win for employers, it is not a home run. Employers in the Fifth Circuit should continue to instruct and train management to refrain from issuing threats regarding pay and related matters to employees because, under the proper circumstances, such threats could potentially support a viable retaliation claim under Title VII.