Recently, the EEOC filed an appeal in EEOC v. AutoZone, Inc. et al., arguing that the lower court erred in dismissing the case against AutoZone Inc. by improperly requiring the EEOC to show that the employee at issue suffered an adverse employment action. AutoZone argued that its decision to transfer the employee was made with the intent to increase sales and customer satisfaction, and that the employee suffered no loss in pay or benefits as a result of its decision.

AutoZone transferred Kevin Stuckey, an African American parts sales manager, from a store with a predominantly Hispanic workforce to a store with a 100% African American workforce. The EEOC alleges that the District Manager over Stuckey’s store told Stuckey the reason for his transfer was to keep the store “predominantly Hispanic” and that Stuckey’s inability to speak Spanish with customers was not considered in the Company’s decision. AutoZone, however, argued that it intended to meet the needs of its customers who primarily spoke Spanish and preferred to interact solely with Hispanic employees. The transfer was not considered a demotion, and did not result in lower pay or benefits for Stuckey.

The district court granted summary judgment for AutoZone, because the EEOC failed to show that Stuckey suffered an adverse employment action as a result of the transfer. The EEOC argued that the provision of Title VII that prohibits segregation on the basis of a protected class does not require the showing of an adverse employment action. Instead, the EEOC argued that the act of segregating employees on the basis of race, in and of itself, is a Title VII violation.

In support of its argument, the EEOC pointed out two distinct provisions of Title VII. The first provision makes it an unlawful employment practice for an employer to discriminate against an individual “with respect to his compensation, terms, conditions, or privileges of employment” because of the individual’s inclusion in a protected group. The second provision makes it unlawful for an employer to “limit, segregate, or classify” employees or applicants on the basis of the protected categories of those applicants or employees. Because the first provision explicitly states that there must be an adverse effect on compensation, terms, conditions, or privileges of employment – while such language is conspicuously absent from the second provision – the EEOC maintains that the second provision does not require the showing of an adverse impact on an individual’s employment.

If the EEOC prevails, employers could be held liable for employment decisions which result in racial or other segregation, even those that conform to the requests or preferences of customers, regardless of whether there is any adverse effect on employees’ pay, benefits or other terms and conditions of employment. When making employment decisions, employers should be mindful to avoid decisions that result in segregation or the appearance of segregation, even where there is no intent to segregate.