In order to prove a violation of Title VII, plaintiffs must demonstrate that they suffered an "adverse employment action," meaning some tangible negative impact on the terms and conditions of their employment. Last week, the Fourth Circuit Court of Appeals (which includes North Carolina and South Carolina) concluded that allegations of disparate severance offers constitute an adverse employment action under Title VII.

In Gerner v. County of Chesterfield, the plaintiff's job was eliminated as the result of a reorganization. She was offered three months' severance, but refused the offer, instead contending that similarly situated male employees had received substantially larger payments when terminated by the County. The County contended that this allegation did not constitute an adverse employment action for two reasons: First, the severance was discretionary, and not part of a contractual entitlement; and second, the plaintiff's employment had already been terminated when the alleged adverse act occurred.

The Fourth Circuit rejected both of these arguments, remanding the case for further proceedings. Title VII requires that equal benefits be offered to persons in protected classifications, regardless of any underlying contractual right to such benefits. Second, the severance offer was made before the plaintiff's employment actually ended. Regardless, Title VII prohibits employers from taking adverse employment action based on sex against former as well as current employees.

While past severance offers generally do not create binding contractual obligations to provide the same benefits in future situations, employers should be ready to explain the business reasons for any differences. Failure to articulate such non-discriminatory reasons leaves the employer open to allegations that the differences are based on bias against protected individuals