Insights

On April 17, 2024, the Supreme Court handed down a unanimous decision in Muldrow v. City of St. Louis, Missouri, No. 22-193, holding that transferees alleging discrimination under Title VII of the Civil Rights Act of 1964 need only show that a transfer caused harm with respect to an identifiable term or condition of employment.  The Court’s decision upends decades of lower court precedent applying a “significant harm” standard to Title VII discrimination cases.  As a result, plaintiffs claiming discrimination under Title VII will likely more easily advance beyond motions to dismiss or motions for summary judgment. In the wake of the Court’s decisions in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (6-2), No. 20-1199, and Students for Fair Admissions, Inc. v. Univ. of North Carolina (6-3), No. 21-707 (June 29, 2023), Muldrow will also likely continue to reshape how employers conceive of, implement, and communicate workplace Diversity, Equity and Inclusion (“DEI”) efforts.  The decision may be used by future plaintiffs in “reverse” discrimination actions to challenge DEI or affinity programs that provide non-economic benefits to some – but not all – employees.  For example, DEI programs focused on mentoring or access to leadership open only to members of a certain protected class could be challenged under Muldrow by an employee positing that exclusion from such programs clears this new, lower standard of harm. 

On March 5, 2024, a federal judge in Texas struck down a federally-sponsored racial preference extended to minority groups seeking to access capital and government contracts. Nuziard v. Minority Business Development Agency (“Nuziard”). Plaintiffs, who are non-minority business owners, challenged a preference provided by the Minority Business Development Agency (“MBDA”), a bureau of the Department of Commerce, to “socially or economically disadvantaged individual[s],” defined to include African Americans, Hasidic Jews, Hispanic Americans, Native Americans and Pacific Islanders. The court struck down the MBDA’s presumption that such racial minorities are socially disadvantaged, finding the preference violated the Equal Protection Clause.   Nuziard, like the recent decision by a federal court in Tennessee in Ultima Services Corp. v. U.S. Department of Agriculture (“Ultima”), follows the Supreme Court’s decision in Students for Fair Admissions, Inc. v. Pres & Fellows of Harvard College, 600 U.S. 181 (2023) (“SFFA”) and, like Ultima, advances the mission of activist organizations across the country seeking to invalidate race-based presumptions in federally funded and sponsored entitlement programs.  

On January 10, 2024, the U.S. Department of Labor (“DOL”) published its final rule on Employee or Independent Contractor Classification under the Fair Labor Standards Act (“FLSA”). Crowell & Moring previously reported on the proposed rule announced on October 11, 2022. The final rule rescinds the “core factors” independent contractor rule adopted by the Trump administration in 2021 and returns to a “totality of the circumstances” analysis for determining whether a worker is properly classified as an employee or independent contractor. According to the DOL, the new final rule institutes an analysis that better aligns with judicial precedent and the FLSA’s text and purpose. The final rule goes into effect on March 11, 2024.