Littler Lightbulb – July Employment Appellate Roundup

Fifth Circuit Applies the Highly Compensated Employee (HCE) Exemption Holding Oil Well Drilling Specialists Exempt from Overtime

In Gilchrist v. Schlumberger Tech. Corp., __ 4th __ (5th Cir. July 14, 2025), the Fifth Circuit examined the highly compensated employee (HCE) exemption from the FLSA’s overtime requirements. The plaintiffs, who sued their employer for failure to pay overtime, were Measurements While Drilling Field Specialists (MWDs), who provided critical data to their employer’s clients who drilled oil wells. The employer argued that, as HCEs who made over $200,000 annually, the plaintiffs were exempt under the FLSA. The district court found that, although the employees satisfied the compensation requirement under the HCE exemption, they did not meet the requirement that they “customarily and regularly perform any one or more of the exempt duties or responsibilities of an executive, administrative[,] or professional employee.” 

On appeal, the Fifth Circuit reversed. It noted that “[t]he applicable regulation states that the ‘high level of compensation’ that the HCE exemption requires is itself ‘a strong indicator of an employee’s exempt status, thus eliminating the need for a detailed analysis of the employee’s job duties.’” Describing the employees’ duties, the Fifth Circuit found that the MWDs “customarily and regularly” performed quality control functions, constantly monitoring data throughout their 12-hour shifts, checking the quality of the data for 15-50 surveys that they took every hour, and reviewing and editing data at the end of every job. Consequently, the court stated, “the MWDs acted as advisers to [the employer’s] clients and performed ‘work directly related to the management or general business operations of [their] employer’s customers’” and were therefore exempt from the FLSA’s overtime requirements under the HCE exemption.

Seventh Circuit Upholds Summary Judgment for Employer in Retaliation Claim

The plaintiff in Johnson v. Accenture LLP, __ 4th __ (7th Cir. July 2, 2025), worked for a company that provides clients with project-based services and required employees to apply internally to be staffed on a project. Employees not on a project were considered “benched” and received their full salary but were expected to apply to work on new projects. Company guidelines provided for termination of employees after eight weeks on the bench without client work. 

In this case, the plaintiff was terminated from employment after spending 10 weeks on the bench. He filed suit claiming he was retaliated against for contacting human resources about alleged racial discrimination and a hostile work environment, which the company’s human resources department had thoroughly investigated and found meritless. Reviewing the facts, the Seventh Circuit found there was no direct or circumstantial evidence linking the plaintiff’s complaint to human resources with any of the adverse employment actions he asserted in his lawsuit. In fact, the court found, the plaintiff’s time on the bench was due to his own misconduct, including leaving a project abruptly to fly home without notifying the project manager, reluctance to cooperate with the team, producing work product “[f]ar below [an] acceptable level of quality,” and failing to read his email carefully. Accordingly, the Seventh Circuit upheld summary judgment for the employer. 

Eleventh Circuit Holds First Amendment Inapplicable to Teacher’s Speech in the Classroom

The plaintiff in Wood v. Florida Department of Education, __ 4th __ (11th Cir. July 2, 2025), a transgender high school teacher, sued the school district to enjoin the enforcement of a recently enacted Florida statute that prohibited her from using “Ms.” and the pronouns “she,” “her,” and “hers” in reference to herself during class time. The district court granted the plaintiff a preliminary injunction finding it likely that the law violated the plaintiff’s First Amendment right to free speech.

On appeal, the Eleventh Circuit held that the plaintiff failed to show a substantial likelihood that the statute infringed on her free speech rights and vacated the district court’s order. Analyzing the case, the appellate court applied the Supreme Court’s test for determining an employee’s First Amendment free speech rights. As a first step, the employee must show that they were speaking as a citizen, rather than as a government employee. Noting that the plaintiff in the case challenged the application of the law to speech in the classroom only, the Eleventh Circuit stated that “[w]hen a public-school teacher addresses her students within the four walls of a classroom—whether orally or in writing—she is unquestionably acting ‘pursuant to [her] official duties’” as a government employee. Because the plaintiff’s claim failed the first prong of the Supreme Court’s test for protection of an employee’s First Amendment rights, the court held that the district court misapplied the law and abused its discretion in preliminarily enjoining enforcement of the statute in this case.

Seventh Circuit Finds Guidance Counselor’s Anti-Transgender Rights Speech Not Protected by First Amendment

Another First Amendment free speech claim by a public-school employee, Darlingh v. Maddaleni, __ 4th __ (7th Cir. July 2, 2025), involved an elementary school guidance counselor’s claim that she was fired in retaliation for exercising her First Amendment right to freedom of speech for speaking at an anti-transgender rights rally. In contrast to Wood v. Florida Department of Education, in this case the Seventh Circuit agreed with the district court that the employee spoke as a citizen on a matter of public concern, rather than speaking as a government employee. However, even in these circumstances, the Seventh Circuit stated that the Supreme Court has required balancing the interests of the employee, as a citizen, commenting on issues of public concern, against the interests of the government, as an employer, in performing its public functions.

Applying the factors courts use in the balancing test, the Seventh Circuit looked at the context and manner of the speech, including the plaintiff’s “profligate use of vulgar language…especially because she is a school counselor and explicitly identified herself by reference to her public employment.” The court found the government’s interests in this case were particularly compelling because the plaintiff’s role included counseling students with gender dysphoria or struggling with gender-identity concerns and required “a degree of public trust not found in many other positions of public employment.” Based on these factors, the Seventh Circuit found the school district’s interests as a public employer outweighed the plaintiff’s free-speech rights and upheld the district court’s dismissal of the case.

Sixth Circuit Applies the Ministerial Exception to a Religious School Employee’s Claims of Race and Sex Discrimination

Pulsifer v. Westshore Christian Academy, __ 4th __ (6th Cir. July 9, 2025), involved claims of race and gender discrimination under state and federal laws by the former dean of students and assistant principal at a private elementary school following his termination from employment. In response to the plaintiff’s allegations, the school argued that the ministerial exception, which stands for the principle that the First and Fourteenth Amendments preclude application of state and federal laws governing the employment relationship between a religious institution and certain key employees, applied. 

Based on this principle, the district court granted the school’s motion for summary judgment, and the plaintiff appealed. In assessing the application of the ministerial exception to the plaintiff’s claims the Sixth Circuit noted that it was undisputed that the school’s mission was to provide religious education to its students. Thus, the question on appeal was the role the plaintiff played in furthering the school’s mission. In this regard, the court found that the plaintiff performed several important religious functions, including leading the staff and school board in religious devotions, and implementing and leading two religious youth programs. In response to the plaintiff’s argument that his duties were not exclusively religious and involved other administrative tasks, the Sixth Circuit cited the Supreme Court, stating that “an employee can fall within the ministerial exception even when ‘[m]ost’ of their ‘work [is] secular in nature’” if they also perform religious functions. Accordingly, the court upheld the district court’s decision granting summary judgment to the school.

Fifth Circuit Upholds Dismissal of Plaintiff’s Age Discrimination and §1983 Claims

In Amstutz v. Harris County, __ 4th __ (5th Cir. July 17, 2025), the Fifth Circuit addressed the plaintiff’s claims of age discrimination under the ADEA and 42 U.S.C. §1983 following his termination from employment as a police officer for numerous policy violations, including failure to report an off-duty incident involving the police, misconduct, unlawful or offensive conduct, conduct unbecoming an employee, untruthfulness, and failure to exercise sound judgment. The court upheld the district court’s dismissal of the plaintiff’s age discrimination claims for failure to exhaust his administrative remedies and, most significantly, also dismissed the plaintiff’s claim that his employer violated his constitutional right to due process under §1983. 

“[T]he due process clause is not implicated unless an individual’s property or liberty interests are threatened,” the Fifth Circuit stated. Noting that employment in Texas is generally at-will and that the plaintiff’s employment was at-will, the court quoted prior Fifth Circuit opinions holding that “an employee who is terminable at will generally has no constitutionally protected property interest.” Thus, the court upheld the district court’s finding that the plaintiff failed to “identify any independent source of law from which he derives a property interest in his employment.”

Sixth Circuit Dismisses State Law Claims Against a Retirement Plan Administrator and Grants Summary Judgment on ERISA Claims

When their employer filed for bankruptcy, the plaintiffs in Aldridge v. Regions Bank, No. 24-5603 (6th Cir. July 17, 2025) lost their retirement benefits under the company’s unfunded “top hat” plans designed for high-level managers. They sued the bank that administered the plans asserting state law claims for breach of fiduciary duty, breach of trust, breach of contract, and negligence, and seeking monetary damages for lost benefits under ERISA §1132(a)(3), which provides equitable relief to redress ERISA violations or enforce the terms of the plan. The district court dismissed the state-law claims on the ground that they were preempted by ERISA and granted summary judgment to the bank on the ERISA claim on the grounds that the request for lost benefits did not qualify as the type of “equitable relief” that plan participants may obtain under ERISA. 

On appeal, the Sixth Circuit examined ERISA’s preemption provision and stated that it would undermine ERISA’s exclusive remedial scheme if ERISA plan participants could pursue benefits not just through ERISA but also through “alternative enforcement mechanisms” under state law. Accordingly, the court upheld the dismissal of plaintiff’s state-law claims. As to the plaintiff’s ERISA claim, the Sixth Circuit granted summary judgment to the bank holding that “§1132(a)(3) does not permit plan participants to seek monetary relief from fiduciaries for the losses that they suffer because of the fiduciaries’ breach of their duties.”

Eight Circuit Affirms Summary Judgment for Employer Where Plaintiff Failed to Establish Direct Evidence or an Inference of Sex Discrimination 

After she was not selected for a position as a retail store daytime support manager, the plaintiff in Brady v. Walmart Stores East I, LP, __ 4th __ (8th Cir. July 21, 2025)¹ sued her employer for sex discrimination in violation of Title VII. The district court granted summary judgment for the employer and the plaintiff appealed. 

 First, the Eighth Circuit considered and rejected the plaintiff’s claim that a supervisor’s remark that the male employee selected for the position “was sick” and “had a family to support” was direct evidence of discrimination. The comment, the court stated “was facially and contextually neutral as to sex. On its face, the comment neither related to [the plaintiff] nor ‘to the abilities of female applicants’ to perform in the support manager role.” Next, the Eighth Circuit found that the plaintiff could not create an inference of sex discrimination under the McDonnell Douglas framework because she could not establish that she met the minimum qualifications for the position she sought: “The record is clear that the position to which she applied had specific qualifications that she did not meet.” In contrast, the male employee who was selected for the position, the court found, was qualified for the position because he was already working as a nighttime support manager, which met the specific qualifications required for the position. Based on the plaintiff’s failure to establish either direct evidence of sex discrimination or an inference of unlawful discrimination, the Eighth Circuit affirmed summary judgment for the employer.

Eighth Circuit Affirms Summary Judgment for the Employer in Another Title VII Case

In a similar case, Martinez-Medina v. Rollins, __ 4th __ (8th Cir. July 22, 2025), the Eighth Circuit affirmed summary judgment for the employer on an employee’s claim of disparate treatment, hostile work environment, and retaliation in violation of Title VII based on race, sex, and national origin. In support of her disparate treatment claim, the employee alleged that 1) her supervisor assigned her work previously performed by higher-level employees; 2) he took credit for her work; 3) her performance review, in which she was awarded the highest rating possible, was delayed; and 4) her request for reassignment was not granted. None of the first three acts were adverse employment actions, the court found, because they did not affect “an identifiable term or condition” of the plaintiff’s employment. Her compensation, benefits, vacation times, and working hours were not affected by the alleged actions. As to the plaintiff’s claims regarding her request for reassignment, the court found that her supervisors actively supported the plaintiff’s request and attempted to help her find another suitable position which would have preserved her pay grade, but the plaintiff did not follow through and ultimately withdrew her reassignment request.

The court also found the plaintiff failed to establish a prima facie case of a hostile work environment based on a supervisor’s laughing response to a co-worker’s request for the plaintiff’s help: “Well I guess she could bring you coffee,” and another supervisor’s reference to the plaintiff as an “incompetent woman.” Stating that “[t]he standard for demonstrating a hostile work environment under Title VII is demanding, and does not prohibit all verbal or physical harassment and it is not a general civility code for the American workplace,” the Eighth Circuit held that the plaintiff failed to present sufficient evidence of a hostile work environment. Finally, as to plaintiff’s retaliation claim, the court found no nexus between the plaintiff’s EEO complaints and the actions she alleged.

First Circuit Upholds Dismissal of Reverse Gender Discrimination Claims Based on Conjecture

The plaintiff in Waleyko v. Phelan, __ 4th __ (1st Cir. July 25, 2025), was hired subject to a two-year probationary period. In the last seven months of his probationary period, the plaintiff was investigated and then disciplined for three incidents, including sexual harassment and deletion of certain code files. At the end of the probationary period the plaintiff was given the choice to resign or be terminated, and he chose to resign, following which he filed suit for gender discrimination in violation of Title VII, alleging disparate treatment.

The district court dismissed the complaint, and the plaintiff appealed. In support of his claims the plaintiff described each of the incidents for which he was disciplined and asserted that if he had been female, he would have been treated differently. Examining each of the plaintiff’s claims, the First Circuit found the plaintiff’s assertions were unsupported hypotheses devoid of any factual support or based on situations that were not comparable. Citing several prior First Circuit cases upholding dismissal where the allegations in a complaint were “too meager, vague, or conclusory to remove the possibility of relief from the realm of mere conjecture,” the First Circuit affirmed the district court’s dismissal in this case.