First Circuit clarifies when a PIP is – and isn’t – an adverse action
To have a valid claim for discrimination or retaliation, a plaintiff must generally show, among other things, that there was an “adverse employment action” based on the plaintiff’s protected characteristic or conduct.
That leads employers, employees, lawyers, and the courts to ask, “What exactly is an ‘adverse employment action’”?
Refusal to hire, demotion, or termination are clearly “adverse.” But what about lesser workplace actions, such as suspension, negative performance reviews, or exclusion from meetings?
In 2024, the U.S. Supreme Court ruled in the case of Muldrow v. St. Louis that these lesser actions can indeed be “adverse employment actions” for purposes of federal discrimination laws. According to the Court, an action is sufficiently “adverse” if the employee experiences “some” harm with respect to the terms and conditions of employment.
The U.S. Court of Appeals for the First Circuit recently considered the application of the Muldrow decision in an age discrimination case where the plaintiff had been issued a Performance Improvement Plan. The decision provides useful guidance on when PIPs are and are not “adverse employment actions.”
Plaintiff Joann Walsh and a “slightly older” co-worker were placed on PIPs in 2019. Ms. Walsh, who was in her 50s at the time, successfully completed the PIP. Approximately 10 months after she had completed the PIP, she and the co-worker resigned. Ms. Walsh sued the employer for age discrimination under the federal Age Discrimination in Employment Act and its Massachusetts equivalent, in addition to asserting other claims. A federal court granted summary judgment to the employer on all claims, and Ms. Walsh appealed the dismissal of her age discrimination claims.
On appeal, the First Circuit agreed with the lower court and found that Ms. Walsh’s PIP was not an “adverse employment action.”
Supreme Court lowered the “adverse employment action” bar but did not eliminate it
Before the 2024 Muldrow decision, many courts required plaintiffs to show that a challenged employment action was “material,” meaning more than a mere inconvenience or minor alteration of job responsibilities. The Supreme Court rejected that standard, holding that an adverse employment action is any event that leaves the employee “worse off” with respect to the “terms or conditions” of employment, regardless of severity.
In Walsh, the First Circuit emphasized that the employee must still identify some actual change to the terms or conditions of employment. In short, not every workplace event that leaves an employee “worse off” in some way is actionable.
Not all PIPs are created equal – or equally affect employment “terms or conditions”
The First Circuit in Walsh declined to adopt any categorical rule about PIPs as “adverse employment actions.” Rather, whether a PIP is an adverse employment action is “fact-intensive and PIP-specific.” The key question is whether the PIP actually altered the terms or conditions of employment, as opposed to being a mere warning of performance deficiencies or a mechanism to help the employee improve performance.
Ms. Walsh’s PIP did not clear that bar: it identified performance deficiencies, set out improvement expectations, and reserved the company’s right to terminate. However, it did not change Ms. Walsh’s title, pay, job duties, or ability to seek advancement. In other words, it was “nothing more than documented counseling.”
The First Circuit noted that a PIP can be an adverse employment action if it imposes new or different job responsibilities, alters the employee’s title or compensation, or limits access to advancement or transfer opportunities. Courts have found PIPs that assigned more burdensome tasks, tarnished employment records, or dampened promotion prospects actually affected the terms and conditions of employment and therefore could form the basis of a discrimination or retaliation claim.
A caution for employers: Keep PIPs in their lane, or be ready to go the distance
The Walsh decision is a reminder that employers may use PIPs for their intended purpose – to give employees a documented, structured opportunity to understand and address performance concerns – without forming the basis of a discrimination claim. A well-crafted PIP should clearly identify the performance deficiencies at issue, set out reasonable and objective metrics by which improvement will be measured, and specify a defined review period.
But if the PIP affects the terms and conditions of employment – for example, by imposing new duties, setting heightened performance metrics, or stripping existing responsibilities – it is likely to be considered an “adverse employment action,” even in the First Circuit. That isn’t to say that this type of PIP is discriminatory in itself (it may very well be justified in the particular circumstances) but only that it will be considered an “adverse employment action” under the federal anti-discrimination laws.
One final note: Any PIP is likely to be viewed by the employee as a first step toward termination. As a result, the employee may engage in legally protected activity while the PIP is in place. Employers should be mindful of the potential for discrimination or retaliation claims to arise while the PIP is active, as well as before and after.
