Joshua C. Hausman, Esquire
A Performance Improvement Plan, or “PIP”, can be an invaluable tool for employers. Properly constructed, a PIP reminds an underperforming employee of management’s expectations and sets definable and measurable goals for the employee to meet. If all goes well, deficiencies are corrected and performance is improved. If, however, expectations are not met, that a PIP was implemented in the first place demonstrates management’s reasonableness and can serve as important evidence in defense of a claim that later discipline was arbitrary, unfounded, or unlawfully discriminatory (all of this also coming with the caveat that the PIP was correctly and properly designed). However, does the act of placing an employee on a PIP in of itself constitute actionable discrimination? This was the question recently addressed by the First Circuit Court of Appeals.
The plaintiff (“Walsh”) in Walsh v. HNTB Corporation, No. 24-1499 (1st Cir. Mar. 13, 2026), worked as an information technology (“IT”) employee for HNTB for many years. In August of 2019, Walsh was placed on a three (3) month PIP, which she completed. She resigned ten (10) months later. Walsh then sued HNTB, claiming in part that her placement on the PIP constituted age discrimination. In December of 2023, the district court granted summary judgment in HNTB’s favor and dismissed Walsh’s complaint. The court held that the PIP had only a minor impact on Walsh’s employment and thus could not constitute an “adverse employment action” necessary to support her age discrimination complaint. Walsh appealed.
In 2024, during the pendency of Walsh’s appeal, the United States Supreme Court issued its decision in the case of Muldrow v. City of St. Louis, Missouri, 144 S.Ct. 967 (U.S. 2024). In that case, a female plainclothes police officer had sued the City under Title VII of the Civil Rights Act of 1964, alleging that she had been removed from her prior supervisory assignment, and had been transferred to a less prestigious assignment, because of her sex. Importantly, the reassignment did not impact her rank or her pay, and she did not lose her job. Initially, her claims were dismissed by the district court, and the Eighth Circuit Court of Appeals affirmed on appeal, on the basis that the alleged harms were not material enough to have been actionable. The Supreme Court, however, reversed, emphasizing that nothing in Title VII required an elevated threshold of harm to support a discrimination claim. Instead, an employee needed to show only that they incurred “some harm respecting an identifiable term or condition of employment” such that they were left “worse off” regarding any employment term or condition, regardless of its severity. The Court’s decision essentially lowered the standard for what could constitute actionable discrimination under federal law.
On appeal, Walsh argued that her placement on the PIP was a per se adverse employment action post-Muldrow. The First Circuit did not agree. While acknowledging the new, lower standard under Muldrow, the Court explained that it was still necessary to evaluate a PIP on a case-by-case basis to assess any negative impact on terms or conditions of employment. A PIP could, for example, do nothing more than warn an employee about performance deficiencies and provide guidance on improvement. Alternatively, a PIP could change job responsibilities, change the terms of employment, or deprive an employee of advancement opportunities. In these cases, “a PIP may serve as an adverse employment action.” The First Circuit emphasized that post-Muldrow “there is no one-size-fits-all answer for whether a PIP constitutes an adverse employment action. Rather, the inquiry is fact-intensive and PIP-specific.”
The Court evaluated the details of Walsh’s PIP and found that it did not constitute an adverse employment action based on several factors. First, the PIP’s stated purpose was to correct Walsh’s unsatisfactory performance. Second, the PIP identified several areas of deficiency and provided a list of ways to improve those deficiencies. Third, the PIP provided Walsh with several advisory statements on what she should do to improve. It did not assign her more duties, alter her title or compensation, or limit advancement or transfer opportunities. The PIP’s reference to the possibility of termination was not evidence of changed conditions where she was an at-will employment at all relevant times. On the whole, the PIP was taken by the Court as “documented counseling,” but not as an adverse employment action.
While the Third Circuit has not yet ruled on whether a PIP can constitute an actionable basis for a discrimination claim post-Muldrow, the First Circuit’s decision is welcome news for employers utilizing these important tools. The decision, however, is also a cautionary tale because it provides yet another reason to ensure that a PIP is properly constructed, otherwise, an employer may only be compounding the liability problem.
Takeaways:
- Properly designed, PIPs provide a “roadmap” to improving an underperforming employee’s performance. If performance does not ultimately improve, PIPs demonstrate the employer’s remedial efforts and are an important line of defense in any challenge or discrimination claim.
- After the Muldrow decision, it is not necessary for a plaintiff to show a significant or material adverse change in employment conditions to state a discrimination claim.
- Despite this lesser liability standard, the First Circuit Court of Appeal’s decision rejected the suggestion that placement on a PIP was a per se adverse employment action. Under the Court’s analysis, a PIP will be evaluated on a case-by-case basis for adverse impact.
- PIPs that adversely impact terms or conditions of employment—to any degree—may form the basis for an actionable claim of discrimination, while PIPs that are purely corrective are less likely to do so under the First Circuit’s analysis.
Bottom Line:
Post-Muldrow, it is particularly important to ensure that PIPs are designed appropriately, considering the desired objectives. A PIP that negatively impacts the terms or conditions of employment to any degree may be self-defeating in that the effort itself could form the basis for a later discrimination claim. Campbell Durrant attorneys are experienced in these matters and can assist your organization with designing proper and effective PIPs that reduce this exposure.
