March 31 Tip of the Week

“Adverse Employment Action or Not”

When an employee sues an employer for any type of discrimination, the employee must show that the employer acted in an adverse manner with respect to the employee’s terms and conditions of employment and that the adverse action that was taken was motivated by discriminatory intent.  The United States Supreme Court addressed the issue of what constitutes an adverse action for purposes of stating a valid claim of discrimination.  In Muldrow v. City of St. Louis, 601 U.S. 346 (2024), the court addressed a claim by a female police officer that her lateral transfer constituted an adverse action because it was to a “less prestigious role” – even though the position had the same pay, but different hours and responsibilities.  By allowing the claim to proceed, the Supreme Court rejected a standard that previously required a plaintiff to show a “materially significant disadvantage” to be successful in pursuing a discrimination claim.

The First Circuit Court of Appeals recently applied the new standard set forth in Muldrow to a claim by a plaintiff regarding the issuance of a performance improvement plan in Walsh v. HNTB Corporation, No. 24-1499, 2026 WL 710036.  In Walsh, the First Circuit reviewed an age discrimination claim brought by the plaintiff.  Walsh, an employee who was in her 50s, and another slightly older co-worker were placed on performance improvement plans.  Walsh successfully completed the plan and approximately ten months after the plan was done, Walsh and her co-worker resigned from their employment.  Walsh then sued the employer under the Age Discrimination in Employment Act claiming that the performance improvement plan constituted an adverse employment action and that it was motivated by her age. 

In rejecting Walsh’s claim, the First Circuit noted the decision in Muldrow, but determined that the plaintiff still had an obligation to show that there was some actual change in her terms or conditions of employment in order to successfully pursue a claim of discrimination.  Stating that the determination as to whether a performance improvement plan constituted an actual change in an employee’s terms and conditions of employment is a fact intensive inquiry and specific to each situation, the First Circuit Court of Appeals determined that Walsh’s PIP did not meet that standard.  The court noted that Walsh’s PIP identified performance deficiencies, established improvement expectations, and reserved the right of the employer to terminate her if she did not meet those expectations, but did not change Walsh’s title, pay, job duties, or ability to seek advancement.  The court characterized the PIP as “nothing more than documented counseling.”  In rejecting Walsh’s claim, the court would not rule out the possibility that a different PIP with more strenuous requirements or with a more direct impact on the employee’s position with their employer could establish the required level of adverse action necessary to state a claim of discrimination. 

What does this mean for employers?  First, it acknowledges the usefulness of a properly written and administered performance improvement plan to address an employee’s performance deficiencies.  Second, it is a reminder that employers need to be careful in how they approach the performance improvement process.  Creating PIPs that are impossible to complete successfully or introduce new or different job responsibilities could create a situation that would allow an employee to make an allegation of discrimination.  By the same token, a PIP that strips an employee of certain responsibilities or changes that way that the employee is perceived in their position could also support a claim of discrimination.  mHRcounsel can assist employers in ensuring that they use PIPs as they were intended – to allow employees the opportunity to correct performance deficiencies and to become valued members of the organization.