Performance Improvement Plans Examined by Appeals Court

The Third Circuit Court of Appeals recently ruled, in Reynolds v. Dep’t of Army, that merely placing an employee on a Performance Improvement Plan (frequently called “PIPs”), is not enough to constitute an “adverse employment action” under anti-discrimination laws. This pro-employer ruling requires employees in New Jersey to provide additional evidence in order to prove their discrimination case against their employer.

The plaintiff in this case was an employee of the United States Army who received a poor evaluation from his supervisor. He was subsequently placed on a PIP. Under the PIP, the employee was given 90 days to improve his performance or face the possibility of termination. A few years later, the employee, who was approximately 55 years old, filed a lawsuit against the Army alleging he was discriminated against based on his age and had faced retaliation. The Army tried to dismiss the lawsuit on the basis that the employee could not prove that he suffered an adverse employment action as a result of the alleged discrimination. The District Court agreed with the employer and determined that merely getting placed on a PIP, absent any other action taken against the employee, does not constitute an adverse employment action.

On appeal, the Third Circuit affirmed this ruling. The Court noted that, for policy reasons, allowing PIPs alone to show adverse employment action would result in “more naked claims of discrimination and greater frustration for employers seeking to improve employees’ performance.”

Proving an “adverse employment action” is crucial to a discrimination case. If there is no “harm,” there can be no “foul.” Frequently, employees rely on being placed on a PIP as evidence of an adverse employment action. However, in light of Reynolds, at least in federal court, an employee will also need to show that additional action was taken against them, such as changes to pay, benefits, or employment status.

However, employees should not be discouraged if they believe they do not have enough evidence to show they have faced adverse employment action due to being members of a protected class, such as age, gender, race, or sexual orientation. Our firm frequently encounters employees who receive PIPs, and an expert’s perspective can catch signs of other adverse employment actions as well. If you have received a PIP and believe you are being discriminated against due to membership in a protected class, you should consult with an employment law attorney. While Reynolds states that PIPs alone cannot show an adverse employment action, PIPs combined with other factors are still actionable.