A plaintiff in an employment discrimination case must show: (1) he or she is a member of a protected class, (2) he or she suffered from an adverse employment action, and (3) there is a causal connection between the adverse employment action and his or her membership in a protected class. An adverse employment action is defined as a “significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.” Traditional examples of adverse employment actions are demotions or terminations.
In Reynolds v. Dep’t of the Army, 2011 WL 2938101 (3rd Cir. July 22, 2011), the Third Circuit (which covers Delaware, New Jersey, Pennsylvania and the U.S. Virgin islands) ruled that a performance improvement plan (PIP) does not constitute an adverse employment action. The employer in Reynolds gave the plaintiff employee ninety (90) days to improve his poor job performance, or face demotion, reassignment, or termination. The plaintiff took early retirement shortly thereafter.
In holding that a PIP does not constitute an adverse employment action, the court noted that unlike a demotion or termination, a PIP alone does not require a change in pay, benefits, or employment status. Rather, a PIP is an opportunity to improve an employee’s pre-existing job duties. To make a PIP an adverse employment action would frustrate employers’ attempts to improve employee job performance.
However, employers beware — while the Reynolds case may seem like a big win for employers, an adverse employment action may still occur where a PIP is accompanied by a change in employment status, such as a decrease in pay. In other words, the act of putting a poor-performing employee on a PIP does not, in and of itself, shield an employer from liability under anti-discrimination laws.