Can an employee sue for discrimination after being placed on a PIP?

We are about to put an employee on a Performance Improvement Plan. Can they sue us for employment discrimination?

Many employers use Performance Improvement Plans, or “PIPs,” as a way to provide clear guidance and direction to employees. Employees given a PIP still have a job, and typically don’t lose any pay. But can a PIP be the basis for an employment discrimination claim?

Until recently, the answer probably was “no.” Many courts in the U.S. had denied such claims, finding that placement on a PIP did not constitute a “material,” or “substantial” harm to the employee.

But in 2024, the Supreme Court decision in Muldrow v. City of St. Louis concluded that there is no requirement of materiality or substantial harm to advance a discrimination claim under Title VII - rather, only “some harm” need be shown. And for more information on the impact of that decision, refer to our Littler 2 the Point, What is the impact of Muldrow v. City of St. Louis on discrimination claims under Title VII?

Since then, courts have had to grapple with the question – when does a change in the conditions of employment rise to the level of “some harm”?

In one recent case, an employer reorganized its operations, giving an employee new job responsibilities. Later, the employee was given a negative performance review and then placed on a PIP. They resigned a few months later and claimed that their placement on the PIP itself was abusive treatment and constituted age discrimination.

The court reviewed these claims and concluded that the actions by the employer were “all within the normal course of employment” and therefore the employee did not suffer “some harm.” The claims of age discrimination were denied.

Now, it is important to note that cases of this sort are very dependent on the underlying facts. Change those just a little bit and the result could be different.

But the case still provides useful guidance to employers – Performance Improvement Plans, presented in an environment of genuinely trying to communicate expectations and helping an employee to do better on the job – are still a useful tool in managing the workplace.

Finally, before engaging in a PIP, it is a good idea to examine the underlying circumstances and consult with counsel.