When Is a Performance Improvement Plan an “Adverse Employment Action”?
After the U.S. Supreme Court’s Muldrow v. City of St. Louis decision eased the requirement for what qualifies as an “adverse employment action” in discrimination cases, courts have begun to interpret this standard in workplace scenarios. The U.S. Court of Appeals for the First Circuit, which hears appeals from the federal court in New Hampshire, has now weighed in—at least with respect to performance improvement plans. In Walsh v. HNTB Corp., No. 24‑1499 (March 13, 2026), the First Circuit held that a PIP is not automatically an adverse employment action, even under Muldrow’s relaxed framework, and must be assessed individually as to the specific PIP. The decision provides practical guidance on how to structure and administer PIPs in ways that both support legitimate performance management goals and reduce litigation risk for employers.
The Case at a Glance
Joanne Walsh worked for HNTB Corporation for more than 25 years as an IT employee in its Boston office. In 2018, Walsh’s performance evaluations showed she “met expectations” but at the “lowest range,” and her supervisor told her that she was “at risk of not meeting expectations” and being put on a PIP. In August 2019, after documented performance concerns and coworker feedback, HNTB placed Walsh on a three‑month PIP. The PIP identified specific issues for Walsh to address, set measurable goals, and provided a roadmap for her job improvement. Ultimately, Walsh successfully completed this 3-month PIP, was not demoted, did not suffer a pay cut, and largely retained her job responsibilities.
Approximately ten months later, Walsh voluntarily resigned and brought a lawsuit alleging age discrimination and constructive discharge. Walsh was fifty-five years old when she left the company, and she claimed the 3-month PIP subjected her to an adverse employment action to support her age discrimination claim. The trial court disagreed and dismissed her claim on summary judgment. Walsh then appealed to the First Circuit.
The First Circuit’s Analysis
An issue on appeal concerned how to apply the standard established in Muldrow to the PIP. Specifically, in 2024, the Supreme Court in Muldrow had concluded that employees only need to show “some harm” from an employment action to maintain a sex discrimination claim under Title VII, declining to require any heighted proof of “material” or “substantial” harm which the First Circuit had previously applied. In other words, to prove an adverse action by an employer in a discrimination claim going forward, the alleged employment action must only leave the employee “worse off” as to the “terms or conditions” of the employee’s employment. It remained to be seen how the First Circuit would apply this lesser “some harm” standard.
Walsh argued that the Muldrow standard applied to her federal Age Discrimination in Employment Act (ADEA) claim and that under that standard any PIP should immediately qualify as an adverse employment action. While the First Circuit agreed Muldrow applied to an ADEA discrimination claim, it rejected any bright-line or “one-size-fits-all” rule regarding PIPs.
Instead, it explained that whether a PIP is adverse depends on the PIP’s actual effect on the employee’s job. A PIP that merely identifies or warns of performance concerns and offers a path for improvement, without changing present terms of employment like reducing pay, demoting the employee, imposing new job responsibilities, or limiting advancement, does not, by itself, leave the employee worse off. The First Circuit noted that PIPs vary widely: some alter an employee’s employment conditions while others function as coaching tools. Only the former may support a discrimination claim. The First Circuit emphasized that this analysis is fact‑specific and context‑driven.
In Walsh’s case, the First Circuit found that the PIP did not change her title, pay, benefits, or core job duties, nor did it limit her advancement opportunities within the company. Its purpose was corrective, and the company’s reservation of its right to terminate Walsh’s employment did not alter the terms of her employment as Walsh remained on employee at-will. As the First Circuit explained, a PIP that functions as “documented counseling” and leaves the employee’s terms or conditions of employment intact does not, standing alone, satisfy the adverse action element under an ADEA discrimination claim—even under the Muldrow framework.
Bottom Line
This case provides timely guidance for businesses concerned that their legitimate performance management of employees—at least with a PIP—may be recast as adverse action under discrimination laws after Muldrow. This is a fact-intensive review of the specific PIP. Employers should exercise care in designing and implementing PIPs. If a PIP results in changes to an employee’s terms or conditions of employment, it may be viewed as an “adverse employment action” to support a discrimination claim. Employers drafting or implementing such management tools may want to consult with legal counsel.