The PIP and Its Place in Discrimination Litigation

The notification of a Performance Improvement Plan, also known by its punctuating acronym “PIP,” can be a distressing knell signaling an employee’s indeterminable last day of employment. Adding to that, a PIP can stay on an employee’s record for some time, can block or delay a transfer or promotion while the PIP is in effect, and undoubtedly bursts one’s morale. 

Within the last year, the viability of discrimination claims that involve allegations of unlawful PIPs has improved, due to the Supreme Court’s lowering of the standard of what an employee needs to show when challenging an employer’s action. 

In Muldrow v. City of St. Louis, 601 U.S. 346 (2024), the plaintiff alleged that the defendant City of St. Louis Police Department transferred her from one job to another because she is a woman, in violation of Title VII. Even though the plaintiff’s rank and pay remained the same, her responsibilities, perks, and schedule did not. The District Court found against the plaintiff stating that the transfer did not cause her a “materially significant disadvantage,” because it did not result in the diminution in value to her title, salary, or benefits, but was only a minor change to her working conditions. The Eighth Circuit Court of Appeals agreed with the District Court, but the Supreme Court had a different take.

In its decision, the Supreme Court wrote that instead of requiring a plaintiff to show “significant” harm to a change in the terms and conditions of employment, the plaintiff would only need to show “some harm.” The Court explained its reasoning by referencing the language of Title VII and interpreting that to “discriminate against” means to “treat worse,” pointing to the language in a previously decided Title VII discrimination case, Bostock v. Clayton Cnty., 590 U.S. 644 (2020), the long-awaited expansion of protections under Title VII to encompass gay and transgender individuals in the workplace.

A month after the Muldrow decision, the Court of the Southern District of New York applied the new standard of “some harm” with respect to a PIP. In Anderson v. Amazon.com, Inc., No. 23-cv-8347 (AS), 2024 WL 2801986 (S.D.N.Y. May 31, 2024), the plaintiff alleged that the employer’s issuance of a PIP was discriminatory, among other claims. First, with regards to the claim being filed under Section 1981 instead of Title VII, the Court wrote that there was no reason to distinguish the Muldrow Title VII standard of harm from how it should be applied under Section 1981 claims. Then, District Court stated that although a PIP that results in a diminished role “might once have been considered immaterial,” it was now enough to survive a motion to dismiss. The Court wrote further that the standard articulated in Muldrow, was similar to New York State’s and New York City’s Human Rights laws, which were known before Muldrow to be more favorable to plaintiffs than Title VII.

More recently, in Hayes v. G&E Real Est. Mgmt. Servs., No. 24-cv-01459 (ER), 2025 WL 769162 (S.D.N.Y. Mar. 10, 2025), the same Court in Anderson permitted a plaintiff’s Section 1981 claim including a discriminatory negative performance review, to proceed, without requiring her to show some immediate economic consequence. The court reasoned that there was “some harm,” as a negative performance review can leave an “employee worse off by dampening the prospects of a promotion, raise or bonus.” Even though sounding like speculation, the “negative performance review plausibly deprived [the plaintiff] of the opportunity to receive a bonus or raise,” like how she had received them in the past when she received positive performance reviews.