Performance improvement plan: (a) valuable tool for correcting performance problems, or (b) obligatory pre-discharge formality? If you answered (a), you know that a PIP can help a faltering employee meet job expectations—an important goal given the costs of employee training and turnover. If you answered (b), try again. In the at-will employment setting, a PIP is not a legal prerequisite to termination (of course not) and it won’t insulate your organization from liability if a discharged employee files suit.
For many private-sector employers, the PIP serves a genuine “due process” function of sorts, a fair warning and last chance for an employee to avoid discharge. But when a PIP is used for the sake of appearances or implemented in half-hearted fashion, courts and juries tend to see right through the subterfuge.
Cases in point
In Brock-Chapman v National Care Network, LLC, a sales executive filed FMLA claims after she was placed on a PIP and then discharged within a month of returning from leave to care for her cancer-stricken (now deceased) husband. Under the PIP, which was implemented because of her purported “lack of urgency” for her work, the employee was required to make “significant improvement” within 30 days. Unsure how to meet this vague mandate, she asked for more specific performance goals, but her request was denied. In fact, when forwarding one such request to the employee’s supervisor, the HR director referred to the employee as “exhausting,” evidencing animus, the court noted.
By objective measures, the employee was performing quite well—she was 43 percent ahead of her sales target for the year. But the PIP required her to “improve sales.” The employee was supposed to have regular calls with her supervisor to monitor her progress toward meeting the PIP goals, but her boss skipped five of the eight calls and did not reschedule them. Moreover, while employees were usually given 90 days to meet PIP objectives (as clearly noted on the employer’s standard PIP form), the employee was granted only 30 days. Under these facts, a federal court in Texas let stand a jury verdict in the employee’s favor, noting that the questionable intent and execution of the PIP demonstrated pretext.
In Trickey v Kaman Indus Tech Corp, a federal district court in Missouri found sufficient evidence that an employer actively thwarted a branch manager’s attempts to comply with a PIP. While on the PIP, his superior undermined his efforts to reestablish his authority as branch manager by publicly congratulating another employee—who was being groomed for the branch manager position—for the branch’s excellent performance. An HR manager testified that the PIP process had been manipulated by a supervisor who had asked her to create a PIP for the branch manager when it was inappropriate to do so. A coworker testified that considerable attention was paid to finding the branch manager’s mistakes.
When the branch manager asked for additional customer accounts in an effort to meet the sales goals set forth in his PIP, his boss refused the request. Only 58 days into the 90-day PIP, the branch manager was demoted and given a gross sales target of $1.2 million. However, he was assigned customer accounts that had netted for only $200,000 in combined sales during the previous year. A jury found the branch manager had deliberately been set up to fail by a sales requirement that was practically impossible. The district court agreed, upholding a jury verdict in his favor on his age bias and retaliation claims.
Finally, in Burnsed v Pasco Regional Medical Center, a hospital placed a respiratory therapist on a PIP. Then the employer removed her from the schedule. Despite the employee’s frequent calls to her supervisor and the director of nursing, she was not given any shifts. Ultimately, the employee was terminated, allegedly because she failed to fulfill the conditions of her PIP. The evidence indicated that the employer interfered with the employee’s attempts to work enough shifts to satisfy the requirements set forth in the PIP. Thus, a reasonable jury could find that the hospital issued the PIP, removed her from the schedule, and ultimately terminated her because it did not want to deal with her intermittent FMLA absences for asthma and colitis, the federal district court in Florida held.
The right way to PIP
A bona fide PIP is a good-faith effort to help an employee correct performance deficiencies and succeed. To that end, the organization seeks to remove impediments, rather than put obstacles in the employee’s way:
• A PIP is implemented in conjunction with HR to control for any unfair bias on the supervisor’s part in assessing whether the employee has met stated goals.
• Stated goals are SMART—specific, measurable, attainable, relevant, and timely. Meaningful criteria are provided in order for an employee to gauge progress. Instead of “improve poor attitude,” for example, an employee is expected to “reduce customer complaints to zero.”
• The employee is given regular feedback. Weekly or semi-weekly meetings with the supervisor are built into the PIP schedule so that more formal feedback can be provided.
• Additional training, mentoring, “scaffolding” are given as needed or requested.
• A fair amount of time is allowed in which to meet the stated criteria. If a standard PIP is 90 days, then an employee is given the full 90 days in which to meet PIP goals. If business needs require a reduced time frame (the employee is in a key policy position, for example), the PIP states at the outset the specific time to be allotted, and why.
• Employees are given a sufficient number of shifts or meaningful work assignments during the PIP period in which to demonstrate improvement and satisfy the PIP criteria.
• The consequences of failure to meet PIP goals—usually termination, perhaps demotion—are clearly articulated at the outset.
When to PIP
A PIP should be imposed for objective, clearly documented reasons. The decision to place an employee on a PIP must be consistent with his or her recent performance evaluations and merit pay decisions. A PIP is not to be imposed in retaliation for filing a complaint, or out of a discriminatory belief that an older employee “can’t hack it” anymore. An employee should not be placed on a PIP if similarly situated younger workers (or male workers, or white workers, for example) would not have been placed on a PIP based on the performance at issue.
Know when not to PIP. A PIP works best to correct performance deficiencies, rather than significant misconduct or behavioral issues. In one instance, an assistant principal was placed on a PIP after she strip-searched an 8-year old male student without calling his parents. However, a PIP is hardly appropriate for situations like these, which call for more severe disciplinary measures.
Employment discrimination based on sexual orientation and/or gender identity continues to be an emerging area of the law with the trend toward added protection. Employers that have not already done so should consider adding antidiscrimination coverage on those bases to their internal employment policies.
EEOC targeting LGBT bias. Although Title VII of the Civil Rights Act of 1964 has not been interpreted to expressly provide protection from employment discrimination to lesbian, gay, bisexual, and transgender (LGBT) individuals as a protected category, the EEOC in 2012 crystallized its view that these individuals may be afforded protection under a sex stereotyping theory, or whenever intentional discrimination against such an individual is due to his or her LGBT status. In its Macy v Holder decision, the commission stated that “intentional discrimination against a transgender individual because that person is transgender is, by definition, discrimination ‘based on …sex,’ and such discrimination therefore violates Title VII.”
EEOC Commissioner Chai Feldblum (who was integral to the Macy decision) has characterized the decision as clarifying what courts have not always done as clearly: that a Title VII claim for discrimination because a person is transgender can be brought based on gender stereotyping or because “gender was on the brain” and clearly taken into account. When gender is taken into account, Title VII is violated, according to Feldblum. The EEOC has also formed a LGBT work group to advise its General Counsel on how to make sure that LGBT individuals are not being carved out and receiving less protection under statutes enforced by the EEOC. The work group is looking at federal districts and circuits around the country in an effort to identify areas where a case may be brought to apply Macy, or theories of sex-plus or associational discrimination. In its Strategic Enforcement Plan for fiscal years 2013-2016, the EEOC has formally declared its intent to target coverage of LGBT individuals under Title VII’s sex discrimination provisions, as they may apply.
Washington and the courts. Some federal district courts have found employment discrimination based on sexual orientation unlawful via a sex stereotyping theory or have found a hostile work environment based on sex. President Barack Obama has declined to sign an executive order that would ban workplace discrimination by federal contractors on the basis of sexual orientation, preferring instead to encourage passage of “inclusive” legislation that would prohibit all employers from discriminating based on sexual orientation and gender identity. The president has hung his hopes on the Employment Non-Discrimination Act, a “legislative solution to LGBT employment discrimination” that has so far failed to pass.
State coverage progressing. There are, however, explicit emerging state laws protecting LGBT employees, including many with gender identity protections. Twenty-one states plus the District of Columbia have laws that prohibit both private and public sector employers from discriminating based on sexual orientation, and in some cases, gender identity. An additional ten states prohibit such discrimination only by state and/or public employers. Similarly, more states are legislatively, judicially, or by voter initiative approving same-sex marriage protections. In the national election on November 6, voters in Maine, Maryland, and Washington endorsed same-sex marriage. Six other states and the District of Columbia permit such marriages. These laws have a broad impact in the employment context in areas such as employee leave and benefits. That these issues will continue to be at the forefront is signaled by the U.S. Supreme Court’s willingness to take up the Defense of Marriage Act (which nullifies gay and lesbian marriages for all purposes of federal law) and California’s Proposition 8 (a constitutional ban on marriage equality) this March.
Businesses adding protection. Meanwhile, the business community, perhaps because it must be more forward-looking than the Congress and the federal government in order to thrive, has continued to carve out protections for the LGBT community through internal employment policymaking. The Human Rights Campaign Foundation’s Corporate Equality Index (CEI), the national benchmarking tool on corporate policies and practices related to LGBT employees, rated the entire Fortune 500 list, and found that for the first time, the majority have nondiscrimination policies that cover gender identity (57 percent). Eighty-eight percent of Fortune 500 companies cover sexual orientation discrimination in their nondiscrimination policies.
Looking ahead. The trend is clearly building toward coverage of sexual orientation and gender identity discrimination in antidiscrimination protections that apply to businesses. Employers may be wise to follow the lead of the Fortune 500 and ensure that LGBT employees and applicants are protected from employment discrimination through internal policies before the EEOC — or its state counterparts — come knocking on their doors.
If you are a manager, and an employee has accused you of discrimination, here are a couple of suggestions.
- Do not fail to cooperate with an investigator ― if there are legitimate reasons for having disciplined a subordinate who accused you of discrimination, spill it. In McGrory v Applied Signal Technology, Inc, the manager declined to identify workers who had complained about the subordinate, citing privacy reasons. But, it is hard to imagine an outside investigator, who is an attorney, will spill the beans.
- Do not tell the investigator off color jokes in excruciating detail. You would think that would go without saying. Sure, you should cooperate and admit your missteps, but it really is not in your best interest to elaborate by telling your favorite dirty jokes.
One manager in California did both and, as a result, gave his employer a legitimate nondiscriminatory reason to fire him. Here is the tale of McGrory, try to learn from his story.
Investigation of employee. The department manager, who reported directly to the chief financial officer (CFO), had a dozen subordinates, including a female who lodged a complaint against him with HR. He had previously given her a warning for poor performance after her coworkers complained. She soon accused him of harassing her and discriminating against her based on her gender and sexual orientation. She had recently announced her marriage despite Proposition 8. She also reported that he told off-color jokes insensitive to other cultures. The employer investigated using an outside female attorney whom the employee (and a male subordinate) found biased and confrontational.
The attorney’s report partially exonerated the employee, finding the subordinate did have performance issues, but also substantiated the claim that he regularly made sexist and racist jokes. Further, the report indicated that the employee and a male subordinate were uncooperative and untruthful in the investigation. As a result, the employer fired the employee and disciplined the male subordinate. The employee filed suit, alleging termination in violation of the public policy against gender discrimination. He also asserted a defamation claim based on the HR vice president’s statements to other employees that he had been fired for not cooperating with the investigation. The trial court granted summary judgment for the employer, finding it had legitimate reasons for the termination and the employee failed to show pretext. The court also found that the alleged defamatory statements were privileged.
Legitimate firing. Affirming, the California Court of Appeals found no evidence warranting a reasonable inference that the employee was fired because he was male. The report on his female subordinate’s allegations found that he did not discriminate, but that he violated the employer’s policies on sexual harassment and ethics. Several witnesses reported that he regularly made racist or sexual comments or jokes. Not only did he admit it to the investigator, he told her a couple of the jokes, one of which made vulgar references to a woman’s breasts and a man’s penis.
As to other facts, however, he was not forthcoming. Citing privacy concerns, he refused to disclose his rankings of subordinates or who had complained about the subordinate whose allegations started the investigation. The investigator concluded that firing the employee was justified and recommended that a male subordinate, who was also evasive, receive a warning.
The employee claimed the investigation was a “proceeding” under the Fair Employment and Housing Act and his participation was a protected activity for which he could not legitimately be fired. The appeals court disagreed, reasoning that being uncooperative or deceptive in an internal investigation of a discrimination claim is not protected under state or federal law. Thus, the employer had a legitimate reason for the termination. The employee’s violation of policies on sexual harassment and ethics, as well as the employer’s concern over legal liability, were also legitimate nondiscriminatory reasons for his termination.
No pretext. Rejecting the employee’s attempts to show these reasons were pretextual, the court found that the CFO’s only giving the employee one of the reasons (misconduct in the investigation) for his termination did not show the employer gave conflicting reasons and did not undermine the other two reasons (violation of policies; legal liability concerns). Moreover, there was no evidence that the investigation was biased against men; indeed, the record evidence was to the contrary. In addition, there was no disparate discipline here because the other two men whom the investigator found to have told inappropriate jokes, one of whom received a written warning for misrepresentations in the investigation, were subordinate to the employee. Thus, they were not similarly situated and they engaged in different conduct. Because the employee failed to show that the employer’s reasons for firing him were pretext for discrimination, summary judgment was appropriate.
Defamation. The employee alleged that he was slandered when the HR vice president told a coworker that the employee was fired for being uncooperative in the investigation, despite receiving warnings. Rejecting this claim, the court found that the employer’s statements to a worker concerning the reason for the termination were conditionally privileged. Although the common interest privilege is not well-defined, it applies when an employer makes statements in good faith so appropriate action can be taken against the employee; the danger of future breaches is minimized; and workers do not develop misconceptions affecting their employment. Significantly, there was no evidence the HR vice president believed the employee was cooperative when he said otherwise. It was undisputed the investigator reported that the employee did not cooperate and there was no evidence that a reasonable person could not have believed the investigator’s report. Thus, the comments were conditionally privileged.
The moral of the story for managers? Cooperate in an internal investigation and be willing to justify your decisions (i.e., if there is evidence supporting your discipline of a subordinate, cough it up). Oh, and if you were clueless enough to tell racist and sexist jokes in the workplace, own up to it (beg forgiveness and promise to stop), but there really is no need to repeat your favorites in excruciating detail.
The Supreme Court has agreed to resolve another question of workplace discrimination. In University of Texas Southwestern Medical Center v Nassar, the Court will determine whether a plaintiff is required to prove but-for causation or only prove that the employer had a mixed motive for an employment action.
Racially motivated harassment. Nassar, a physician of Middle Eastern descent, was a faculty member at the University of Texas Southwestern Medical Center (UTSW). He filed suit under Title VII alleging that he was constructively discharged because of racially motivated harassment by a superior. There was evidence his superior monitored his productivity and billing practices closer than other doctors and had made negative remarks about Middle Easterners. Nassar also claimed that UTSW retaliated against him by preventing him from obtaining a position at a clinic after his resignation.
After a trial, the jury awarded Nassar over $436,000 in back pay and more than $3 million in compensatory damages. UTSW filed a renewed motion for judgment as a matter of law, a motion for new trial, and motion for remittitur. The district court denied UTSW’s motions for judgment as a matter of law and for a new trial. The district court did, however, grant UTSW’s motion for remittitur because of Title VII’s compensatory damages cap, which required reducing the compensatory damage award to $300,000. The physician sought attorneys’ fees and was awarded $489,927 in fees plus court costs. Both parties appealed.
Constructive discharge. After suggesting numerous aggravating factors that would support the physician’s constructive discharge claim, the Fifth Circuit found Nassar failed to prove any of those factors with the possible exception of “badgering, harassment, and humiliation.” UTSW had actually approved Nassar’s promotion to a position with a higher salary and more preferable employment terms, the court pointed out. With respect to the harassment, when viewed in the light most favorable to the jury’s verdict, Nassar proved that his superior racially harassed him, but his proof was no more than the “‘minimum required to prove a hostile work environment.’” When considering the aggravating factors, the appeals court did not find sufficient proof to show that Nassar’s “working conditions were so intolerable that a reasonable employee would feel compelled to resign.”
Retaliation claim. Nassar contended that his superior’s immediate supervisor (the department chair) blocked his attempt to become a staff physician at a clinic that had an affiliation agreement with UTSW because of his complaints about being harassed by his superior. UTSW argued the supervisor thwarted the prospective employment as a routine application of the employer’s rights under the affiliation agreement.
When viewing the evidence in the light most favorable to the jury’s verdict, there was sufficient evidence that the supervisor invoked UTSW’s putative rights under the affiliation agreement in order to punish Nassar for his complaints about his superior. The clinic’s director testified that the chair told him that Nassar’s complaints in his resignation letter were his reason for blocking the position. While there was testimony that the chair made his decision before receiving the letter and that he regarded the matter as a routine application of the affiliation agreement, after the jury considered the evidence, it resolved the conflict in Nassar’s favor. “Since ‘[c]redibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge,’” the appeals court found no basis to upset the jury’s verdict that UTSW retaliated against the physician.
Damages. Remanding the case for recalculation of damages, the appeals court noted that the jury’s verdict on the constructive discharge claim was insufficiently supported and, because the damage award did not separate the damages awarded for the retaliation claim and the damages awarded for the constructive discharge claim, the case must be remanded. Nonetheless, the parties presented legal issues relating to the physician’s monetary recovery that had to be resolved.
UTSW sought to change the back pay award, arguing that back pay should have been determined by comparing Nassar’s compensation at UTSW and his compensation at his current job in California and not, as the district court allowed, by comparing his compensation at the clinic and his compensation at his current job. Rejecting that argument, the Fifth Circuit wrote that by retaliating against the physician and blocking his job with the clinic, UTSW deprived him of the pay he otherwise would have earned there. Therefore, to make the physician whole, the back pay ought to be measured against what he would have made at the clinic.
However, the court agreed with UTSW’s argument that it was error for the jury to have been able to consider honoraria the physician claimed he lost since he no longer had a UTSW affiliation (approximately $100,000 less per year) as a part of its award of back pay. Although Nassar would not have been able to obtain the honoraria without his job at UTSW, they were paid by third parties for services that were not required under the terms of his UTSW employment. Therefore, they were not akin to salary, wages, or benefits, the normal components of back pay. Compensatory damages available in a Title VII case cannot include back pay or front pay. Nassar’s lost honoraria income was thus awardable as compensatory damages to the extent the loss was caused by UTSW’s blocking his position at the clinic rather than his decision to resign from UTSW. That factual question was to be resolved on remand.
The appeals court did not address the issue of front pay because the case was being remanded for reconsideration of monetary compensation in light of the court’s findings of insufficient evidence to support a constructive discharge verdict and that honoraria should not have been considered part of back pay.
Petition for certiorari. UTSW filed a petition for certiorari (Dkt No 12-484) on October 17, 2012 and High Court granted cert on January 18, 2013. The issue before the Court is: Whether the retaliation provision of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a), and similarly worded statutes require a plaintiff to prove but-for causation (i.e., that an employer would not have taken an adverse employment action but for an improper motive), or instead require only proof that the employer had a mixed motive (i.e., that an improper motive was one of multiple reasons for the employment action).
Employer did nothing wrong by firing pre-FMLA eligible employee after she advised him of need for cancer surgery once she became FMLA eligible
Consider this scenario, you’re fairly new at your job as an administrative assistant and enjoy the work quite a bit. You’ve successfully completed your probationary period and your boss seems satisfied with your performance. But now, you’ve been diagnosed with cancer and your doctor is recommending surgery. You are aware that you have some leave rights but you still have several weeks before you become eligible.
Being a conscientious employee, you duly advise your supervisor of your medical condition, and advise him that you plan to take medical leave once you become eligible. Too your complete surprise he responds that he needs a full-time employee and fires you. After you consult an attorney, he thinks that you have a pretty good case, there’s a ruling out of the Eleventh Circuit that says the employer is wrong. So what happens?
In Dunn v Chattanooga Publishing Co, a federal district court in Tennessee determined that a pre-FMLA eligible employee who was diagnosed with cancer, and who was subsequently discharged after she notified her employer of her post-eligible plans to undergo surgery and take medical leave, could not advance her FMLA claims. Granting the employer’s motion to dismiss, the court declined to follow a recent Eleventh Circuit case, Pereda v Brookdale Senior Living Communities, Inc, offering conflicting precedent.
Non-eligible status. Because the employee was admittedly not an “eligible employee” under the FMLA at the time of her discharge, her claims could not proceed, ruled the court. Declining to follow the Eleventh Circuit’s contrary ruling in Pereda, the court reaffirmed its two prior rulings holding that a pre-eligibility employee may not make a valid FMLA claim where she notified her employer of planned post-eligibility leave. In those cases, the district court had held that recovery under either the interference or retaliation theories was limited to “eligible employees,” rejecting the argument an ineligible employee could recover for interference with, or discrimination for, anticipated post-eligibility leave. The court, in those rulings, had followed the controlling Sixth Circuit precedent, which, although not addressing this precise issue, held that ineligible employees were barred from making FMLA claims.
The court squarely rejected the Eleventh Circuit’s conflicting ruling in Pereda, which held that a pre-eligibility employee who notified her employer of expected post-eligibility medical leave was entitled to FMLA protection. In that case, the appeals court noted that the FMLA required an employee seeking FMLA leave after the birth of a child, or for foster care, to first provide her employer 30-days’ notice of the foreseeable leave. The court concluded that applying the notice requirement while simultaneously withholding protection to pre-eligible employees seeking post-eligibility leave created a hole of protection incompatible with the purposes of the FMLA.
The Eleventh Circuit also pointed to Department of Labor regulations, which require a determination as to FMLA eligibility be made “as of the date the FMLA leave is to start.” Further, the appeals court noted the reference to “employee” rather than “eligible employee” in the statute’s notice requirement. It found this constituted recognition that some ineligible employees would be required to notify employers of expected post-eligibility leave. Thus, it concluded that a pre-eligibility employee notifying an employer of post-eligibility leave was entitled to FMLA protection from both interference and retaliation.
Rejecting the reasoning of the Eleventh Circuit, the district court noted that its prior rulings to the contrary were based on binding Sixth Circuit precedent that it could not ignore. It conceded that its interpretation of the statute left a small class of employees without the FMLA’s protection, but emphasized that Congress intended to omit certain employees from protection. Indeed, among those omitted were employees who had been employed for less than one year. Accordingly, the court dismissed the employee’s FMLA claim.