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Employee PIP’d, then RIF’d, after ending consensual affair advances quid pro quo harassment claim

By Kathleen Kapusta, J.D.

A general manager who, several months after ending a consensual sexual relationship with her supervisor, was placed on a performance improvement plan when she exceeded her holiday party budget and then was fired in a reduction-in-force as a result of the PIP can proceed to trial on her quid pro quo sexual harassment and retaliation claims, a federal court in Minnesota ruled, finding the claims narrowly survived summary judgment. Her hostile work environment claim, however, failed (Pung v. Regus Management Group, LLC, December 21, 2017, Frank, D.).

Thirteen years after she was hired, the employee began working as a general manager for the executive suite leasing company. Not long after that, she began a two-year consensual sexual relationship with her supervisor. After she ended the relationship, he became “very controlling,” she alleged, claiming that within a couple of months, he threatened to put her on a coaching plan because her “numbers were lacking.”

Targeted. She then reported her prior relationship to HR, expressed concern about the coaching plan, and stated that she thought he was targeting her because she ended their sexual relationship. Although HR investigated, it was unable to substantiate whether there had been a sexual relationship between them, as he denied it (he later admitted the sexual relationship during his deposition). He was, however, given a warning for creating an appearance of improper conduct. He also remained responsible for the employee’s day-to-day reporting but, according to the employer, a regional vice president took over her performance-related supervision.

PIP’d and RIF’d. The next month, the supervisor purportedly attempted to discipline the employee for a drop in her sales numbers. He later testified, however, that he could not recall the corrective action document. Several months after that, the employee, who was planning a Christmas party for clients, asked the supervisor about a budget. Although he told her to keep it under $250, she spent $560 on the party. As a result of this overspending, the VP placed her on a PIP and several weeks later, she was terminated in a RIF. There was evidence that the PIP factored into her inclusion in the RIF.

The employee then sued under Title VII and the Minnesota Human Rights Act, asserting claims of sexual harassment and retaliation.

Quid pro quo harassment. Her termination, the employee argued, was the direct result of her supervisor’s imposition of the holiday party budget and his subsequent complaint that she exceeded that budget. He was motivated to complain, she asserted, because he was upset she refused to continue their sexual relationship and because she complained to HR about his behavior. She also cited evidence showing that in response to being asked why he criticized her, he responded “Why shouldn’t I have after the hell she put me through this summer?”

In addition, she cited evidence suggesting he came up with the $250 holiday party without relying on any specific company policy; she was the only employee disciplined for exceeding a party budget, despite the fact that other employees threw parties without strict budget constraints and she had thrown similar parties in the past without incident; and he gave differing accounts of why she was terminated. This evidence, said the court, was sufficient to support her prima facie case.

Cat’s paw. Accepting that the employer articulated a legitimate reason for placing her on a PIP (violating work rules) and terminating her (the RIF), the court turned to the employee’s argument that the employer was liable for the supervisor’s discriminatory and retaliatory actions under a cat’s paw theory. While the employer contended that the VP initiated the investigation into the holiday party expenditures, determined that the employee was insubordinate, and made the decision to place her on the PIP, the court found a reasonable juror could conclude the supervisor played a material role in the sequence of events involving the holiday party expenditure, which in turn played a material role in the employee’s ultimate termination. This claim could proceed to trial.

Hostile work environment. Dismissing her hostile work environment claim, however, the court found that while there was evidence the supervisor and employee interacted and argued, and that he criticized her work, this was insufficient as a matter of law to support her claim. He may have been abrupt, critical, and sarcastic, but there was no evidence he made physical contact with her, used inappropriate language, or made sexual or intimidating comments to her.

Retaliation. Her retaliation claim, however, also advanced based on evidence that could lead a reasonable juror to conclude the supervisor complained about, raised, or used the employee’s expenditures for the holiday party in such a way that resulted in, or at least factored into, her termination. The employee also pointed out that she complained to HR about his alleged harassment. While her complaint and her termination were separated by several months, a factfinder could still conclude that the supervisor’s actions played a role or influenced her termination and that he took those actions because she complained to HR about his alleged harassment of her.