First Circuit Rejects Per Se Rule that Performance Improvement Plans Automatically Qualify as Adverse Employment Actions

Why It Matters

The decision narrows the scope of discrimination claims tied to PIPs, lowering employers’ exposure to costly litigation. It also provides a clear framework for HR teams to design performance plans that comply with federal law.

Key Takeaways

• PIP alone isn’t automatically adverse action
• Courts require proof of changed employment terms
• No duty, title, or pay changes = non‑adverse
• Fact‑specific analysis varies by jurisdiction
• Clear remedial language reduces discrimination risk

Pulse Analysis

The recent First Circuit opinion in Walsh v. HNTB Corporation adds a pivotal layer to the evolving landscape of federal anti‑discrimination law. After the Supreme Court’s Muldrow ruling removed the requirement for a "material" change, courts have grappled with how to assess adverse employment actions. By rejecting a per‑se rule for performance improvement plans, the First Circuit clarified that a PIP must be examined on its specific facts, focusing on whether the employee’s terms or conditions of employment were actually worsened. This nuanced approach aligns with the broader judicial trend of balancing employee protections with employer flexibility.

In Walsh, the court highlighted that the plaintiff’s PIP did not alter her job duties, title, salary, or advancement opportunities, rendering it merely "documented counseling." The decision contrasts with a 2024 Southern District of New York case where a PIP was deemed adverse because it added undesirable tasks and tarnished the employee’s record. Similarly, the Seventh Circuit’s 2025 ruling echoed the First Circuit’s view, emphasizing that changes within the normal scope of employment do not meet the adverse‑action threshold. These divergent rulings underscore the fact‑intensive nature of the inquiry and signal that outcomes will hinge on the precise language and implementation of each PIP.

For HR professionals, the takeaway is clear: design PIPs with explicit remedial intent, avoid modifying compensation or restricting promotion pathways, and document the plan’s purpose without punitive overtones. By maintaining unchanged employment terms, companies can mitigate the risk of a PIP being classified as an adverse action in future discrimination suits. As courts continue to refine the standards set by Muldrow and Walsh, proactive policy adjustments will be essential to safeguard both performance management objectives and legal compliance.