The U.S. Court of Appeals for the First Circuit discussed whether a performance improvement plan (PIP) is an adverse employment action in Walsh v. HNTB Corporation on March 13, 2026. For years, litigating employment discrimination cases was routinely favorable to employers when the “adverse employment action” was an employee being placed on a PIP. The reason: PIPs do not usually have a “material” effect on the terms or conditions of an employee's employment. The U.S. Supreme Court, however, changed that standard in 2024 when it decided Muldrow v. City of St. Louis. 

What changed after Muldrow?

An adverse employment action went from needing to “materially” affect an employee's terms or conditions of employment to merely making an employee's terms or conditions of employment “worse off.” 

What makes that change an issue for employers?

The drastic change in the standard for an adverse employment opportunity makes it easier for employees to survive summary judgment in litigation. The First Circuit in Walsh pointed out scenarios that may result in a PIP being an adverse employment action: “impos[ing] new job responsibilities, change[ing] the present terms of employment, or deprive[ing] an employee of potential advancement opportunities.” 

But those scenarios can show themselves in a variety of scenarios, which can be a problem in litigation. For example, the First Circuit noted “there is no one-size-fits-all answer for whether a PIP constitutes an adverse employment action.” Instead, “the inquiry is fact-intensive and PIP-specific.” In sum, a fact-intensive inquiry is not ideal for employers who used to routinely obtain summary judgment when a PIP was the only adverse employment action.

What should employers do to avoid issues post-Muldrow?

While the First Circuit noted “a per se rule that all PIPs constitute an adverse action is inconsistent” with the U.S. Supreme Court's ruling in Muldrow, employers should:

1.  Ensure supervisors responsible for implementing PIPs are only issuing them “to warn an employee about performance deficiencies or assist an employee in developing a plan to achieve an identified opportunity for skill development”;
2. Ensure supervisors understand that the PIP cannot impose new job requirements; and
3. Ensure PIPs do not deprive employees placed on one of advancement opportunities.

To ensure these key requirements are met, employers may want to consult with counsel about training supervisors on best practices when planning to implement a PIP.