By Bill Wright
If you put an employee on a performance improvement plan (“PIP”), can he resign, sue on some theory or other, and collect damages as though he had been discharged? Two employees in Texas tried it. The employees contended that they were top performers, but that, because of their age and/or race, they had been placed on coaching plans and then on PIPs “based on minor or trivial performance issues.” They also contended that the plans had “included vague and subjective criteria that were impossible to meet,” and that the plans did not meet company policies. Each resigned and sued, alleging “constructive discharge.” We assume they asked for back pay, front pay and other damages.
At trial, the jury found (a) the employees were constructively discharged because of discrimination, but also (b) the employer would have placed them on the PIPs anyway. Consequently, the employees only won their costs.
The case still went to the court of appeals, where one issue was: “Is being placed on a PIP enough to be constructive discharge?” The Court said, No. The employees had not suffered threats of immediate discharge, demotion, reduction in salary, reduction in responsibilities, reassignment, harassment, or any other negative factor. Alone, being placed on a PIP just isn’t enough for a reasonable jury to find constructive discharge. Phew. If discipline less than discharge were grounds to claim constructive discharge, employers might as well fire employees for every instance of poor performance. Perret v. Nationwide Mut. Ins. Co., No. 13-40867 (5th Cir. October 20, 2014).