Performance Improvement Plans Must Be Well-Drafted
Submitted by: Emmerson Mirus, Brian Goodman and Storm Larson
Murphy v. Caterpillar Inc., a recent case in the Seventh Circuit Court of Appeals, highlights the importance of well-drafted performance improvement plans and good recordkeeping. Murphy, a former employee of Caterpillar Inc., claimed that Caterpillar discriminated against him based on his age. Since starting his employment with Caterpillar in 1979, Murphy had a long history of positive performance reviews and promotions. However, shortly after he successfully led a significant project in 2018, Murphy was placed on a performance action plan. The plan imposed a deadline that had already passed, and Murphy’s supervisors marked it as failed before the plan even took effect.
Murphy argued that the performance action plan was designed for him to fail and therefore suggested the existence of unlawful age discrimination. The Seventh Circuit agreed, reversing the lower court’s judgment in favor of Caterpillar. The Court explained that placing an employee on a performance action plan alone is not sufficient evidence of discrimination. However, Caterpillar’s particular plan for Murphy was “like a bank demanding that a borrower sign a promissory note indicating that the borrower is already in default.” This meant the plan could be used as evidence that the plan was pretext for age discrimination against Murphy.
In light of the Murphy case, employers should ensure that their performance management processes are legitimate, well-documented, and administered fairly to avoid creating evidence that could support age (or other) discrimination claims.
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