A recent 3rd Circuit Court—which covers Delaware, New Jersey, and Pennsylvania—decision raises questions about when an employment action is significant enough to constitute an adverse action within the scope of state and federal discrimination laws.
“Jose” began working for the Bank of Tokyo-Mitsubishi UFJ, Ltd. (BTMU) in September 2012 at its office in Jersey City. He served as a vice president of IT for BTMU’s Management Compliance Systems (MCS) department.
“Peter” supervised Jose from October 2012 to April 2013, although they were at the same level on BTMU’s corporate hierarchy. “Tim,” a managing director within the MCS department, was Jose’s second-level manager. BTMU assigned Jose as the “IT Lead” on two major projects, the core banking replacement (CBR) project and the T360 project.
On January 23, 2013, Peter received e-mails about Jose’s performance from both “Nathan,” who oversaw the CBR project, and “Sven,” who oversaw the T360 project. Nathan told Peter that Jose had missed a deadline. Sven wrote that Jose wasn’t maintaining open communication about the project’s status and didn’t consider Sven’s proposals. A few days later, one of Jose’s team members sent Peter an e-mail claiming that he often lost his temper during team meetings, making the “meeting atmosphere strange.”
Peter met with Jose to discuss the issues his supervisors and team members raised, and also his overall job performance. He sent a summary of the meeting to Tim, and in February 2013, Tim approved a decision to reassign Jose away from his IT lead roles on the CBR and T360 projects. Jose continued to work as a “senior team member” and was paid at the same rate.
Peter gave Jose his annual performance evaluation in April 2013. On a scale of 1 (below expectations) to 5 (outstanding), he was given a rating of 2, which was defined as “Performance meets some requirements with development needed to achieve greater consistency in meeting expectations. Needs to demonstrate more initiative.”
BTMU requires mid-year evaluations for employees who receive a rating of 2. During the same review period, three other employees—two of whom self-identified as “White” and the third as “Asian”—also received a rating of 2 on their annual performance evaluations. Jose voiced his disagreement with his evaluation to HR and wrote a 10-page rebuttal. It didn’t reference discrimination of any kind.
On April 29, “Michael” replaced Peter as Jose’s direct supervisor. Jose received his mid-year performance evaluation in July, and Michael didn’t speak with either of his previous supervisors when she drafted the evaluation. “Anthony”—a director-level employee who replaced Tim as Jose’s second-level supervisor—delivered his mid-year evaluation. Following the evaluation and without input from Peter, Tim, or Michael, Anthony recommended that he be released from his position. On August 14, BTMU fired Jose.
Jose filed a lawsuit in federal district court against BTMU asserting that it had discriminated against him based on his race and national origin in violation of Title VII of the Civil Rights Act of 1964 and the New Jersey Law Against Discrimination (NJLAD). According to the lawsuit, the violations occurred when the company (1) reassigned him from his position as IT lead on two projects, (2) gave him two negative performance reviews, and (3) terminated him.
BTMU asked the court to dismiss Jose’s claims. Regarding his claim that BTMU discriminated against him by reassigning him, the district court reasoned that it wasn’t an adverse employment action and, thus, couldn’t form the basis of a discrimination claim under Title VII or the NJLAD.
By contrast, it found that Jose’s negative performance reviews could constitute an adverse employment action because they led to his ultimate termination. Nonetheless, it dismissed his claim relating to the performance reviews because he had failed to produce evidence that they were the based on his race or national origin.
Although there was no dispute that Jose’s termination was sufficient to constitute an adverse employment action, as with his performance evaluations, he failed to present any evidence that BTMU’s actions were based on his race or national origin.
Jose appealed the district court’s decision to the 3rd Circuit.
3rd Circuit’s Decision
The 3rd Circuit agreed with the district court. In doing so, it conducted an analysis of what actions qualify as adverse in the context of a discrimination claim under Title VII or the NJLAD. To qualify as adverse, the action must create “a significant change in employment status, such as hiring, firing, failing to promote, reassignment with significantly different responsibilities, or a decision causing a significant change in benefits.”
It recognized that some cases—including some previous 3rd Circuit decisions—have suggested that purely lateral transfers may qualify as adverse employment actions, and this is particularly so when the transfer could interfere with the employee’s professional development or day-to-day working conditions.
However, Jose failed to present evidence that his reassignment had affected his job title, benefits, or compensation, significantly changed his employment status, or otherwise interfered with his professional development or working conditions. The 3rd Circuit also noted that even if the reassignment constituted an adverse employment action, he failed to show that BTMU’s motives for reassigning him were discriminatory.
Like the district court, the 3rd Circuit found that Jose’s negative performance reviews could be adverse employment actions because they resulted in his ultimate termination. But as with his claim relating to his reassignment, he failed to prove any connection between the evaluations and his race or national origin.
Significantly, he had only claimed that Peter and Tim discriminated against him—not Michael, who had drafted the mid-year evaluation. Additionally, the fact that three other employees within his department who weren’t of the same race or national origin also received 2 ratings on their evaluations undermined any inference that his rating was the result of discrimination.
The 3rd Circuit also found that Jose’s failure to even mention discrimination in his 10-page rebuttal to his annual evaluation further belied his discrimination claim. The court noted that even if he had presented some connection between his race or national origin and the evaluations, BTMU had legitimate nondiscriminatory reasons for giving him the evaluations—namely, his well-documented performance lapses and interpersonal issues with his coworkers.
The appeals court also affirmed the dismissal of Jose’s final claim—that his termination was the result of discrimination—because he failed to present any evidence that the termination decision was based on his race or national origin.
Although he claimed that Peter and Tim discriminated against him, it was Anthony who made the decision to terminate him, and he didn’t claim that Anthony harbored any discriminatory animus. Further, it was undisputed that Peter and Tim didn’t provide Anthony with any input regarding the decision.
Although BTMU successfully defeated Jose’s claims in this case, the 3rd Circuit’s decision may present questions about when an employer crosses the line and imposes a change in employment status significant enough to trigger the protections of state and federal discrimination laws.
Although Jose failed to present sufficient evidence that his reassignments crossed the “significance” threshold, his negative performance evaluations did. The court reasoned that the negative performance reviews constituted adverse employment actions because they resulted in his ultimate termination.
Employers frequently rely on negative performance evaluations to justify employee terminations. Jose’s mid-year evaluation led directly to his termination. It’s not clear whether the timing relative to his termination was the factor that transformed the negative evaluation into an adverse action, but this uncertainty may open the door to claims that lesser employment actions constitute adverse employment actions subject to state and federal discrimination laws.
James M. Leva is a contributor to the New Jersey Employment Law Letter.