7th Circuit: Adverse Action May be a Pretext for Unlawful Conduct
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APPLIES TO All Employers with Employees in IL, IN, and WI |
EFFECTIVE June 18, 2025 |
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Quick Look
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Discussion
In Murphy v. Caterpillar, Inc., the Seventh Circuit Court of Appeals said that where evidence showed that an employer placed an employee on a performance improvement plan (PIP) that was not attainable and had conflicting reasons for taking adverse action, the employee may claim that the adverse action was a pretext for unlawful conduct. Specifically, employee Murphy claimed that he was discriminated against on the basis of age in violation of the Age Discrimination in Employment Act (ADEA).
The court said that “evidence conflicting with an employer’s stated justifications for adverse employment action permits a reasonable inference of pretext and unlawful intent.” Here, Caterpillar placed Murphy on a PIP that had a deadline for completion that was already passed, and the employer then refused to amend the plan when he pointed out that flaw. When the plan was finalized and provided to Murphy, his supervisors had already signed the portion of the plan indicating with their signatures that Murphy had failed to meet its requirements. Murphy also offered evidence showing that he consistently received positive performance reviews, contradicting Caterpillar’s claim that his performance was substandard, which was the alleged reason for the adverse action taken against him. Murphy also presented evidence that Caterpillar offered inconsistent explanations for the adverse action, which the court said also supports a reasonable inference of pretext.
The court further clarified its analysis in saying that “pretext does not require an inference of unlawful animus, but it does permit that inference.” As a result of this ruling, the court said the case should proceed to trial before a jury. This case is a cautionary tale reminding employers to properly train managers on proper discipline and performance management so as not to trigger discrimination claims.
Action Items
- Have appropriate personnel trained on employee discipline and performance management.
- Review procedures for performance management for compliance.
Disclaimer: This document is designed to provide general information and guidance concerning employment-related issues. It is presented with the understanding that ManagEase is not engaged in rendering any legal opinions. If a legal opinion is needed, please contact the services of your own legal adviser. © 2025 ManagEase