The Third Circuit’s recent decision in Andujar v. General Nutrition Corporation (GNC) should remind employers that termination of an employee based on poor performance should result from clear policies, and that personalized treatment of poor performance reviews may ultimately be used to allege discrimination. The Third Circuit, in an age discrimination suit, permitted a terminated employee to draw comparisons with poorly-reviewed employees who had different job duties and/or supervisors.

Facts

Andujar, who was 59 at the time of his lawsuit, began his employment with GNC on January 12, 1999 as a Sales Associate. He was eventually promoted to store manager in 2001, and held that position for approximately 13 years. At GNC, store managers are evaluated through a Performance Evaluation Process, or “PEP.” The PEP considers factors such as store performance and appearance, staff development, and loss prevention. The maximum score is 500, while 300 is considered passing. GNC also evaluates managers through a Critical Point Audit, or “CPA,” focused on loss prevention to ensure the manager is properly documenting the store’s inventory. The passing score for a CPA is 90%.

Andujar repeatedly failed CPAs in 2010, 2011, 2012, and 2013. Between these failed CPAs, Andujar’s supervisor met with him to discuss the ongoing issues. Andujar’s performance, however, did not improve. On January 23, 2014, Andujar received a failing PEP score of 287. GNC, pursuant to company policy, implemented what it referred to as a Red Store Action Plan (RSAP), outlining the various areas which required improvement, and setting a 30-day deadline for improvement.

After 30 days, Andujar had failed to improve the ongoing issues at his store. GNC informed him that he could no longer serve as a store manager, but offered to employ him in a different position with the possibility that he could again become a manager in the future. Andujar declined and GNC terminated his employment. GNC filled the position with a man in his twenties.

Andujar Supports His Lawsuit With Comparative Evidence And Prevails at Trial

Andujar filed suit against GNC alleging wrongful termination, and age discrimination, in violation of the New Jersey Law Against Discrimination (LAD). The case was originally filed in New Jersey state court but was removed to federal court, based upon diversity of citizenship. At the close of discovery, GNC made a motion for summary judgment. The Court denied GNC’s motion and the matter was set for trial.

At trial, Andujar presented evidence of what he claimed were similarly situated “comparators,” five younger GNC employees who had received different discipline after failed performance reviews. The Court instructed the jury that it could assume Andujar and the comparators all engaged in the same course of conduct because they all had failing PEP scores. At trial, the jury awarded Andujar $258,926, which included $123,926 in back pay, $60,000 in front pay, and $75,000 for his emotional distress.

The Court’s Decision

GNC appealed the verdict to the Third Circuit on several grounds, including various evidentiary issues. Critically, however, GNC argued that none of the employees identified by Andujar were similarly situated as none of them had multiple failing performance scores, nor had they been subject to an RSAP. For each comparator, GNC identified what it deemed to be a key difference in the relevant factors between them and Andujar. For example, one comparator was terminated for losing over $10,000 in inventory. Another comparator was a newly-promoted manager and his failing score would have been his very first review as a manager. Other comparators had different job duties or different supervisors.

The Third Circuit denied GNC’s appeal and affirmed the orders of the trial court. Although the Court reiterated that companies have the right to dismiss employees for poor performance, they cannot excuse poor performance by younger workers without doing the same for older workers. The Court also held that comparators must only be similarly situated, not necessarily identical, and that a trial court has broad latitude to determine the factors it uses to determine whether comparators are appropriate in a given case. The Court stated that because the comparators were all managers or assistant managers in the same region as Andujar who received failing PEP scores, that those similarities were sufficient.

Bottom Line

The Andujar decision should remind employers that poor performance must be addressed uniformly. Even disparate treatment based on what appears to be common sense can be used as evidence of discrimination. For example, in this case, GNC terminated Andujar, who had underperformed for several years, but did not terminate a younger, newer, manager who was in his first year on the job and, presumably, had greater ability to improve over time. It is, therefore, important that any divergence in treatment be set forth in clear, detailed policies. When employees are disciplined or terminated through a supervisor’s discretion rather than through implementation of written company policy, the terminated employee may allege that discretion was exercised with discriminatory intent.