In Hayes v. G&E Real Estate Management Services d/b/a Newmark, 24-cv-01459 (ER), 2025 WL 769162 (S.D.N.Y. March 11, 2025), the court, inter alia, denied defendant’s motion to dismiss plaintiff’s claim of race discrimination asserted under 42 U.S.C. § 1981. Plaintiff asserted that she suffered discrimination in the form of various “adverse employment actions” – including a negative performance review and a failure to promote.
Of note, the court applied the reasoning of the U.S. Supreme Court’s recent decision in Muldrow v. City of St. Louis, 601 U.S. 34 (2024), which “rejected the notion that in Title VII cases the harm incurred must be significant or serious, or substantial, or any similar adjective suggesting that the disadvantage to the employee must exceed a heightened bar.” [Cleaned up.]
Here is the court’s application of the Muldrow standard to plaintiff’s negative performance evaluation:
Hayes contends that she sufficiently pleaded an adverse employment action in connection with the negative performance review she received in 2021 which she believes cost her the opportunity to earn an additional $4,000 to $5,000 in annual income. Hayes argues that because Newmark “awards bonus[es and raises] based on positive performance reviews and [that] in 2020, her salary was increased by $3,000 because of her positive performance review[ ],” the fact that she received a negative performance review in 2021 is sufficient to allege that she suffered a tangible loss.
“[A] negative employment evaluation, if accompanied by negative consequences, such as demotion, diminution of wages, or other tangible loss, may constitute an adverse employment action.” Smith v. New York City Department of Education, No. 18-cv-8545 (PGG), WL 6307471, at *8 (S.D.N.Y. Nov. 25, 2019) (quoting Siddiqi v. New York City Health & Hospitals Corp., 572 F. Supp. 2d 353, 367 (S.D.N.Y. 2008)). However, “a negative performance review, without any showing of a negative ramification, cannot constitute an adverse employment action.” Natofsky v. City of New York, 921 F.3d 337, 352 (2d Cir. 2019); see also Siddiqi, 572 F. Supp. 2d at 367 (“[N]egative evaluations, standing alone without any accompanying adverse results, are not cognizable.”) (quoting Bennett v. Watson Wyatt & Co., 136 F. Supp. 2d 236, 247 (S.D.N.Y. 2001)).
Newmark is correct that Muldrow does not change the understanding that a negative performance review, without more, does not qualify as an adverse employment action. See Doc. 38 at 2–3. However, as the Court explained above, Muldrow made clear that “some harm respecting an identifiable term or condition of employment” covers more than just “economic or tangible” harms. 601 U.S. at 347, 359 (citation omitted) (“The [action] must have left her worse off, but need not have left her significantly so.”). Accordingly, a negative performance review that does not result in immediate economic consequences may nonetheless qualify as adverse employment action because it leaves the employee worse off by dampening the prospects of a promotion, raise, or bonus. See, e.g., Anderson, 2024 WL 2801986, at *11 (finding that plaintiff’s placement on a performance improvement plan was an adverse action because it “adversely affected [her] benefits, privileges, terms, or conditions of employment by saddling her with more and worse tasks, tarnishing her permanent record, dampening her prospects of a promotion or raise, temporarily preventing her from transferring, excluding her from certain meetings and projects, and so on.”).
Newmark argues that Hayes’ allegations that her negative performance review cost her the opportunity for a raise or bonus are merely speculative. See Ramirez, 2021 WL 4392303, at *5 (“No matter what the pleading standard is, [a] complaint must at least contain enough factual allegations that are not made upon information and belief to ‘raise a right to relief above the speculative level.’ ” (quoting Gilford v. NYS Office of Mental Health, No. 17-cv-8033 (JPO), 2019 WL 1113306, at *6 (S.D.N.Y. Mar. 11, 2019) (citation and internal quotation marks omitted)); Lebowitz v. New York City Department of Education, 407 F. Supp. 3d 158, 171 (E.D.N.Y. 2017) (explaining that the alleged consequences resulting from a negative evaluation “must go beyond mere speculation” to survive a motion to dismiss). The Court disagrees.
Here, Hayes alleges that bonuses, raises, and promotions are based on positive performance reviews. She also alleges that her positive performance reviews in 2020 resulted in a $3,000 raise. Although a positive performance review does not necessarily entitle an employee to a raise, bonus, or promotion, it is reasonable to infer that they are substantially less likely to be awarded when an employee receives a negative performance review. In other words, Hayes’ negative review plausibly deprived her of the opportunity to receive a raise or bonus similar to the one she received in 2020. Accordingly, the Court finds that Hayes has sufficiently alleged that she has suffered some harm resulting from the allegedly discriminatory negative performance review.
Hayes has also met her “minimal burden of showing facts suggesting an inference of discriminatory motivation … .” Littlejohn, 795 F.3d at 311. Remarks made by colleagues may raise an inference of discrimination “if there is a nexus between the remarks and an adverse employment decision.” Mesias v. Cravath, Swaine & Moore LLP, 106 F. Supp. 3d 431, 438 (S.D.N.Y. 2015). To determine whether a colleagues remark is probative of discriminatory intent, courts consider four factors: “(1) who made the remark (i.e. a decision-maker, a supervisor, or a low-level co-worker); (2) when the remark was made in relation to the employment decision at issue; (3) the content of the remark …; and (4) the context in which the remark was made (i.e. whether it was related to the decision-making process).” Id. (quoting Henry v. Wyeth Pharmaceuticals, Inc., 616 F.3d 134, 149 (2d Cir. 2010)).
Here, Hayes alleges that Winkelmann made allegedly racist remarks in September 2020 when Winkelmann told her that “Black lives don’t matter,” and in October 2020 when Winkelman told her that the company insurance policy was “better than Obamacare.” Doc. 13 ¶¶ 16, 20. Hayes alleges that Winkelmann later gave her an allegedly discriminatory performance review on December 7, 2021. Id. ¶ 42.
Where, as here, the same supervisor who made the allegedly racist remarks also took the adverse action, it is much easier to find an inference of discrimination. See Anderson, 2024 WL 2801986, at *11 (finding that the plaintiff met her minimal burden of suggesting an inference of discrimination where the “same bosses who made comments and took actions that were racially inflected also took the allegedly adverse actions.”). However, the Court must also consider the other competing factors. See Henry, 616 F.3d at 150 (“[W]e caution that none of these factors should be regarded as dispositive… [but] this framework will provide a useful approach to the admission or exclusion of remarks not directly related to the adverse action against the plaintiff … .”).Newmark argues that the passage of time between the remarks and the negative performance review weighs against an inference of discrimination. This argument is undermined by the fact that Winkelmann also allegedly discriminated against Hayes between September 2020 and December 2021 by repeatedly denying PTO requests and wrongfully reporting her to HR for filing a fraudulent expense report. Doc 37 at 12–13. Regardless of whether these actions also constitute adverse employment actions, they provide relevant background evidence by shedding light on the context of Winkelmann’s motivation and thus bolster Hayes’ claim that Winkelmann treated her differently because of her race. Vega v. Hempstead Union Free School District, 801 F.3d 72, 88 (2d Cir. 2015) (“[P]urpose may often be inferred from the totality of the relevant facts … .” (quoting Washington v. Davis, 426 U.S. 229, 242 (1976)); Anderson, 2024 WL 2801986, at *11; Wright v. New York City Off-Track Betting Corp., No. 05-cv-9790 (WHP), 2008 WL 762196, at *4 (S.D.N.Y. Mar. 24, 2008) (“Stray discriminatory comments combined with significant disparate treatment can raise an inference of discrimination.”). Accordingly, The Court finds that Winkelmann’s allegedly racist remarks and discriminatory conduct, viewed together, support the minimal inference that Winkelmann gave Hayes a negative performance evaluation because of her race.
Newmark also argues that there cannot be an inference of discrimination because Hayes received an “overwhelmingly positive” performance review from Winkelmann. Doc. 35 at 13–14. However, Hayes makes no allegations that Winkelmann ever participated in a positive performance review. Although the complaint is not clear about who gave Hayes the positive reviews, the Court draws the reasonable inference that Hayes does not allege Winkelmann was the supervisor responsible for her positive performance reviews and subsequent raise. Indeed, aside from the negative review in December 2021, the only performance review that Hayes specifically references in her complaint is a December 2020 performance review with Winkelmann and Flavinn where Hayes attempted to raise a complaint of discrimination against Winkelmann and was prevented from doing so.
[Citations omitted.]
Based on this, the court held that plaintiff “has sufficiently pleaded that her negative performance constitutes an adverse employment action which occurred under circumstances giving rise to an inference of discrimination.”