“Grade inflation” is a well-known phenomenon in the academic sphere, where grade-point averages creep up over time despite the lack of performance-based reasons for the increase. Grade inflation can also be an issue for employers’ evaluations of employees and can result in serious legal issues when the supposedly high-performing employee is terminated. A new decision from the Fourth Circuit Court of Appeals (which includes North Carolina, South Carolina, and Virginia) illustrates the danger of evaluations that contradict the grounds used for such terminations.

In Cowgill v. First Data Technologies, Inc., the plaintiff was a call center employee who alleged that she was discriminated against and fired due to her back condition, violating the ADA and FMLA. The defendant disciplined and terminated her for allegedly avoiding calls following disclosure of the medical condition and request for FMLA leave. The district court granted summary judgment for the employer based on the reasons provided for the termination.

On appeal, the Fourth Circuit reversed this decision and remanded the case for a jury trial. The court noted that the plaintiff had received above-average performance reviews, including the last review prior to her termination. The employer’s sudden discovery of alleged performance issues raised factual questions of whether these purported reasons were a pretext for terminating the plaintiff due to her medical condition.

Companies that ask supervisors to compile performance reviews should train those managers on how to rate employees. The training should explain that average means average and that there is nothing wrong with rating an employee’s performance as average. Employers should not tie salary increases or bonuses to achieving a certain score on the reviews. This practice incentivizes managers to overrate employees to avoid them missing out on pay increases. When terminating an employee for performance, the company should ensure that the grounds used to justify this decision are not undercut by its employee assessment system.