U.S. Court of Appeals Decision Highlights Retaliation Risks During Employee Separations

A recent decision from the U.S. Court of Appeals for the First Circuit provides an important reminder that an employer’s exposure to a retaliation claim can arise even after it has already made a lawful decision to terminate an employee.

In Russo v. New Hampshire Neurospine Institute, P.A., No. 25-1519 (1st Cir. Aug. 25, 2026), the First Circuit affirmed summary judgment for an employer on an employee’s sex discrimination claim, but reinstated her retaliation claim. The court concluded that, although the employer had decided to terminate the employee before her attorney sent a demand letter alleging discrimination on her behalf, a jury could find that subsequent changes to the terms and timing of her separation were retaliatory.

Background

The plaintiff, a physician assistant, had worked for the New Hampshire medical practice for approximately eleven years. Following conflicts between her and one of the practice’s physician-partners, the partners unanimously voted to terminate her employment.

The practice did not immediately implement the termination. Instead, the parties discussed a transition arrangement under which the plaintiff would remain employed for several additional months while looking for another position. They also negotiated a separation agreement and contemplated a post-employment independent contractor arrangement.

During those discussions, the plaintiff complained that her termination was the result of sex discrimination. The parties nevertheless continued negotiating a separation agreement and a potential independent-contractor arrangement. Her attorney subsequently sent a demand letter reiterating the discrimination claim, seeking additional severance, and expressing her willingness to continue discussing an employment or contractor arrangement.

Within days of receiving the demand letter, the practice accelerated her termination and discontinued the contemplated independent-contractor opportunity. The record also included internal communications in which the practice’s executive director stated that the plaintiff was “done” because she was making allegations that the executive director regarded as unacceptable.

The plaintiff sued for sex discrimination and retaliation.

The Decision

The First Circuit agreed with the district court that the evidence was insufficient to permit the plaintiff’s sex discrimination claim to proceed. The practice had articulated a legitimate reason for the termination: the deteriorated working relationship between the plaintiff and a physician-partner, who had said he could no longer remain at the practice if she continued working there. The court concluded that the plaintiff had not presented sufficient evidence that sex discrimination motivated the termination.

Although the termination decision predated the demand letter, the retaliation claim focused on the practice’s subsequent actions. The employer argued that the earlier decision defeated the retaliation claim.

The First Circuit rejected that argument because the termination itself was not the only employment action at issue. The practice’s subsequent decisions to accelerate the termination and withdraw the contemplated independent-contractor opportunity were separate actions occurring after the protected complaint.

The court also concluded that accelerating the termination was materially adverse and that a jury could find that withdrawing the contractor opportunity was materially adverse as well. The accelerated termination cost the employee several months of expected wages and benefits, while loss of the contractor opportunity could similarly deter a reasonable employee from complaining of discrimination. The court did not decide whether acceleration of her termination alone would be materially adverse if the employee had continued receiving full pay and benefits through the originally scheduled termination date.

The internal communications were particularly damaging. The First Circuit characterized the executive director’s statement that the employee was “done” because she was making unacceptable allegations as direct evidence of retaliatory animus. Other communications linking the practice’s actions to her discrimination complaint further supported allowing the retaliation claim to proceed.

Employer Takeaways

Russo does not mean that an employer cannot carry out a previously made termination decision because an employee asserts a discrimination claim. It does, however, underscore the retaliation risk when an employer changes the timing or terms of a separation, or withdraws a contemplated post-employment opportunity, after protected activity. 

Employers should consider several practical steps when an employee raises a protected concern during the separation process:

• Document what was already decided. Contemporaneous documentation of the termination decision and contemplated timing can be critical if the employee later raises a protected complaint.
• Treat subsequent changes as new decisions. Accelerating a termination or withdrawing a contemplated post-employment opportunity after a complaint may create retaliation exposure even if the underlying termination decision was lawful.
• Evaluate whether there is an independent reason for the change. Before modifying an existing transition or separation arrangement, identify and document the legitimate, nonretaliatory reason for the change.
• Keep communications focused on legitimate business reasons. Internal communications should accurately reflect the reasons for any change in the separation process and avoid allowing frustration over an employee’s complaint or threatened legal action to influence the decision.
• Involve counsel when the circumstances change. A discrimination complaint during the separation process should prompt a fresh review before the employer changes the timing or terms of the separation.

The practical lesson from Russo is straightforward: a lawful termination decision does not insulate an employer from retaliation claims based on what happens next. Once an employee engages in protected activity, any subsequent change to the separation plan should be carefully evaluated and supported by a legitimate business reason.

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The Workforce Bulletin blog is currently edited by Adam S. Forman, Greta Ravitsky, Elizabeth S. Torkelsen, and Jennifer Stefanick Barna.