By David M. Lester
Atkinson, Anderson, Loya, Ruud & Romo
As Carrie Fisher once said, “Everything is negotiable; whether or not the negotiation is easy is another thing.” A recent decision in the First Circuit, Russo v. New Hampshire Neurospine Institute, P.A., 2026 WL 2491680 (1st Cir. 2026), while not legally binding on California employers, nevertheless raises many questions on how best to separate difficult employees and concerns that can arise out of a termination that takes place over time.
Background of Escalating Conflict Led to Decision to Separate
Gina Russo worked for eleven years as a physician’s assistant at the New Hampshire Neurospine Institute (the “Institute”). During her tenure she had several negative interactions with Dr. Ahn, an orthopedic surgeon. Russo worked primarily in a different area, neurosurgery, and did not have a negative interaction with Dr. Ahn until eight years into her employment. Dr. Ahn asked Russo to look in on a patient at a different hospital from where she was presently working, and when she said she could not and suggested Dr. Ahn visit the patient instead, he got angry with her. Dr. Ahn later described her tone during the conversation as disrespectful, hateful, and resentful. Nine months later Dr. Ahn asked her to obtain a consent for surgery from a patient, and Dr. Ahn felt she had handled the consent process inappropriately and severely damaged the trust of his patient. As a result, he requested that she be removed from all of his cases. Twenty-one months later, Dr. Ahn sought Russo’s help in discharging a patient, and he yelled at her when he felt her response to his request was passive aggressive. Within weeks, Dr. Ahn told his partners that he could no longer work with Russo because she was disrespectful, insubordinate, rude, abrasive, and unhelpful. He told his partners it was either him or Russo, and the partnership unanimously decided to terminate her employment. It should be noted that Dr. Ahn had a history of difficulties in getting along with others in the practice.
Plaintiff’s Termination Was Accelerated Following Her Gender Bias Complaint
The Executive Director of the Institute informed Russo of her termination, but also proposed a transition schedule whereby Russo would continue to work while looking for a job and the practice could avoid being short-staffed. During discussion about this transition plan, Russo for the first time expressed concerns about gender bias. On April 2, 2019, an agreement was sent to Russo which proposed having her work at the Institute through June 28, 2019, receiving a $15,000 severance payment, and letting Russo work at an affiliated nursing home as an independent contractor thereafter. Two days later Russo sent a counterproposal of working through April 19, taking accrued vacation until July 9, and working at the nursing home during her vacation period and then after July 9. On April 11, the Institute sent her a modified separation agreement incorporating Russo’s requests but reducing the severance to $2,500.
Russo did not agree to the revised agreement and, on April 29, Russo’s attorney sent a demand letter that reiterated her gender bias complaint, confirmed her willingness to provide services either as an employee or independent contractor, and proposed a severance payment of $100,000. In response to the demand letter, the Institute terminated Russo’s employment effective May 2, 2019. Russo had previously asked four doctors to provide her recommendation letters to which they agreed, however, on May 30 the Institute instructed several doctors that all requests for references must go through the Institute’s legal counsel. Russo obtained a new job in early June 2019. It was not until the following month that the Institute hired an independent investigator to determine if Russo had experienced sex discrimination.
No Evidence of Gender Bias
There was no dispute that Russo raised her voice at Dr. Ahn, did not follow his instructions at times, and failed to timely contact him about potentially important, patient-related matters. These types of concerns are not gender-based. Similarly, Dr. Ahn yelling at her on multiple occasions because he felt she was disrespecting him may be out of line in the workplace, but there is no nexus to her gender especially in light of the fact that he had a history of explosive emotional reactions to many other colleagues, both male and female. In short, Dr. Ahn was often difficult towards employees of both genders. Russo and Dr. Ahn had multiple negative interactions over several years. Dr. Ahn’s ultimatum that he would quit if the Institute retained Russo was the basis for the Institute’s decision to terminate Russo. The court found that there was no evidence that Dr. Ahn’s views were rooted in gender bias rather than personal antipathy.
Employer’s Actions During Severance Negotiation Could Be Actionable Retaliation
The court in this case found that there was direct evidence of retaliatory animus, specifically that the Institute wanted Russo to be gone because she was making allegations of gender bias. The only remaining question was whether the Institute subjected Russo to adverse employment actions due to her gender bias complaint.
The court addressed whether accelerating termination during the transition period and denying Russo an independent contractor role at the nursing home were adverse employment actions. The court did not address whether withholding recommendation letters was an adverse employments action because it was not before the court, but it indicated it might be.
The court held that accelerating a termination due to an employee’s protected conduct is retaliation because the loss of several months’ guaranteed wages and benefits for sending a demand letter would discourage reporting discrimination. The court also found that withdrawing the independent contractor opportunity would discourage a reasonable employee from complaining about discrimination, and therefore, it is an adverse action. The court held that withdrawal of a voluntary benefit may constitute adverse action even when the employer had no obligation to provide that benefit.
The Institute argued that Russo was notified of her termination before she engaged in any protected conduct and that adverse actions which precede protected conduct cannot be actionable. The court concluded, however, that accelerating Russo’s termination and withdrawing the independent contractor opportunity postdated Russo’s demand letter and therefore Russo could state an actionable retaliation claim.
Employer Takeaways and Best Practices
- Telling an employee that they are terminated following a workplace conflict but allowing them continue to work thereafter while looking for a job can be a recipe for disaster. Once you notify an employee of such a termination, it may be best to part ways immediately before any resentments can bubble to the surface or conflicts worsen.
- Employers should negotiate severance agreements with current employees with extreme caution. If any workplace compliant surfaces during negotiations, any perceived backward negotiation stance by the employer could be construed as retaliation and prompt the employee to loop in legal counsel.
- When an employee complains about any form of discrimination, the employer should start an investigation immediately. Any delay can be misconstrued as indifference and give rise to claims for failure to prevent or correct discrimination. In addition, starting an investigation after the employee has already been terminated and departed can lead to difficulties with getting the complainant to participate in the investigation.
- All employers should adopt a reference policy of only providing dates of employment and position held. This bare bone approach helps to avoid potential claims of defamation and can be consistently applied regardless of the circumstances.
Employers with questions regarding severance negotiations may contact the author of this post or their usual employment law counsel at AALRR.
Reprinted with permission from AALRR.