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Commentary: A multimillion-dollar cautionary tale of diversity programs

Employers using the programs can be guilty of discrimination if not properly executed

An employee filed a lawsuit against his employer under Title VII of the Civil Rights Act of 1964 alleging that he and seven other white male executives were fired as part of the employer’s “diversity” push.  A jury of his peers found that he was terminated based on his race and sex.  The jury awarded him $10 million in punitive damages, with a hearing set for a later date to determine back pay, front pay/reinstatement, attorneys’ fees, and other damages.

Background

The employee had been employed as the senior vice president of marketing and communications for nearly five years. The employee had received positive evaluations every year and was hitting his targets set by the employer. Despite his positive evaluations, the employee was terminated and replaced with a white female and a black female who shared his former duties.  The employee filed suit against the employer in federal court in North Carolina alleging that he had been wrongfully terminated and that his termination had been motivated by his race and sex in violation of Title VII of the Civil Rights Act of 1964.

Court decision

To prove his claims, the employee asserted that he could prove discrimination using a “mixed motive” approach and that evidence could be used to demonstrate that his race and gender were motivating factors in the employer’s decision to fire him. His evidence included an alleged pattern of white males being terminated from employment and the specifics of the employer’s new-founded Diversity, Equity & Inclusion (DE&I) program. 

The employee pointed to evidence that the Diversity and Inclusion Executive Council, formed under the DE&I program, determined in 2018 that the employer was failing to meet its diversity targets, specifically within its leadership ranks. Relying on the employer’s “nine-box” performance ratings document from 2017 for all senior leaders, the employee was able to demonstrate that by 2019, every white male on the document had been terminated and every woman and minority on that same document had been promoted.  The employee also presented evidence that the employer’s diversity statistics from 2016-2019 showed a 5.9% decrease in white employees at or above the vice president level as well as contemporaneous increases in the numbers of women and minorities. The employee also pointed to the proximity between the council’s meeting regarding these targets and the discharge of the first white male member of leadership within the same month. Additionally, the employee presented evidence that when a recruitment firm contacted the employer to enquire about plaintiff’s employability following his termination, the employer specifically indicated that his performance was not the reason for his termination.

In attempting to defend its decision and the DE&I program, the employer presented evidence that the employee had admitted that he had never been subject to discrimination while employed. It also argued that the employee had been consistently underperforming and that, while his evaluations were strong generally, he was often described as lacking potential and failing to engage with his peers. The employer asserted that it expected its senior executives “to be exceptional, not just good,” and had a legitimate performance-based explanation for its discharge decision.

After a lengthy trial, the jury hand down a verdict in favor of the employee. The jury found that he proved that his race and sex were a motivating factor in the employer’s decision to terminate his employment and that the employer did not prove that it would have made the same decision to discharge the employee regardless of his race or sex. The jury awarded the employee $10 million in punitive damages and set a later hearing to determine back pay, front pay/reinstatement, and other damages.

Takeaway

This case serves as a reminder that if an employer decides to implement a diversity program, it should be created, administered, and implemented in a wholly non-discriminatory manner.  As this case illustrates, any classification of individuals in the workplace can be subject to alleged discrimination.  While diversity programs can and should be a positive vehicle for promoting diversity in the workplace, employers should take time to review any diversity programs and initiatives to ensure the clear communication and implementation of their programs, including avoiding any overly robust implementation strategies that may attempt to “increase diversity” through potential discrimination with respect to other classifications. 

R. Eddie Wayland is a partner with the law firm of King & Ballow.  You may reach Mr. Wayland at (615) 726-5430 or at rew@kingballow.com.  The foregoing materials, discussion and comments have been abridged from laws, court decisions, and administrative rulings and should not be construed as legal advice on specific situations or subjects.

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