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Diversity-Fueled ‘Reverse’ Bias Claims Put Employers in Quandary

Oct. 8, 2020, 9:46 AM

The Trump administration’s condemnation of some diversity and inclusion programs presents a Catch-22 for employers seeking to close baked-in pay, hiring, and promotion gaps for women and people of color, while avoiding claims of bias from White workers and men.

This clash between diversity efforts and “reverse” discrimination was recently stoked by the U.S. Labor Department’s scrutiny of Microsoft Corp. and Wells Fargo & Co. The agency asked the companies to explain how their programs to increase Black leadership don’t violate a federal civil rights law that prohibits race bias.

Attorneys said this development could make employers hesitate to take on new diversity measures when faced with the threat of agency enforcement and sanctions, as well as “reverse” bias lawsuits that can lead to damages.

“Companies were never able to give preference to one race of gender over another. The real result here is that there will be a lot of confusion about reverse discrimination claims,” said Tyrone Thomas, a member at Mintz, Levin, Cohn, Ferris, Glovsky and Popeo in Washington and chair of the firm’s Diversity Committee. “This could have a chilling effect, not because they are violating the law, but because of a large misunderstanding of what companies can do on their own volition to combat racism or sexism in the workplace.”

The DOL’s inquiries to the companies follow President Donald Trump’s September executive order that bars federal agencies and their contractors from conducting diversity training that includes “divisive concepts” such as the idea that the U.S. is inherently sexist or racist.

Meanwhile, companies including Adidas AG, The Boeing Co., and Alphabet Inc.'s Google promised to increase their hiring of people of color and promote better inclusion, in the wake of escalated racial tensions that followed the death of George Floyd in Minneapolis this summer.

Quotas and hiring preferences that exclude groups based on race or sex generally are illegal under Title VII of the 1964 Civil Rights Act. But diversity efforts, when done correctly, don’t need to be abandoned because of the fear of potential “reverse” discrimination liability, attorneys say. Companies also risk claims of inequity and bias from women and minorities if they don’t have training, outreach, or other programs in place to address systemic issues in the workplace.

“It’s fair to say that American workers might be confused about what is lawful and what is not,” said Laura Maechtlen, a partner at management-side firm Seyfarth Shaw in San Francisco. “It’s not always clear where the legal line can be drawn, but as long as companies proceed carefully, they can do a lot that falls on the right side of the law to respond to the current environment.”

More ‘Reverse’ Bias Claims?

Litigation alleging discrimination against White workers and men under Title VII and similar state laws aren’t new, and several high-profile suits were filed in recent years against YouTube, Google, and Starbucks Corp. These cases show that companies face pressure from several fronts, from shareholders and advocates pushing for equality and those who feel they are left out of such efforts.

The Trump administration’s push against diversity programs could embolden more “reverse” discrimination suits, said David Lowe, a partner with plaintiffs’ firm Rudy, Exelrod, Zieff & Lowe in San Francisco.

“It provides another argument for racial majority members to challenge a practice that previously we believed was legal and desirable to expand hiring pools,” Lowe said. “Now, you have the federal government questioning. That will add a new avenue of attack.”

Former Google engineer James Damore, for example, filed a discrimination lawsuit after he was fired for criticizing the company’s diversity policies in a 3,000-word memo that, in part, detailed the biological differences between sexes that he claimed made men better suited for the industry. He ultimately dropped that lawsuit in May.

Another lawsuit claims former Google and YouTube recruiter Arne Wilberg was unlawfully fired because he didn’t reject white and Asian male job candidates, which he said the company pressured him and other recruits to do for diversity purposes. The company denied it has such a policy. The dispute was sentto arbitration.

Starbucks found itself embroiled in a high-profile incident last year at a Philadelphia cafe in which a Black customer was asked to leave the store and was subsequently arrested. In the wake of protests and accusations of racism, the company responded swiftly by condemning the action and instituting anti-discrimination training.

But in an October 2019 lawsuit, which is ongoing, store manager Shannon Phillips alleged that, as a result of the inclusion efforts, she and other White employees who weren’t involved in the incident were punished and Black staff members present during the conflict weren’t. She says her termination was motivated by the arrests and bad publicity the company received and sued for discrimination based on her race as a White person.

Starbucks has denied the allegations.

Look to High Court Precedent

Thomas of Mintz Levin said the U.S. Supreme Court has decades-old precedent about what’s permissible when it comes to programs that promote inclusion and diversity. Companies are allowed to put in place proactive plans to address areas where there have been racial inequality issues, as long as they don’t have an exclusionary effect on a White or male person.

The justices found in United Steelworkers v. Weber in 1979 that Title VII didn’t bar employers from favoring women and minorities. A later case in 1987, Johnson v. Transportation Agency, dealt with sex-based affirmative action programs. Since then, there’s been a dearth of case law or lawsuits that take aim at corporate inclusion efforts.

To the extent that employer diversity and inclusion programs involve employee solicitation, they should keep the parameters of the high court’s decisions in mind, said New York University School of Law professor Deborah Malamud.

In those cases, the court held that programs can’t exclude groups, but can be aimed at racial or gender imbalances in traditionally segregated job categories, she said.

Seyfarth Shaw’s Maechtlen said the key is being keenly aware to not institute illegal quotas or use race or sex as a sole factor in promotion or hiring. That’s distinct from efforts to create equal opportunities for all employees, she said.

“It is a balancing decision that every employer has to make about how creative they can be within their own talent structure,” she said. “There’s an idea that somehow doing a diversity program will exclude majority populations. That’s a real fallacy.”

To contact the reporter on this story: Erin Mulvaney in Washington at emulvaney@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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