Recently, many employers have adopted diversity, equity, and inclusion (DEI) programs. They believe these programs will improve workforce diversity, organizational performance, and workforce inclusivity. It can make good business sense. However, some employers and employees have experienced problems with their DEI programs. As a result, some companies have altered or discontinued their DEI programs. These are examples of the need to keep DEI program implementation flexible, viewing the process as an evolution. Employment lawyers and other skilled professionals can help. Ending up in the courtroom is an example of what can happen when the goals, plans, operations, and workplace policies created in the DEI program are implemented without legal guidance.

A decision handed down on March 12, 2024, by the Fourth Circuit Court of Appeals, in a matter known as Duvall v. Novant Health, drives home a key point concerning unconscious bias. This case makes clear that employers must guard against the risk of violating the prohibition of workplace discrimination spelled out in Title VII, through what is commonly referred to as reverse discrimination.

Employers must also ensure that DEI programs do not run afoul of state and local anti-discrimination provisions. In the wake of Duvall, some basic guidelines have emerged. Here is where an employment lawyer can help navigate a company through the waters of state and federal employment law.

How to Implement a Legal DEI Program

Guarding an employer from legal liability is among an HR manager’s top tasks. This may be the time to evaluate workplace policies, hiring policies, and employment guidelines. Hiring policies and recruitment should be channeled through the HR manager as well as the corporate suite. It is wise to learn about Texas and other state laws that affect a DEI program before implementation. Contact Kilgore & Kilgore for employment law guidance from our experienced team of employment lawyers.

Legal Considerations for DEI Programs – Navigating State and Federal Employment Laws

In the matter of Duvall v. Novant Health, in 2015, Novant Health signed onto the American Hospital Association’s #123forEquity campaign. The goal of the nationwide campaign was to reduce racial, ethnic, and cultural disparities in health care by increasing diversity in leadership and governance. Novant Health implemented its own diversity and inclusion initiative with a four-year timeline. Between 2016 and 2019, the goal of the initiative was to “remake the workforce”. The initiative included executive-level review of employee demographics and a plan to base executive bonuses, at least in part, on achievement of the diversity and inclusion goals. It was a numbers-driven plan.

David Duvall, a white man, joined Novant Health as the senior vice president of marketing and communications in August 2013. During his tenure, he consistently received high performance ratings and national recognition for marketing initiatives under his leadership. Despite his success, Novant abruptly terminated his employment in 2018. Duvall had no previous indication that his job was in jeopardy.

His responsibilities were temporarily reassigned to a white woman and a black woman. His permanent replacement was a black woman. Duvall’s termination followed the termination of several other senior white male executives who, he claimed, were similarly replaced by women or racial minorities. Novant’s after-the-fact citation of performance issues was not documented in Duvall’s performance ratings. In November 2019, Duvall sued Novant Health, asserting race and gender discrimination in violation of Title VII and wrongful discharge. Novant’s goal of remaking the workforce figured prominently in Duvall’s complaint.

After a 7-day trial in the Western District of North Carolina, the jury returned a verdict for Duvall, concluding that his race and/or sex were motivating factors in his termination and that Novant Health would not have otherwise fired him. Duvall received $3.2 million in back pay and front pay. The jury awarded him $10 million in punitive damages. On appeal, the Fourth Circuit vacated and remanded the punitive damages award, affirming the rest of the trial court’s decision.

Title VII and the Texas Commission on Human Rights Act (TCHRA)

Federal law, Title VII of the Civil Rights Act of 1964, protects job applicants and employees from employment discrimination based on race, color, religion, sex, or national origin. In its 1973 decision in McDonnell Douglas Corp. v. Green, the Supreme Court stated that the purpose of Title VII was:

“to assure equality of employment opportunities and to eliminate those discriminatory practices and devices which have fostered racially stratified job environments to the disadvantage of minority citizens.” The Court further stated that “[d]iscriminatory preference for any group, minority, or majority, is precisely and only what Congress has proscribed. What is required by Congress is the removal of artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classification.”

The McDonnell Douglas case makes clear that the primary purpose of Title VII is to assure neutral employment decisions. Novant Health’s DEI initiative seems to have reached beyond neutrality. Although intended to ensure compliance with anti-discrimination laws, its implementation instead violated them.

In Texas, the issue of employment discrimination is also governed by the Texas Commission on Human Rights Act (TCHRA) which provides for the execution of “the policies of Title VII of the Civil Rights Act of 1964 and its subsequent amendments.” It further specifies that:

“An employer commits an unlawful employment practice if because of race, color, disability, religion, sex, national origin, or age, the employer:

• fails or refuses to hire an individual, discharges an individual, or discriminates in any other manner against an individual in connection with compensation or the terms, conditions, or privileges of employment; or
• limits, segregates, or classifies an employee or applicant for employment in a manner that would deprive or tend to deprive an individual of any employment opportunity or adversely affect in any other manner the status of an employee.”

At least on its face, there seems to be little daylight between TCHRA and Title VII, at least as far as a DEI program is concerned.

How to Reduce Legal Liability of DEI Programs – Nine Principles

Currently, there is no definitive regulatory guidance about the boundaries of neutrality in employment decisions. The collected wisdom of experienced employment attorneys seems to focus on nine general principles:

• DEI programs that explicitly seek to prefer one race or gender over another, such as by using quotas or providing bonuses to leaders for meeting certain race- or gender-based metrics, are more likely to be questioned.
• A DEI program should seek to expand the pool of employees who are competing for jobs and promotions by reaching out to diverse communities. The recruitment and promotion pool should get bigger, as well as more diverse.
• Employers should be mindful of the fact that race-based training programs can create hostile workplaces when official policy is combined with ongoing stereotyping and explicit or implicit expectations of discriminatory treatment.
• DEI is not a single event or a short-term goal. Businesses need defined goals for an evolving action plan to guide efforts over the long haul, with mechanisms to track progress in a program with regular checkpoints for evaluation.
• Periodic, anonymous employee satisfaction surveys can help a company discover simmering workplace issues. This data also provides a baseline for measuring the effectiveness of DEI initiatives.
• Employers should stress the business case for diversity, using data about the positive effect of an inclusive culture on the bottom line, including profit, and achievement of DEI goals.
• The practice of tying compensation to the achievement of diversity objectives may be risky.
• Employee performance issues should be addressed in a timely manner and documented.
• Finally, and more than anything else, companies can reduce the risk of lawsuits by conducting careful legal reviews of their DEI programs, hiring practices, and training protocols.

Are You a Victim of a DEI Program? Or Are you Evaluating a Current DEI Program? Contact Kilgore & Kilgore

To learn more about legal guidance, legal liability, performance ratings, DEI initiatives, diverse talent acquisition, inclusion initiatives, unconscious bias, and measuring success of inclusion programs, click here contact Kilgore & Kilgore. We will call you or call us if you prefer at (214) 949-9099. We are here to help you achieve company success.