The U.S. Supreme Court is considering the future viability of affirmative action plans in the academic sphere and could make significant changes to the legality of race-based admissions policies in colleges and universities.  Like academia, over the last twenty years, many companies have adopted diversity and affirmative action programs (even where not required by law) to increase the representation of traditionally underrepresented employees in certain positions.

The prevalence of these business practices, coupled with the scrutiny federal courts implore onto programs that discriminate against some employees (even if that discrimination is in an effort to either equalize racial or gender imbalance or to remedy the effects of past discrimination), will likely lead to an increase in race-based and gender-based challenges to employer diversity programs—as demonstrated by a recent case out of the U.S. District Court for the Southern District of Texas. Thus, while the goals of these actions may be laudable, they may also result in discrimination claims filed by non-minority employees.

In Burak Powers v. Broken Hill Proprietary (USA), Inc., Houston-based federal judge Lee Rosenthal aptly framed the issue:

This lawsuit raises a question that many companies are struggling to answer: What steps can a company take to encourage the promotion of women and unrepresented minorities to managerial positions without discriminating against men or individuals outside the protected class seeking the same opportunities?

As it turns out, there is good reason why companies are struggling to answer this question—because there is no clear answer.

Burak Powers was hired by BHP, an Australian-based company, in 2013. By most accounts, he was an outstanding employee. He was promoted to managerial positions having multiple direct reports. He was nominated as a BHP Future Emerging Leader, and HR named him a high potential talent.

In 2016, the company launched its Inclusion and Diversity Initiative. The goals of the initiative included both increasing the presentation of women in the global workplace by 3% and reaching an overall gender-balanced global workforce by 2025. The company furthered the initiative by creating Key Performance Indicators, that tied manager performance reviews and bonuses to the targets in the Inclusion and Diversity Initiative and the representation of women in the workforce.

Despite being a high performer, Powers’ position was eliminated during the company’s global restructuring effort. When he attempted to apply for other positions within the company, he was routinely passed over for women (despite his contention that he was more qualified and a better candidate for the role). Moreover, the company converted an Australia-based role similar to the one Powers held into a global opportunity, which a woman from Houston, Texas ultimately filled. As a result of his termination and other subsequent actions taken by BHP, Powers brought a sex discrimination, post-termination retaliation and breach of contract suit against BHP.

Judge Rosenthal denied BHP’s motion for summary judgment on Powers’ claims, noting that Powers had direct proof of sex discrimination (i.e., the Inclusion and Diversity Initiative) and that he had substantial circumstantial proof of sex discrimination. Judge Rosenthal also determined that a fact issue existed on Powers’ post-termination retaliation and breach of contract claims.

Power’s spotlights several features of diversity initiatives that could prove problematic and give rise to a discrimination claim by an employee that is not the intended beneficiary of the initiates. These include: (1) tying bonuses (either the amount or eligibility to receive) to achievements of gender or minority-based targets; (2) measuring manager performance or setting KPIs to the achievement of gender or minority-based targets; (3) pre-determining that a position will be filled by a candidate of a particular gender or race without regard to the qualifications of the applicants; (4) altering a position to accommodate for one gender or minority-based candidate while not altering the position for other applicants of different genders or races; (5) instructing leadership to utilize the company’s restructuring as a tool to accelerate its progress towards gender or minority-based targets and (6) exiting employees based, in whole or in part, on their gender or minority status and not upon the employee qualifications.

Inclusiveness and diversity in the workforce can be important goals of a business.  However, when implementing and utilizing these programs, companies must be mindful of the anti-discrimination laws and ensure that remedying underrepresentation of certain racial, gender or ethnic does not result in discriminating against other employees.

A full copy of Judge Rosenthal’s opinion is available here.