DEI Initiatives in Reverse Discrimination Claims: Circuit Courts Weigh-In

A federal appeals court has affirmed a jury verdict awarding nearly $4 million in lost wages, benefits, and interest to a white male employee who based reverse discrimination allegations in part on circumstantial evidence related to DEI initiatives. 

The decision highlights the importance to employers of vetting DEI initiatives under advice of counsel to ensure they are legally permissible.  That kind of review can help companies promote diversity, equity and inclusion without creating undue risk in a climate of DEI backlash following the U.S. Supreme Court’s decision striking down race-conscious college admissions programs.

The Case In More Detail

The Fourth Circuit upheld a jury verdict recently in a case brought by David Duvall against his former employer, Novant Health Incorporated.

Duvall argued that his race and gender were motivating factors in his employer’s decision to terminate his employment.  Particular DEI initiatives relied on by Duvall and noted by the Fourth Circuit included:

• A “widescale D&I initiative” to ensure that Novant Health’s workforce and leadership “reflect[ed] the communities [it] serve[d],” including by committing to:
  • “[A]dditional dimensions of diversity to the executive and senior leadership teams[.]”
  • “[I]ncorporating ‘a system wide decision-making process that includes a diversity and inclusion lens[.]’”
  • “[I]dentifying and closing any remaining diversity gaps[.]”
• Data showing “a dramatic increase in female leaders” by 2019 (the year after Duvall was fired). The data also showed an increase in Black workers and leaders during the life of the D&I plan.
• “A long-term financial incentive plan that tied executive bonuses to closing gaps in the Hispanic and Asian workforce’ by achieving a specific percentage of each group.”

Other important evidence included the fact that Duvall had a record of exceptional performance, was told simply that the company “was going in a different direction” and was replaced by two women. In addition, Duvall’s manager (the company’s CEO) “offer[ed] shifting, conflicting, and unsubstantiated explanations for Duvall’s termination.” 

The Fourth Circuit vacated the jury’s $10 million punitive damages award, however, for lack of proof that Duvall’s manager “perceived risk that [terminating Duvall’s employment would] violate federal law.”

Other Courts Weigh In

Other circuit courts are also taking notice of DEI initiatives in the context of reverse discrimination claims. 

The Tenth Circuit recently wrote in its discussion of a hostile work environment claim that an employer’s DEI training was “troubling on many levels” and could “create hostile workplaces when official policy is combined with ongoing stereotyping and explicit or implicit expectations of discriminatory treatment.” The court noted that the DEI training could also “set the stage for actionable misconduct.” 

The court ultimately found that a single instance of the objectionable training was not sufficiently severe or pervasive to create a hostile work environment.  It provided examples, however, of when such training might, including if “the training occurred more than once” or if “supervisors threatened to punish or otherwise discipline employees who failed to complete or agree with the materials” or if “co-workers engaged in specific acts of insult or ridicule … aimed at [plaintiff] because of the training.”

What Employers Should Consider Doing

We are likely to see more cases like these, particularly in the wake of the Supreme Court’s decision in the college admissions case. 

Now, however, is not the time to overreact, for reasons we recently noted. Rather, employers can work with counsel to review DEI initiatives, identify and refine practices that present legal risk and continue their commitment to promoting equal employment opportunity for all.