Toward the end of 2024, an entirely new category of ERISA litigation began to take shape. These are known as pension risk transfer (PRT) lawsuits. They have all the makings of a looming legal storm. A big one. Among the players are:

• Roughly half of all American adults who, by the end of 2024, held as much as $42 trillion in retirement accounts. They urgently need to know if their savings are safe;
• Fiduciaries of retirement plans covered by the Employee Retirement Income Security Act (ERISA), who need to know the limits of their legal duty to participants when they transfer plan assets to insurance companies and other non-ERISA annuity providers;
• Service providers, including those who manage asset transfers, who need clarity about whether the transfer makes them subject to strict legal requirements of ERISA compliance; and
• The Fifth Circuit and its 2018 decision in Chamber of Commerce v. Department of Labor to vacate federal regulations about fiduciary duty. This has now been cast into high relief by the Supreme Court’s 2024 decision in Loper Bright Enterprises v. Raimondo.

Predicting the course of future litigation is a fool’s errand; history helps sometimes though. In any event, this looks like a combustible mix.

Kilgore & Kilgore Employment Lawyers Understand the Developing Areas of ERISA Litigation

ERISA sets out rules for pension plans, health and disability benefits. But it is a layered and complicated law that changes fast, but also draws from centuries-old principles. To find the answers to your questions about ERISA litigation, you need a lawyer with a wide range of knowledge and experience. Please visit our ERISA and Disability page. For a free review of the facts of your case, reach out by clicking here and sending a contact request to our website Kilgore & Kilgore.

ERISA Guidance – the First Ten Years – To Promote the Interests of Employees and Their Beneficiaries

To quote the Fifth Circuit’s Chamber of Commerce decision, “Congress passed ERISA in 1974 as ‘a comprehensive statute designed to promote the interests of employees and their beneficiaries in employee benefit plans.'” The intended beneficiaries were workers and their families, and only them.

ERISA does this in a variety of ways – including by importing certain ancient trust law principles into the law to ensure that retirement savings were strictly preserved for the use of the intended beneficiaries. Under Section 404 of ERISA, plan fiduciaries are required to act prudently and to diversify the plan’s investments to minimize the risk of large losses. In addition, they must avoid conflicts of interest, including transactions on behalf of the plan that benefit parties related to it, such as other fiduciaries, service providers, or the plan sponsor.

ERISA fiduciary duty requirements – An ERISA fiduciary’s duty of loyalty to the plan participants is often described as the highest standard of care.

Originally, most pension plans promised lifetime annuities to named beneficiaries beginning at normal retirement age. Workers often had long careers and did not become fully entitled (or vested) in their benefits for as long as ten years. The trust fund that held the money was managed by professional investment managers. The world of work was less volatile, and fiduciary regulation was straightforward.

Building Complexity, Crumbling Certainty – 1985-2000

Beginning in about 1985, however, retirement benefit plans began to diversify. Increasingly, participants began to manage their own retirement saving with the help of outside investment management – think of self-directed 401(k) plans, which are now the rule rather than the exception. Other options emerged as well. Some employers terminated their defined benefit plans and eventually annuitized benefits by moving plan assets to insurance companies.

Much of this diversification involved shifting risk away from the plan sponsor and moving retirement savings outside the plan. Questions began to emerge about the standard of loyalty and care that applied to the management of funds that had slipped beyond the immediate control of the named fiduciaries.

In 1995, the Department of Labor issued an Interpretive Bulletin to address this issue, known as IB 95-1. IB 95-1 generally recognizes that when a pension plan purchases an annuity from an insurer as a distribution of benefits, the plan’s liability for the benefits moves to the annuity provider. No longer covered by ERISA, the participant is protected primarily by state insurance law. The plan fiduciaries have discharged their fiduciary duty of loyalty if they have acted prudently. Prudence is defined as a matter of picking the safest possible annuity.

Recent Pension Risk Transfer (PRT) lawsuits rely heavily on IB 95-1, with plaintiffs alleging that plan fiduciaries, for reasons that would constitute a conflict of interest (including cost), failed to choose the safest possible annuity. Many of these lawsuits focus on contracts issued by Athene Annuity and Life Co.

The Fifth Circuit Vacates the Fiduciary Rule

The Fifth Circuit has long regarded IB 95-1 with skepticism, largely because the DOL’s guidance is only an agency interpretation that is not part of ERISA. In 2016, the DOL promulgated related guidance, a package of seven different rules, known as the “Fiduciary Rule” that reinterpret the term “investment advice fiduciary.” The stated purpose of the new guidance was to regulate hundreds of thousands of financial service providers and insurance companies in the trillion-dollar markets for ERISA plans and individual retirement accounts. In Chamber of Commerce, three business groups challenged the Fiduciary Rule as regulatory overreach not justified by the language of ERISA. In 2018, the Fifth Circuit vacated the Fiduciary Rule.

DOL Tries Again to Provide Greater Protection for Retirees – DOL Fiduciary Rule Changes

In early 2024, the DOL released its new fiduciary investment advice definition. The Retirement Security Rule: Definition of an Investment Advice Fiduciary, also known as the “2024 Fiduciary Rule,” would make more service providers investment advice fiduciaries, and thus subject to the conflict-of-interest rules under ERISA. This would provide greater protection for retirement accounts. The 2024 Fiduciary Rule is the subject of two lawsuits in Texas district court, and its effective date was recently stayed by both courts.

In one of the cases, Fed. of Am. for Consumer Choice, Inc. v. Dep’t of Labor, the Eastern District of Texas cites to Loper Bright in support of its conclusion that it owes “no deference to the DOL’s interpretation of ERISA.” The sides are clearly squaring off for a fight. What happens now is anyone’s guess. But it is safe to assume that something will.

Kilgore & Kilgore ERISA Lawyers May Guide You through the ERISA Compliance Lawsuit Maze

Please visit us at our ERISA Disability Claims page to learn more about how Kilgore Lawyers are working to guide clients through the ERISA maze. Please click this link to our website, fill out and submit a request for a free consultation Kilgore & Kilgore.

Creepy. Big Brother. That is how many people react to the thought of an employer requiring an employee to wear smart workplace technology capable of biometric data collection. Say what? Think of a next gen fitness tracker that collects physical information about employees. These employee biosensors collect data such as heart rate, eye movements, temperature, location, and electrical activity of the brain, whether it is related to job performance or not. Those are the printable remarks.

In truth, this kind of employee monitoring has been around for years, especially in industrial settings. The National Labor Relations Board raised an alarm in 2022 in its GC Memo 23-02. The fear was that biometric data collection could be used to thwart union organizing. Texas has had a law in effect since 2017 to protect consumers from invasive data collection, but does it apply to the workplace? Can employers require wearable devices?

Workplace Wearable Technology Laws

In December 2024, the EEOC issued new guidance to employers about what data an employer may lawfully collect. The central caution of this guidance called “Wearables in the Workplace: Using Wearable Technologies Under Federal Employment Discrimination Laws” is that the collected data must be job related and consistent with business necessity. The second most important idea is that the information collected about employees must be securely maintained. Finally, employee consent alone does not justify the collection and use of the data.

Workplace Monitoring Claims – Kilgore & Kilgore Employment Lawyers Provide Guidance on Legal Interpretations

If nothing else, the growth of big tech has taught us that data is king. Big data, especially. As the law has developed, our employment lawyers have been helping workers protect themselves against workplace surveillance and employee monitoring. For information about our employment law practice, click Employment Lawyers. Or call us at (214) 969-9099. You can also reach out to us online. Just click this link Contact Kilgore Law to get the conversation started.

Workplace Wearable Technology Laws: Worker Surveillance and Smart Workplace Technology

The new EEOC fact sheet does not define “workplace wearable technology” or “wearables.” Instead, it refers to digital monitoring devices embedded with sensors and worn on the body that may keep track of bodily movements, biometric data collection, and/or track location.

These might include smart watches or smart rings that track workers’ activities and monitor their physical and mental condition in the workplace, or other devices such as:

• Environmental or proximity sensors that warn wearers of nearby hazards;
• Smart glasses and smart helmets that can measure electrical activity of the brain (electroencephalogram (EEG) testing);
• Emotion detectors;
• Exoskeletons and other aids that provide physical support and reduce fatigue;
• Global Positioning System (GPS) devices that track location; and
• Various other devices.

Workplace Wearable Monitoring and Workplace Wearable Technology

In 2022, about 21 percent of Americans chose to use wearable devices to track health and fitness goals. These are even more popular now. But when employers require workers to wear biometric monitoring devices, the situation is different. These devices are required by some sectors such as:

• Manufacturing, construction, and healthcare employers, to monitor safety, fatigue, and/or exposure to hazardous conditions;
• Retail and service industries, to track productivity, health metrics, or stress levels to optimize workplace performance;
• Corporate sectors, which may use workplace productivity tools, employee health monitoring, employee stress monitoring, and workplace safety tracking, to improve performance;
• Tech and innovation companies to maximize workplace integration; and
• Fitness and health-focused employers to track activity levels, sleep, or overall health to promote of wellness programs.

Here is where issues arise regarding workplace privacy rights, workplace discrimination, and employee consent requirements. An employer may run afoul of nondiscrimination laws if, for example:

• When health information is used to infer an employee is pregnant and then fires her or puts her on unpaid leave unprompted;
• When data from wearable technology produces less accurate results for people with darker skin, it leads to adverse employment decisions against those workers because of that data;
• When an employee goes on a break to take a loved one to a health center and receives an inquiry about the purpose of the visit, which could elicit genetic information in violation of the Genetic Information Nondiscrimination Act; or
• When employees of a specific race or ethnicity are required to use wearables to collect health information while other employees are not.

Workplace Surveillance – EEOC Guidance Wearables – Biometric Data Collection

The EEOC warns that any wearable that collects information about an employee’s medical status (such as blood pressure monitors) may run afoul of the Americans with Disabilities Act (ADA). The EEOC has noted that requiring these wearables could be classified as conducting “medical examinations” or making “disability-related inquiries.” Under the ADA, medical examinations and disability-related inquiries are permitted only if related to the specific job of the employee, and the exam/inquiry is consistent with a business necessity.

When an employer terminates an employee or takes another adverse action against him or her based on inaccurate productivity data, it may be a violation of Title VII of the Civil Rights Act of 1964.

Further, workers must be fully informed about what data is collected, how it will be used, and who will have access. Unless an employee’s consent is demonstrably fully informed and voluntary, it may not permit biometric data collection.

Under the ADA, employers must securely store and treat health and disability-related information confidentially. Employers must also offer accommodations under the ADA and Title VII, such as alternative monitoring methods for employees who cannot or do not want to use wearables due to religious beliefs, disabilities, or pregnancy-related conditions.

Kilgore & Kilgore Employment Lawyers May Be Able to Help You with Workplace Wearable Monitoring Technology Discrimination Claims

The new EEOC guidance imposes significant new restrictions on employers. If you believe that your employer is collecting or has used biometric information against you in a way that is forbidden by law, reach out to us. Click Kilgore Law to contact us.

In March 2024, a Fifth Circuit ruling affirmed a grant of summary judgment for the employer by the Southern District Court of Texas. In Cerda v. Blue Cube, the plaintiff alleged that she was terminated for exercising her rights under the Family and Medical Leave Act of 1993 (FMLA). This case is often cited for providing valuable guidance to employers about what constitutes adequate notice of an intention to take FMLA leave. On the one hand, the decision seems to stand for the proposition that employees may not steal time, curse at or threaten co-workers under the guise of law. But on the other hand, this is a tale of an employee pushed, beyond her limits, by the demands of caring for an aging family member. It is a complicated story of what might once have been a cooperative employment relationship gone sour. The worker lost her job. The employer lost a long-term employee. How did this go so wrong?

The FMLA has been around for a long time now – long enough, one might think, for most of the administrative kinks to be worked out. The intermittent leave provisions, however, have remained an administrative headache for HR Management and employees.

Employee Rights Under the FMLA in Texas – FMLA Intermittent Leave

The FMLA allows eligible employees of covered employers to take unpaid, job-protected family and medical leave, with continuation of group health insurance coverage under the same terms and conditions as if the employee had not taken leave. Eligible employees are entitled to take up to 12 work weeks of FMLA family or medical leave in a 12-month period for specified conditions.

Since its enactment in 1993, administrative practices have been developed to regularize how HR management deals with the law. Nonetheless, the provisions of the law that permit an employee to take shorter, intermittent periods of leave where appropriate remain a headache for HR management. And that, quite frankly, is the way that family and medical emergencies often happen.

Call Kilgore & Kilgore for Questions About FMLA Violations

Our FMLA leave legal specialists understand FMLA requirements. Click this link to learn more about our Texas employment law practices FMLA Best Practices. To speak with one of our Texas employment lawyers, reach out to us at Contact Kilgore & Kilgore or call us at (214) 969-9099.

FMLA Workplace Leave Policies and Texas Employment Law

Elizabeth Cerda worked as a Cell Services Operator at Blue Cube Operations in Freeport, Texas from 2006 until 2020. In December 2016, she took workers’ compensation leave after sustaining an on-the-job injury to her foot. In 2017, Cerda took FMLA leave while recovering from rotator cuff surgery. She exhausted all 12 weeks of FMLA-protected leave in 2018. She was out on leave for approximately 18 months, though Blue Cube allowed her to return to her employment in December 2018.

Family Caregiving and FMLA Intermittent Leave

Upon her return, Cerda informed her supervisor that her father had health issues and said that she “was going to make more of an effort to go on [her] lunch break to see [her father] to make sure he had his medicines and something to eat . . . to hold him down until [she] got off work.” In January 2019, Cerda’s mother, who had been her father’s primary caregiver, died. Cerda’s father suffered from a variety of conditions, including dementia, which affected his ability to care for himself. Her other family was not local.

Cerda’s co-workers, meanwhile, began to complain that she was missing shifts. She was also taking lunch breaks far longer than the allotted 30 minutes. Cerda took time off when she was exposed to COVID-19. She was required to code the days as personal sick days. The facts are in dispute, but when she became angry, she allegedly said that “she would just come to work and get all these m-f sick.” At the same time, she alleged instances of sexual discrimination and harassment. Cerda was fired in April 2020, allegedly for time theft and threats to co-workers. Cerda sued. The District Court granted the employer’s motion for summary judgment and the Fifth Circuit ruling affirmed.

What Constitutes Adequate Notice of an Intention to Take FMLA Intermittent Leave?

The Fifth Circuit noted that, although Cerda informed her supervisor of her plan to care for her ailing father during lunch breaks, she did not indicate a need for additional time outside the half-hour lunch period. She also informed a human resources employee that she might explore “possibly getting FMLA,” but she never requested FMLA paperwork. Cerda did not have to say that she wanted FMLA leave, but she did have to request time off work. The bottom line was that the actions she took were insufficient to put her employer on notice that she intended to take FMLA leave.

FMLA Best Practices – Administrative Practices – FMLA Intermittent Leave Documentation

Going forward, a best practice in this situation might have been to train supervisors to properly document conversations with employees that are related to the employee’s health conditions or potential absences to care for family members due to their health conditions. Employers should train supervisors to notify HR and upper management any time supervisors recommend workers inquire about eligibility for a leave of absence.

FMLA Intermittent Leave Provisions and Leave Notice Requirements

FMLA-eligible employees are entitled to take leave on an intermittent or reduced-schedule basis to, for example:

• take care of the employee’s own serious health condition;
• care for a spouse, parent, son, or daughter with a serious health condition;
• for a qualifying exigency; or
• to care for a covered service member with qualifying exigencies.

Leave Notice Requirements for FMLA Intermittent Leave

Had Cerda’s notice been adequate, it is plausible that caring for her elderly father for an hour per day might have qualified. An intermittent leave request raises a host of other issues, however. Among these are:

• the need to distinguish between an intermittent leave – separate blocks of time due to a single qualifying reason – and a more permanent reduced schedule. The latter is a change in the employee’s schedule for a period of time, normally from full-time to part-time.
• reinstatement rights. An employee on FMLA leave has the right to be reinstated to a pre-leave status. An employee who switches from full to part-time might not.
• the administrative burden of keeping track of time taken on intermittent leave. An employer may not deduct time during which a worker would not normally be scheduled to work.
• how to prevent intermittent leave abuse.

Our Employment Lawyers May Be Able to Help with the FMLA Intermittent Leave Puzzle

When it was enacted 30 years ago, FMLA was hailed as a forward-looking way to address the substantial and growing needs of a changing workforce. Truthfully, women were a major factor in the workplace and had been juggling the demands of work and caregiving long before 1993. The recognition was better late than never.

Today, however, the national conversation is shifting toward the possibility of Medicare expansion to cover home health care. It might have made a difference for both Elizabeth Cerda and Blue Cube.

Regardless of the practical solutions to the conundrum facing both employers and workers, our Texas employment law attorneys may be able to help. Reach out to Kilgore & Kilgore for a free review of the facts of your employment challenges. Click here to get the conversation started contact Kilgore & Kilgore. We look forward to hearing from you.

In May 2023, the Equal Employment Opportunity Commission (EEOC) issued technical advice outlining employer liability for third-party algorithms that are widely used in evaluating and hiring job applicants. Employers may be held liable under Title VII of the Civil Rights Act for employment discrimination that results from the use of algorithmic decision-making tools. An employer can find itself on the wrong end of a lawsuit or an enforcement action – even if a third-party vendor developed the AI recruitment tool and even if the employer was unaware of the legal risks of automated employment decisions.

Hiring process automation has become big business. Think, for a moment, about all the employers that sign software vendor contracts to use candidate screening algorithms to obtain employment applications from better qualitied candidates to get a superior “first cut.” By mid-2024, enforcement seemed to have begun in earnest, with an EEOC settlement in two separate matters involving the ITutor Group (which paid $365,000 to settle an EEOC discriminatory hiring suit) and Mobley v. Workday, Inc. (in which the court accepted the plaintiff’s claim that an AI vendor could be directly subject to liability for employment discrimination). Amazon is reported to have already dropped an AI recruitment tool that was biased against women.

Although no Texas employers seem to have been named in similar actions to date, the EEOC has cautioned employers that it is watching for AI bias in employment. It would be reasonable to assume that this guidance also applies to other employment decisions, such as promotions, training opportunities, scheduling and reductions-in-force. Federal contractors are subject to very specific DOL guidance about this issue.

AI-Driven Employment Discrimination Lawsuits

Our employment lawyers at Kilgore & Kilgore have been watching this issue. At first, the use of artificial intelligence was controversial in certain specific industries, like the practice of law. But technology moves fast, and AI is now a major factor in all aspects of every business. For information about our employment law practice, click this Employment Lawyers. Or call Kilgore & Kilgore (214) 969-9099. You can also reach out to us online at Contact Kilgore Law to get the conversation started.

AI-Driven Hiring Discrimination and the EEOC

The iTutorGroup settlement focused particularly on age-based discrimination, prohibited by the Age Discrimination in Employment Act (ADEA). The Mobley decision casts a wider net to deal with discrimination based on race, disability, and age. The first line of the Mobley court’s opinion notes that Congress has charged the EEOC with administering and enforcing federal statutes that prohibit employment discrimination, including Title VII, the Americans with Disabilities Act (ADA) and the ADEA.

In other words, the EEOC is looking at all forms of employment discrimination, including those that affect veterans, pregnant workers, members of the LGBTQ community, and those whose genetic data might disadvantage them. These are the same situations covered by the Texas Commission on Human Rights Act (TCHRA), as enforced by the Texas Workforce Commission.

The EEOC’s 2023 technical advice focuses particularly on the question of whether the selection procedures an employer uses to make employment decisions – such as hiring, promotion, and firing—have a disproportionately large negative effect on a basis that is prohibited by Title VII. This is often referred to as disparate impact or adverse impact and deals with the situation in which a rule, although neutral on its face, might have a disproportionate effect on members of a protected group. The classic example is the effect a requirement that firefighters be at least six feet tall might have on women.

The 80 Percent Rule and AI-Driven Hiring Discrimination

Question 3 of the 2023 technical advice makes it clear that an employer may be liable under Title VII for its use of algorithmic decision-making tools whether these tools were developed and administered in-house or by another entity, such as a software vendor. Ignorance of the vendor’s process is no longer an excuse.As a practical matter, the EEOC now advises employers to determine whether AI tools produce selection rates for protected groups that are less than the selection rates for another group.

Selection rates are determined by dividing the number of applicants by the number of hires for a particular group. These rates are then compared by dividing the lower selection rate by the higher selection rate. If the resulting percentage is less than 80 percent, there is an inference that the difference is substantial. The 80 percent rule is not a guarantee of compliance, but a general guideline that may be useful in demonstrating good faith.

How to Avoid Bias in Hiring Processes and AI-Driven Hiring Discrimination

• Obtain the EEOC Guidelines for AI-based Recruitment Tools
• Work with an experienced employment lawyer to draft indemnification provisions to be included in software vendor contracts.
• Implement regularly scheduled audits and evaluations of AI recruitment tools and track demographic data of applicants and hires.
• Create an 80 percent test and employ it as a diagnostic tool for measuring new hires, promotions, terminations, reductions-in-force, etc.
• Consider other legal options if your business is targeted in an employment discrimination action. These might include breach of contract claims, deceptive business practice lawsuits, or other formal legal actions against AI recruitment tools vendors that could shield you from exclusive legal responsibility.
• Insert human decision-making at critical points along your hiring processes to prevent AI bias or the appearance of bias. Consider doing this for other employment-related decisions such as promotions, layoffs, and scheduling changes. Automated screenings of applicants are convenient, but they should not be the last word.
• Train your HR staff and managers in the proper use of AI when it comes to making hiring and other employment-related decisions.

Count on Kilgore & Kilgore Employment Lawyers to Help You With AI-Driven Employment Discrimination

Experience counts and laws evolve. The new EEOC guidance imposes significant new obligations on employers. Reach out to our experienced employment attorneys. Click Kilgore Law to contact us.

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.