Labor & Employment Law Daily Class claims that evaluation process systematically disadvantaged black professionals survive dismissal
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Thursday, February 7, 2019

Class claims that evaluation process systematically disadvantaged black professionals survive dismissal

By Marjorie Johnson, J.D.

A black employee plausibly alleged that Corning’s performance evaluation process gave a “small brain trust” unfettered discretion to alter employees’ ratings, which it was incentivized to do, with the effect of systematically disadvantaging black professionals by limiting pay and networking opportunities.

Refusing to dismiss an African-American employee’s class claims asserting that her employer’s performance evaluation systematically disadvantaged black professionals in violation of federal and state law, a federal district court in New York found she plausibly alleged that a “singular and cohesive” executive group had unfettered discretion to determine each professional employee’s final rating, was incentivized to manipulate ratings, and did so in a manner that had the effect of barring black employees from advancing to higher pay bands and receiving additional pay, bonuses, and networking opportunities. Moreover, her failure to allege that she was denied a specific promotion was not fatal to her individual claims since she alleged an adequate link between the executives’ discriminatory actions and tangible adverse impacts (Woods-Early v Corning Inc., February 4, 2019, Geraci, F.).

Pay-grade promotions based on yearly reviews. The plaintiff, a marketing consultant for Corning since 2007, challenged the lawfulness of the company’s performance evaluation process for its thousands of professional employees. Those employees were placed in one of six pay bands, “A, B, C, D, F, and 88,” which dictated salaries and bonuses. Those placed in pay band “D” or above could also take part in networking opportunities with high-level executives. To be eligible for promotion to pay band “D,” an employee had to be designated as “emerging talent,” which required a final performance rating of 4 out of 5 in two consecutive yearly evaluations.

Managers had “unfettered discretion.” Each professional employee’s final performance rating was based on three subsidiary sets of ratings: manager ratings, participant ratings, and an average rating. The employee’s supervisor determined the manager rating by rating the employee in seven categories and then providing an overall rating. The participant ratings were based on the same evaluation methodology, with each employee identifying those with whom they had worked during the previous year to complete the evaluations. The manager rating and overall participant rating were then combined to produce the employee’s average rating.

Executives had final say. The manager then had unfettered discretion to assign a final rating. The director of the department would then review the manager’s final rating, with the discretion to approve or modify it. The director then submitted the final rating to a “small brain trust” consisting of executive and senior VPs. This small group controlled the final determination of each professional’s final rating and retained unfettered discretion to alter each final rating. The group thus ultimately controlled which employees were designated as “emerging talent.”

Disparate impact. The plaintiff’s central claim was that the evaluation process was infected by racial bias since Corning had “fostered a culture of discrimination and a racially hostile environment” where “degrading terms such as ‘gorilla’ and even the ‘n-word’” were routinely used to refer to black professionals and employees. She further claimed that this pervasive discrimination impacted the performance evaluation process, which was largely controlled by non-black supervisors and executives who had the discretion to use the evaluation process to promote non-black professionals and ensure that black professionals were disproportionately compensated within the lowest three pay bands. Moreover, the executive brain trust had the incentive to use its “unfettered discretion” to alter each professional’s final rating since only 10 percent of professional employees could be designated as “emerging talent.” She also argued that the company’s own data showed that the bulk of black professionals’ performance ratings fell within the 1-3 range while most non-black professionals received ratings in the 3-5 range.

Plaintiff’s own experiences. In support of her individual discrimination and retaliation claims, the plaintiff alleged that during her tenure, she only received final ratings of 3 (and sometimes no final rating at all) despite “her raw numbers justifying a final rating of at least 4.” She also claimed that her supervisors manipulated the performance evaluation process to deflate her participant ratings. As to retaliation, she alleged that she faced discriminatory conduct and comments from her supervisors and was terminated for having engaged in protected activity to respond to such discrimination.

Commonality. Addressing Corning’s assertion that the proposed classes lacked commonality, the court rejected the company’s contention that following the Supreme Court’s decision in Wal-Mart Stores, Inc. v. Dukes, employment-discrimination claims challenging managerial discretion do not satisfy the requirement that there be “questions of law or fact common to the class.” Rather, since Dukes, courts have found commonality in cases challenging discretionary employment decisions where such discretion is exercised uniformly by “upper-level, top management personnel.”

Here, the plaintiff alleged that an executive group had unfettered discretion to determine each employee’s final rating and that the “singular and cohesive group” was incentivized to manipulate ratings in order to limit the number of employees who were designated as emerging talent. She also alleged that the way this group exercised discretion had the effect—if not the purpose—of barring black professionals from advancing to higher pay bands and thereby receiving additional pay, bonuses, and networking opportunities. These allegations provided the “glue” to bind the otherwise disparate pay-and-promotion decisions of potential class members.

The court also rejected Corning’s argument that the proposed classes could not satisfy any of the alternative criteria set forth in Rule 23(b) since it “merely raised the sorts of objections that can and should be addressed at the class certification stage.”

Adverse action. The court also rejected Corning’s contention that the plaintiff’s individual claims failed since she didn’t allege that she was denied a specific promotion, noting that negative reviews can constitute adverse actions if “they trigger other negative consequences, such as a change in compensation, benefits, or job title.” Here, she alleged that the executive brain trust exercised its discretion to assign final performance ratings in a manner that had the effect of depressing the final ratings of black employees, which in turn barred them from being assigned to a pay band that would result in increased salary, bonuses, and networking opportunities. Because she alleged an adequate link between the discriminatory actions of the executives and tangible adverse impacts to black employees (including herself), her failure to identify a promotion that she was denied was not fatal.

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