Credit Union Eliminates HR Department, Allegedly for Opposing ‘Look Test’

COO purportedly insisted on all-white employees for the site to have ‘the right look’

Allen Smith, J.D. By Allen Smith, J.D. September 27, 2017
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Credit Union Eliminates HR Department, Allegedly for Opposing ‘Look Test’

​While a Texas credit union maintains in a recent lawsuit that it eliminated a two-person HR shop for financial reasons, the plaintiff in the case says that the elimination was in retaliation for her opposition to the bank's biased hiring policies.

'The Right Look' Resisted

Plus4 Credit Union, based in Houston, eliminated an HR shop of two after an HR manager repeatedly opposed a chief operating officer's (COO's) alleged insistence on having an all-white staff at the credit union. He wanted the site in Humble, Texas, to achieve "the right look."

Emma Donald, the HR manager, claimed that her supervisor, the COO, told her to "hire all white, but maybe have one black person as a teller in the back so they wouldn't be seen. … We have to have the right look." The COO denied making this statement.

After Donald facilitated the hiring of Christopher Lee, the COO instructed Donald to fire him on the first day of his employment—Aug. 18, 2014—because he was black and had dreadlocks, Donald claimed. The COO also said she would start sitting in on all of Donald's interviews so that "we can hire the right people for Humble."

Donald e-mailed her objections to the COO, who subsequently began closely monitoring Lee through the company's video system each day. She did not observe other employees to the same extent, the complaint alleged.

The COO ordered Donald several times to fire Lee; each time Donald refused. Donald received a less favorable performance review on Oct. 31 than she had since she was hired in November of the prior year and was told to be compliant with the executive team's directives, according to her deposition.

On Nov. 14, Lee was fired. Plus4 maintained that it discharged him for taking personal calls while he was at work, for not permitting a new employee to train with him and for disturbing other co-workers with loud singing. Donald had e-mailed the COO in November asking for Lee to be fired after the branch manager reported alleged performance issues, but Donald later asserted she did so because she could no longer resist the COO's demands.

Until the HR department was eliminated in March 2015, Donald claimed, she continued to oppose other discriminatory practices, including resisting the termination of another black employee, and was being retaliated against. Two weeks before the department was eliminated, she met with Plus4's lawyers and said the COO was retaliating against her.

Donald sued for race discrimination and retaliation in the U.S. District Court for the Southern District of Texas. Her race discrimination charge alleged that she was treated differently from similarly situated employees because she was black. The court let her proceed with her retaliation claim under Title VII of the Civil Rights Act of 1964, but dismissed her race discrimination claim on July 31. Lee sued for race discrimination and was allowed to proceed on his claim. The other discharged HR employee was not a party to Donald's lawsuit.

Donald successfully got stricken from the evidence memos alleging poor work performance by Lee in 2014 because the memos weren't made contemporaneously. They were either undated or dated July 2015, eight months after he was fired.

Plus4 Credit Union did not respond to a request for comment. The case is ongoing, said Melissa Garcia-Martin, an attorney for Donald and Lee and with Garcia-Martin & Martin in Sugar Land, Texas. She declined to comment any further on the case.

Discriminatory Hiring Allegations Are Common

While the situations alleged in Donald's case are "fairly extreme," allegations of discriminatory hiring practices "are made fairly frequently and are often associated with negative publicity for the employer involved," wrote Brian Pedrow and Chris Cognato, attorneys with Ballard Spahr in Philadelphia in an e-mail to SHRM Online.

They pointed to the recent settlement reached with Bass Pro Outdoor Worldwide LLC, where the company agreed to pay $10.5 million to settle an Equal Employment Opportunity Commission (EEOC) lawsuit alleging discriminatory hiring practices. "The media, EEOC and plaintiffs' attorneys are all highly attuned to developments like these. Therefore, all employers would be wise to pay careful attention to their own training and outreach efforts, as well as their hiring practices," they wrote.

[SHRM members-only toolkit: Managing Equal Employment Opportunity]

Companies should identify whether any discrimination is organizationwide or limited to a small group of rogue decision-makers to help ascertain training needs, they recommended.

An employer may have a diverse workforce overall but only black employees in one location and white workers in another. But that can be unlawful, cautioned Barry Hartstein, an attorney with Littler in Chicago. And employers should not have workers of one race in the front of the house and employees of another race in the back, he added.

Customer preference for employees of one race and managers' desire to have employees who speak the same language cannot be excuses for hiring people of only one race or national origin, he also said.

Justifications for One Race Heavily Represented at One Location

However, "The fact that one race may be heavily represented among employees of a particular store or position does not necessarily mean that discriminatory hiring practices have occurred, but instead may be a reflection of the applicant pool, merit-based hiring or simply coincidence," said Nathaniel Glasser, an attorney with Epstein Becker Green in Washington, D.C.

Denise Wright, an attorney with FordHarrison in Fort Myers, Fla., agreed, saying she has a large health care client that provides services primarily to Hispanic patients. "One of the requirements for most positions at the company is to be bilingual. As a result, they primarily, although not exclusively, hire Hispanic employees," who are more likely than other candidates to speak both English and Spanish.

"We're going to continue to see failure-to-hire claims," Hartstein said, noting that eliminating barriers in recruitment is part of the EEOC's strategic enforcement plan.

But Kevin Troutman, an attorney with Fisher Phillips in Houston, said, "These cases are generally hard for plaintiffs to win because courts do not want to become a super HR department." 

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