By: Benjamin Shaw
Volume IX – Issue II – Spring 2024
I. Introduction
The financial world, with its promise of high-stakes deals, lucrative rewards, and societal prestige, has long held a captivating allure. However, beneath its veneer of affluence and power lies a stark reality – an industry plagued by a persistent lack of diversity. According to the 2020 McKinsey Diversity Matters report, women in North America were significantly underrepresented in the financial-services workforce, particularly at the level of senior management and above. [1] In the banking sector, women made up 53% of the entry-level workforce but less than one-third at the SVP (senior vice president) and C-suite (executive-level manager) levels. Nearly one in four employees at the entry level is a woman of color, though this falls to one in 20 at the C-suite level. The representation of women and women of color falls off at every step of the corporate pipeline: from entry level to the C-suite, the representation of women of color falls by 80%. Despite progress, 64% of financial-services C-suite executives are still white men, and 23% are White women—leaving just 9% of C-suite positions held by men of color and 4% by women of color. This paper delves into the intricate dynamics at play, examining how the pervasive "culture" of investment banking often serves as a smokescreen for discrimination against women and other minorities. The interaction between legal rulings and societal advancement, showcased by the case of Price Waterhouse v. Hopkins, continues to represent a pivotal battleground for fostering a more diverse and fair society. It is imperative for financial institutions, as well as all employers, to actively address and deconstruct the covert biases entrenched within their organizational frameworks if they genuinely aspire to embody the meritocratic values they espouse.
Historical Context
The concept of mixed-motive discrimination was vaguely founded under Title VII of the Civil Rights Act of 1964, but had little formalization or application before the landmark Supreme Court case of Price Waterhouse v. Hopkins (1989). The concept of mixed-motive discrimination existed, but the burden of proof was primarily on the employee to demonstrate that discrimination had occurred. [2] Title VII of the Civil Rights Act of 1964 prohibited discrimination in employment based on sex, among other factors. However, the interpretation of what constituted sex discrimination was narrower than it is today. Discrimination was often understood in terms of direct, overt actions rather than the more subtle forms of bias that can influence employment decisions. In cases of alleged discrimination, the plaintiff had to establish a prima facie case of discrimination, i.e., present initial evidence that supports their claim of discrimination. The burden would then shift to the employer to articulate a legitimate, non-discriminatory reason for the adverse employment action. Finally, the burden would shift back to the employee to show that the employer’s stated reason was not the real reason, but rather a pretext for discrimination. This process was known as the McDonnell Douglas burden-shifting framework, established in McDonnell Douglas Corp. v. Green (1973), which formalized the process for traditional Title VII discrimination litigation. [3] The framework is as follows:
1) A plaintif must first establish a prima facie case by a preponderance of the evidence, i.e., allege facts that are adequate to support a legal claim.
2) Then the burden of production shifts to the employer, to rebut this prima facie case by articulating some legitimate, nondiscriminatory reason for the employee’s rejection.
3) The plaintif may prevail only if they can show that the employer’s response is merely a pretext for behavior actually motivated by discrimination.
This framework had its limitations. It was often challenging for employees to provide sufficient evidence to establish a prima facie case, especially in situations where discrimination was not overt. For instance, in the case of Marshall v. Rawlings Co. LLC, the McDonnell Douglas burden-shifting framework was applied to claims of Family and Medical Leave Act of 1993 retaliation based on indirect evidence. [4] The challenge was that it was often difficult for employees to provide sufficient evidence to establish the prima facie case, especially when the employer's actions were not overtly discriminatory. This case demonstrates how the rigid McDonnell Douglas framework can falter when applied to more subtle forms of workplace discrimination and retaliation.
Furthermore, even if the employee could establish a prima facie case, it was often difficult to prove that the employer’s stated reason was a pretext for discrimination. To prove pretext, a plaintiff must show either that the employer more likely than not was motivated by a discriminatory reason, or that the employer’s stated reason is not worthy of credence. Evidence of poor business judgment or a degree of subjectivity in making an employment decision is insufficient to prove pretext. [5] The relevant inquiry is whether the employer held its stated reasons in good faith at the time of the employment action, even if they later proved to be untrue. The difficulty in proving pretext lies in the fact that employers can claim any stated reason was an exercise of a "degree of subjectivity" in the decision-making process, creating a significant hurdle for plaintiffs to establish that the employer's stated reason is not worthy of credence. For example, in Crain v. McDonough, the plaintiff failed to prove that the employer's stated reasons for reassigning her due to her substandard performance were pretextual. [6] As a result of this failure, the plaintiff was unsuccessful in their discrimination claim.
Moreover, before Price Waterhouse v. Hopkins, the concept of “sex stereotyping” was not recognized as a form of sex discrimination under Title VII. This meant that employees who faced discrimination because they did not conform to traditional gender norms had limited legal recourse, and marginalized groups like individuals in the LGBTQ community often had limited basis for discrimination through Title VII claims. [7] Price Waterhouse v. Hopkins brought forth a significant shift by recognizing that employment decisions could stem from a blend of discriminatory and non-discriminatory motives, easing the plaintiff's burden in such mixed-motive scenarios and underscoring the necessity of a legal framework that accommodates the nuanced nature of discrimination.
II. Price Waterhouse v. Hopkins
The landmark Supreme Court case of Price Waterhouse v. Hopkins in 1989 marked a pivotal moment in the landscape of discrimination. In the case, Ann Hopkins worked at Price Waterhouse for five years before being proposed for partnership, although securing a $25 million government contract that year, the board decided to put her proposal on hold for the following year. [8] The next year, when Price Waterhouse refused to re-propose her for partnership, she sued under Title VII for sex discrimination. Notably in the makeup of Price Waterhouse, of the 622 partners, 7 were women. The partnership selection process relied on recommendations by other partners, some of whom openly opposed women in advanced positions, but the corporation alleged that Hopkins also had problems with being overly aggressive and not getting along with office staff. [9] The Supreme Court held that an employment decision motivated in part by discrimination does not violate Title VII if the employer can demonstrate that the same employment decision would have been made for nondiscriminatory reasons. The plaintiff has the initial burden of proving that discriminatory animus "played a motivating part in an employment decision". Once that burden is met, the employer "may avoid a finding of liability only by proving that it would have made the same decision even if it had not allowed [the protected characteristic] to play such a role". [10] This case established the legal framework for mixed-motive discrimination, where an employer’s decision stems from a combination of legitimate and discriminatory factors. The original burden of proof shifts to the employer to demonstrate that the outcome would have been unchanged even in the absence of discrimination. This decision significantly strengthened the legal standing of employees seeking to challenge discriminatory practices.
III.The Civil Rights Act of 1991
The Civil Rights Act of 1991 (CRA) overruled Price Waterhouse, and created a more favorable standard to plaintiffs. These changes included restoring the rule that any proven discrimination in an employment decision could be the basis for liability, and altering the evidentiary requirements for the mixed-motive defense. Furthermore, the CRA eliminated the complete defense to liability for employers with both discriminatory and nondiscriminatory reasons. [11] The act provides that, where race, color, religion, sex, or national origin is “a motivating factor” for any employment practice, that practice is unlawful “even though other factors also motivated the practice”. [12] The CRA also provides some relief to employers in mixed-motive cases. If the employer can establish that it would have taken the same action in the absence of the impermissible motivation, then the employee is not entitled to be reinstated or hired, nor may the employee recover damages. However, the employee may recover attorney’s fees and costs. This is explained in the Larson on Employment Discrimination, which states that an illegal employment practice is established by showing that race, color, religion, sex, or national origin was a motivating factor, even though other factors also motivated the practice. [13] This principle was applied in the case of Wallace v. Caring Sols., LLC, where the court concluded that the ADA requires a plaintiff alleging a claim of employment discrimination to prove that discrimination was the but-for cause of any adverse employment action. [14] Similarly, in the case of Desert Palace, Inc. v. Costa, the court determined that the employee only had to demonstrate that the employer used a forbidden consideration with respect to any employment practice, therefore, the employee did not need to present direct evidence of discrimination in order to obtain a mixed-motive instruction. [15] In the case of Hill v. Lockheed Martin Logistics Mgmt., the court noted that there were two methods for proving intentional sex or age discrimination in the employment setting: "pretext" cases and "mixed-motive" cases. The court concluded that the employee had proffered direct evidence of sex and age discrimination in the statements of her safety inspector, who substantially influenced the company's decision to fire her. [16] Finally, the statute 42 USCS § 1981a outlines the right of recovery in an action brought by a complaining party against a respondent who engaged in unlawful intentional discrimination. The complaining party may recover compensatory and punitive damages, in addition to any relief authorized by section 706(g) of the Civil Rights Act of 1964 § 1981a. Damages in cases of intentional discrimination in employment.
The Civil Rights Act of 1991 amended Title VII of the Civil Rights Act of 1964, but not Title VIII. This means that the Price Waterhouse standard, which allows for "mixed-motive" cases, continues to apply in Title VIII cases. In a mixed-motive case, a defendant can avoid liability by proving that the same decision would have been made even without the forbidden factor playing a role. This standard was upheld in the case of Mhany Mgmt. v. Inc. Vill. of Garden City & Garden City Bd. of Trs. The Civil Rights Act of 1991 did not address the Price Waterhouse Court's analysis for determining liability in a mixed motive case where the language of a statute proscribes conduct 'because of' certain unlawful factors. Therefore, the causation analysis formulated in Price Waterhouse remains applicable for Fair Housing Act cases despite the Civil Rights Act of 1991. This means that courts applying Title VIII still use the Price Waterhouse case to determine liability in mixed motive housing discrimination cases. [17]
IV. Mixed-Motive Cases
Mixed-motive cases are cited when the plaintiff has shown intentional discrimination, and the defendant can still avoid liability for money damages by demonstrating by a preponderance of the evidence that the same decision would have been made even in the absence of the impermissible motivating factor. In practice, pursuant to the Civil Rights Act of 1991, if the defendant establishes this defense, the plaintiff is then entitled only to declaratory and injunctive relief, attorney’s fees, and costs. [18] Orders of reinstatement, as well as the substitutes of back and front pay, are prohibited if a same decision defense is proven. The distinction between “mixed-motive” cases and “pretext” cases is generally determined by whether the plaintiff produces direct rather than circumstantial evidence of discrimination. If the plaintiff provides direct evidence of discrimination, this is sufficient to show that the defendant’s activity was motivated at least in part by animus toward a protected class, and therefore a “mixed-motive” instruction is given. If the evidence of discrimination is only circumstantial, the appropriate framework is the McDonnell Douglas burden-shifting framework, established in McDonnell Douglas Corp. v. Green (1973), which is the standard form for Title VII cases. [19]
Mixed-motive instructions are used by courts in many discrimination and improper retaliation cases. These instructions usually take the following form: “If the plaintiff shows that the defendant did something that hurt them, and the action was motivated by an impermissible reason, there is a presumption that the defendant’s conduct was wrong.” The defendant may rebut this presumption by showing that they would have taken the action regardless of its impermissible motive. In some cases, there is evidence that discrimination was one of multiple motivating factors for an employment action. In these “mixed motive” cases, the agency does not have to offer the complainant the position sought if it can demonstrate by clear and convincing evidence that it would have taken the same action even absent the discrimination. The mixed motive theory generally applies when the employer has legitimate as well as discriminatory reasons for the employment decision. The plaintiff must provide sufficiently strong circumstantial evidence of discrimination that might lead a jury to find that the employment decision was motivated, at least in part, by discrimination. The legal landscape of mixed-motive discrimination has evolved significantly since the landmark Supreme Court case of Price Waterhouse v. Hopkins. The burden of proof now lies with the employer to demonstrate that the same decision would have been made even in the absence of discrimination. This shift in burden of proof has significantly strengthened the legal standing of employees seeking to challenge discriminatory practices.
V. The Use of “Culture” to Justify Discrimination
The financial sector, like many other industries, is not immune to the influence of culture in shaping its practices and outcomes. In some instances, culture has been used to justify discriminatory practices, leading to disparities in access to financial services and opportunities. This is particularly evident in the realm of high finance, where subjective assessments often play a significant role in employment and investment decisions. [20] One way in which culture can be used to justify discrimination is through the perpetuation of stereotypes and biases. For example, certain cultural norms or beliefs may lead to the assumption that individuals from certain racial or ethnic groups are less capable or less deserving of employment opportunities, which can be manifested through differential treatment in hiring. Subversively, discrimination can be caused by the use of “cultural fit” as a criterion for employment or promotion decisions. In finance, this can often translate into a preference for individuals who conform to the dominant culture of the industry, which is often characterized by certain demographic traits such as race, gender, and socioeconomic status. This can lead to a lack of diversity in the industry and perpetuate existing disparities. The increasing reliance on automated decision-making models in the financial sector can also contribute to the use of culture to justify discrimination. These models often rely on historical data, which can reflect past discriminatory practices and biases. As a result, they can perpetuate a cycle of bias in their predictions and decisions, leading to discriminatory outcomes which mirror the past.
In the case of DeFrancesco v. Ariz. Bd. of Regents, the plaintiff alleged that he was discriminated against due to his sexual orientation, claiming that the defendants, who were part of a male-dominated medical field with a "jock/frat culture", held biases in favor of masculine, heterosexual males as ideal candidates for traditionally male-dominated fields, such as finance. However, the court found these allegations insufficient to raise an inference of discrimination. [21] In another context, the Country Reports highlight that despite legal progress, some social and legal institutions still discriminate against women, with cultural norms leading to job discrimination. [22] This suggests that cultural norms and biases can contribute to discrimination in various sectors, potentially including finance. Moreover, the D.C. Code § 2-281.03 and LAC 19:VII.8903 regulations highlight efforts to address discrimination against businesses owned by individuals who have been subjected to racial or ethnic prejudice or cultural bias. [23 24] These regulations suggest that cultural bias can impact access to financial resources and opportunities, reinforcing the idea that culture can be used to justify discrimination in sectors like finance.
There are a plethora of cases, many coming from large companies like Google and Apple, where culture is seen by the plaintiffs to have been a discriminatory factor, but it is such a vague and hardly defined concept that the courts often favor the defendants. In the case of Heath v. Google LLC, Google argued that the experiences of each plaintiff were individualized, and thus they could not be similarly situated. Google highlighted that the interviewers' assessments of each plaintiff with respect to "Googleyness" or cultural fit varied significantly. However, the plaintiffs argued that they were all subject to the same standardized hiring process and criteria used by Google, which included an emphasis on "Googleyness" or cultural fit. [25]. In Miller v. Apple Inc., the plaintiff alleged that he was told he was not a "cultural fit" at Apple, which he interpreted as discrimination based on his race or national origin. However, the court found that the plaintiff failed to provide any evidence showing that an Apple employee made that comment or that the comment was in reference to his race or national origin. [26] In Handloser v. HCL Techs. Ltd., the plaintiffs alleged that the company had a policy of screening out non-Indian local candidates through "culture fit" interviews. However, the court found that the plaintiffs failed to provide sufficient evidence to establish commonality for the putative class under their disparate treatment and disparate impact claims. [27] In Barnes v. Berryhill, the plaintiff alleged that she was subject to disparate treatment due to her age because the SSA hired younger, lesser qualified individuals instead of her. She based her contention on the fact that the hiring decisions were made based on subjective factors such as personality and cultural fit. However, the court found that the plaintiff's allegations did not demonstrate that the hiring decisions were based on age. [28]
VI. Solvency from Mixed-Motive Litigation
A plaintiff can allege that "cultural fit" was used to justify their discrimination by providing direct or circumstantial evidence that race, or any other protected characteristic, motivated the adverse employment action. This can be done through the mixed-motive framework, where the plaintiff must demonstrate that the employer acted because of both permissible and forbidden reasons. The plaintiff does not have to show that discrimination was the sole motivating factor, only that it was a motivating factor. To fight this kind of mixed-motive discrimination, the plaintiff must produce evidence that clearly indicates a discriminatory attitude at the workplace and must illustrate a nexus between that negative attitude and the employment action. If the plaintiff relies on circumstantial evidence, such evidence must be "of sufficient probative force to reflect a genuine issue of material fact". [29] If the plaintiff is able to show that the adverse employment action was motivated in part because of discrimination, the employer can avoid liability if it can prove that the employee would have been fired even in the absence of the discriminatory motive. [30] However, if the plaintiff has demonstrated that the employer’s action was the product of a discriminatory motive, but the employer is able to demonstrate that it would have taken the same action for other legitimate reasons, the employer will not avoid liability, but will be able to limit its exposure to damages. [31]
To enhance the efficacy of mixed motive laws in mitigating workplace discrimination, a comprehensive strategy is paramount. Legislators can provide stricter legislative definitions, offering more explicit criteria on what qualifies as a "motivating factor" in discrimination. Simultaneously, institutions should embrace enhanced training programs, arming employees with the knowledge to recognize and neutralize biases. Instituting regular third-party audits allows for the detection of discriminatory patterns, with companies possibly being mandated or incentivized to participate. Firms can also establish transparent criteria for employment decisions, aiding in the identification of discrimination when deviations from these standards occur. Support for whistleblowers is crucial; strengthening their protection encourages reporting and thus serves as a deterrent to unfair practices. Furthermore, integrating diversity and inclusion metrics into managers' performance evaluations ensures accountability, promoting fair practices. New developments in information science, like the use of AI in hiring, may offer a more objective analysis of employment trends, potentially uncovering hidden biases. Lastly, as notions of discrimination evolve, so should company policies. Regular updates to these practices can align with contemporary understanding and legislation, fostering a workplace where equity is paramount and discrimination is diligently countered.
Discrimination is currently changing definitions in the courts, and recent progress has been made to categorize new concepts like “culture”. In 2019, Jain v. Tokio Marine Mgmt. saw the court hold that the comment about "cultural fit" could be considered as evidence of discrimination. The court relied on the Second Circuit's holding that phrases like "better fit" or "fitting in" might be about race. When the facts are construed in a light most favorable to the non-moving party, these phrases, even when isolated, could be enough to create a reasonable question of fact for a jury. This ambiguity is enough to create a reasonable question of fact. The court found that the "cultural fit" comment, along with Jain's change in treatment upon Taylor's arrival, created material issues of fact that precluded summary judgment on the discriminatory termination claim. [32]
VII. Conclusion
This analysis of mixed motives in high finance, as evidenced by the case of Price Waterhouse v. Hopkins, signals a crucial evolution in our legal system’s approach to discrimination. This landmark decision has illuminated the complex interplay of both overt and covert biases that can influence workplace decisions, challenging institutions to rigorously examine their employment practices. In the finance sector, where the promise of meritocracy often clashes with the reality of persisting inequality, this case offers a beacon for progress. By shifting the burden of proof from the employee to the employer in mixed-motive cases, the Supreme Court not only empowered individuals like Ann Hopkins to confront discriminatory practices but also encouraged corporate introspection and structural change. The evolving legal interpretations and applications originating from this case have significantly broadened the scope of protection against discrimination, ultimately demanding a higher standard of fairness and equality in the workplace. Though thirty years have elapsed since Hopkins courageously challenged the obstacles to her advancement, the striking underrepresentation of women and minorities in senior finance roles today reflects the ongoing relevance of mixed-motive discrimination. The persisting disparities in the finance industry underscore the importance of vigilant enforcement of anti-discrimination laws and the ongoing need for cultural and policy shifts within organizations. The intersection of law and social progress, as exemplified by Price Waterhouse v. Hopkins, remains a critical arena for the development of a more inclusive and equitable society. Financial institutions—and indeed all employers—must continue to confront and dismantle the hidden biases within their walls if the industry is to truly embody the meritocratic principles it professes to hold. The enduring legacy of Price Waterhouse v. Hopkins lies in the message that responsibility for mitigating discrimination does not rest solely with the individual affected but is shared by the organization and by society as a whole.
Endnotes
[1] “How Diversity, Equity, and Inclusion (DE&I) Matter | McKinsey.” Accessed November 01, 2023. https://www.mckinsey.com/featured-insights/diversity-and-inclusion/diversity-wins-how-inclusion-matters#/.
[2] Cornell Legal Information Institute. “Mixed-Motive Instruction.” Accessed November 12, 2023. https://www.law.cornell.edu/wex/mixed-motive_instruction.
[3] US EEOC. “Chapter 11 REMEDIES.” Accessed October 30, 2023. https://www.eeoc.gov/federal-sector/management-directive/chapter-11-remedies.
[4] Marshall v. Rawlings Co. LLC, 854 F.3d 368
[5] Zatz, Noah D. "The Many Meanings of 'Pretext': How the Supreme Court Manipulated the Burden of Proof in Title VII Cases." Marquette Law Review, vol. 101, no. 2, 2017, pp. 565–611. Marquette University Law School Institutional Repository.
[6] Crain v. McDonough, 63 F.4th 585
[7] Pierceson, Jason. Before Bostock: The Accidental LGBTQ Precedent of Price Waterhouse v. Hopkins. Lawrence: University Press of Kansas, 2022.
[8] Oyez Project. “Price Waterhouse v. Hopkins.” Accessed November 02, 2023. https://www.oyez.org/cases/1988/87-1167.
[9] Oyez Project. “Price Waterhouse v. Hopkins.” Accessed November 02, 2023. https://www.oyez.org/cases/1988/87-1167.
[10] Price Waterhouse v. Hopkins, 490 U.S. 228
[11] Christopher Payne, Employment Law and the Civil Rights Act of 1991, 69 Denv. U. L. Rev. 939 (1992).
[12] TITLE VII OF THE CIVIL RIGHTS ACT, 3 Antieau on Local Government Law, Second Edition § 45.03 (2nd 2023)
[13] 1 Larson on Employment Discrimination § 8.09 (2023)
[14] Wallace v. Caring Sols., LLC, 213 Conn. App. 605
[15] Desert Palace, Inc. v. Costa, 539 U.S. 90
[16] Hill v. Lockheed Martin Logistics Mgmt., 314 F.3d 657
[17] Mhany Mgmt. v. Inc. Vill. of Garden City & Garden City Bd. of Trs., 985 F. Supp. 2d 390
[18] Cornell Legal Information Institute. “Mixed-Motive Instruction.” Accessed November 12, 2023. https://www.law.cornell.edu/wex/mixed-motive_instruction.
[19] US EEOC. “Chapter 11 REMEDIES.” Accessed October 30, 2023. https://www.eeoc.gov/federal-sector/management-directive/chapter-11-remedies.
[20] Andrew Ellul, Isil Erel, Camelia Kuhnen, Uday Rajan, Discrimination, Disparities, and Diversity in Finance, The Review of Corporate Finance Studies, Volume 11, Issue 3, August 2022, Pages 457–464, https://doi.org/10.1093/rcfs/cfac022
[21] DeFrancesco v. Ariz. Bd. of Regents, 2022 U.S. Dist. LEXIS 175127
[22] 2010-12 Country Reports Section 6 (2023)
[23] D.C. Code § 2-281.03
[24] LAC 19:VII.8903
[25] Heath v. Google LLC, 345 F. Supp. 3d 1152
[26] Miller v. Apple Inc., 2022 U.S. Dist. LEXIS 180625
[27] Handloser v. HCL Techs. Ltd., 2021 U.S. Dist. LEXIS 45183
[28] Barnes v. Berryhill, 2019 U.S. Dist. LEXIS 125556
[29] Parker v. Premise Health Employer Sols., Inc., 2020 U.S. Dist. LEXIS 183126
[30] Inman v. Klockner Pentaplast of Am., Inc., 2008 U.S. Dist. LEXIS 60193 § 18.01
[31] Introduction: Theories or Bases of Discrimination
[32] Jain v. Tokio Marine Mgmt., 2019 U.S. Dist. LEXIS 1746.