Defending Discrimination Lawsuits in Silicon Valley Before They Are Filed

Emily Taylor
April 6, 2015

Employment policies and procedures are often an afterthought when starting a tech company, but they could mean the difference between success or failure.  Even well-established tech companies are learning their lessons the hard way.

A lawsuit filed in March by a former computer engineer at Twitter serves as a wake-up call for tech companies to have clear, written, nondiscriminatory, employment policies and procedures and to train supervisors on those policies.  These simple steps could prevent costly employment discrimination lawsuits altogether, or at a minimum, enhance the defensibility of such cases.

Implementing equal employment opportunity and anti-discrimination policies early as well as the consistent enforcement of such policies help promote a non-discriminatory culture as a company develops.

As stated in Tina Huang’s lawsuit, Tina Huang, for herself and on behalf of all others similarly situated, v. Twitter, Inc., et al., Case No. CGC15544813 (pending in San Francisco Superior Court), tech is “an industry that is marked by dramatic imbalances in diversity.”  Gender and racial imbalances in the workforce are all the more reason for an employer to take proactive steps to defend against allegations of disparate treatment before such allegations arise.

The California Fair Employment and Housing Act (“FEHA”), California Government Code section 12940, et seq., makes it unlawful for an employer to harass or discriminate against an employee because of “race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status.”  Cal. Gov’t Code §§ 12940(a)and(j)(1).  The FEHA also prohibits an employer from retaliating against any person for opposing harassment or discrimination or for filing a complaint of discrimination or harassment. Cal.  Gov’t Code § 12940 (h).

The FEHA applies equally to startups with at least five employees in California and large corporations, and the FEHA’s prohibition of harassment applies to all employers with at least one employee or independent contractor.

When a startup becomes a large company, not having clear nondiscriminatory employment policies and procedures may increase the potential for class action litigation.  The potential damages an employer may face from a class action can be financially devastating; however, even a successful lawsuit by an individual employee may cause a startup to fail before it takes off.

Ms. Huang’s putative class action is brought on behalf of herself and “[a]ll current and former female employees of Twitter … denied promotions” to “engineering leadership positions.”  Ms. Huang’s lawsuit alleges that Twitter “discriminates against its female employees by failing to promote equally qualified or better qualified women …. The company’s promotion system creates a glass ceiling for women … because Twitter has no meaningful promotion process for these jobs.” Ms. Huang states in her lawsuit that Twitter recognizes its company-wide, pervasive problem of discrimination…[and] recently began providing bias mitigation training throughout the company.”  However, she alleges that Twitter “[fail[s] and refus[es] to take adequate steps to eliminate the effects of its past discriminatory practices; and, retaliat[es] against women employees who complain of unequal treatment.”

Such allegations could be diffused if an employer has in place clear written policies prohibiting discrimination, harassment and retaliation based on any protected status and established procedures for reporting complaints and prompt impartial investigations of all complaints.  A demonstrated commitment to train employees, especially supervisors and hiring managers, on these policies and to promptly and impartially investigate and enforce violations of these policies would further undercut such allegations.

The FEHA makes it unlawful for an employer “to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.”  Cal. Gov’t Code § 12940 12940 (k).  Ms. Huang has not alleged a separate cause of action for failure to take all reasonable steps to prevent discrimination; however, Ellen Pao included such a cause of action in her recently decided lawsuit against venture capital firm Kleiner Perkins Caufied & Byers LLC, Pao v. Kleiner Perkins Caufied & Byers LLC, et al., Case No. CGC-12-5201719 (San Francisco Superior Court).  Tech companies should anticipate that employees who feel they have been treated differently than their peers because of a protected characteristic may bring such claims.  Policies and training can help defend against an allegation of failing to take all reasonable steps to prevent discrimination, harassment and retaliation.

California Government Code section 12950.1 requires employers with 50 or more employees to provide training to supervisory employees in California on sexual harassment and the prevention of abusive conduct.  While not legally required, smaller companies should nonetheless train their supervisory employees on the prevention of harassment and discrimination in order to promote a company culture free of discrimination and to ensure that supervisors properly address any complaints raised by employees.

Taking these proactive steps early can help a startup develop an equal employment opportunity culture to prevent or enhance the defensibility of discrimination allegations.