Key Issue: Are employers making the mistake of overreaching to avoid discrimination claims?

The Case: McGuinness v. Lincoln Hall

Lincoln Hall operates a residential program for troubled youth in Lincolndale, New York. Sheila McGuinness, a white woman, was hired as Lincoln Hall's director of human resources. A year after she was hired, the company's executive director initiated a reorganization, and Carlton Mitchell, a black man, was hired as deputy director of programs. Both McGuinness and Mitchell were members of an executive group consisting of Lincoln Hall's top administrators. Later, another black man was hired as campus ministry coordinator.

Shortly thereafter, the board of managers decided to reverse the restructuring decision and terminated the executive director. Within two months, members of the entire executive group either resigned or were discharged. Among those terminated were McGuinness, Mitchell, and another white male.

McGuinness was notified that the company was eliminating her position and offered her a layoff package that included two weeks of severance pay. She was not asked to sign a general release of claims against Lincoln Hall.

Two days later, Mitchell received a similar notice. However, his severance package included 12 weeks of pay in exchange for signing a waiver of claims under both federal and state laws. About the same time, the white male executive was also terminated. He didn't receive a severance package nor was he asked to sign a waiver. About six weeks later, the other black man was also discharged and offered a significant severance-pay package in exchange for signing a release of claims waiver. This man had only been employed with the organization for about four months as opposed to McGuinness's two years.

McGuinness sued for racial and gender discrimination in Lincoln Hall's severance pay policy. Lincoln Hall denied the allegations, saying that it offered Mitchell more severance because, among other reasons, he negotiated for his severance and threatened legal action.

The district court found in favor of Lincoln Hall, asserting that McGuinness could not show that she was similarly situated to a black male employee who received a larger severance package. The court went on to say that even if she had been able to establish a prima facie case, she did not have enough evidence to rebut Lincoln Hall's nondiscriminatory reason for its severance pay practices.

The 2nd Circuit Court of Appeals agreed that she did not have a case with respect to her gender-discrimination claim. However, it concluded that she did satisfy the requirements to claim racial discrimination, pointing out that a "plaintiff is not obligated to show disparate treatment of an identically situated employee." Furthermore, the 2nd Circuit noted that Lincoln Hall had offered Mitchell a larger severance package than McGuinness before Mitchell embarked on "negotiations." This, and the fact that another black male with only four months' service also received an enhanced severance package and a similarly situated white male did not, suggests that the employer's reasons were suspect. The case was sent back to the district court for further proceedings.

Compliance quote: The concept of reverse race discrimination has emerged over time because it's more common to see cases where the plaintiffs are black, Hispanic, or of another minority, rather than white, especially when whites were the demographically dominant race in most areas.

Some observers say that this case illustrates how employers can mistakenly make decisions they think will protect them from discrimination charges (i.e., asking for signed waivers and over-achieving in their pay practices for selected employees considered high-risk litigation candidates).

The 2nd Circuit was firm in its conviction that there was enough evidence to question the veracity of the employer's actions, stating: "Plaintiff has made out a prima facie case that she was treated differently on the basis of her race, and she has proffered evidence that could support a determination that the defendant's nondiscriminatory explanation for its actions was false."

Experts remind employers that discrimination is discrimination and race discrimination can include the color white. Payoffs and waivers are no way to prevent discrimination charges. The way to at least reduce, if not totally prevent, discrimination disputes is to establish fair employment policies and administer them consistently.