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  • Writer's picturePavan Khoobchandani

How This Company Might Have Avoided Paying $750,000 To Settle A Race Discrimination Lawsuit

Updated: Jul 16, 2020

In 2017, the Equal Employment Opportunity Commission (EEOC) filed a lawsuit against Diversified Maintenance Systems, LLC in federal court in Maryland, alleging that since 2012 the company discriminated against African American job applicants in the DC and Philadelphia areas, favoring Hispanic applicants.

On November 22, 2019, the EEOC announced that the lawsuit had been settled, with the company agreeing to pay $750,000 and to take a number of actions to prevent discrimination including implementing a targeted hiring plan and record-keeping requirements (a significant administrative burden), providing training to its employees, and designating an officer or high-level management employee as an internal monitor.

That's a huge financial outlay, administrative expense, and burden.

Diversified is a national company that provides janitorial services for businesses including large retail stores. The allegation in the lawsuit was that the company instructed its regional management not to hire African American applicants as custodians, lead custodians, or porters, unless special permission was granted. The lawsuit also alleged that the company tried to dissuade African -American applicants from applying by emphasizing that there would be a criminal background check.

No worker should be denied employment because of his or her race," aid EEOC District Director Jamie R. Williamson. "Moreover, employers must properly address complaints of workplace harassment and prevent retaliation against those who exercise their rights to complain about such mistreatment."

Part of the lawsuit focused on the treatment of a particular African American area manager. including calling him the "N-word," instructing him not to hire African American employees for janitorial positions and to only interact with African American contacts.

During the course of the lawsuit, some of the allegations that came out were that:

  • a Diversified employee told an African American applicant that Diversified "did not need his kind;"

  • the company initially hired African American employees then rescinded their job offers;

  • the company fired an African American woman for being five minutes late to work, saying "n****** is always late;" and that

  • the company paid white janitorial employees less tha Hispanic employees, and said that "white people are lazy."

To its credit, Diversified had a harassment policy that required that harassment be reported. The lawsuit alleged that the area manager reported the harassment to his supervisors, to a management level above them, and to human resources, and that no remedial action was taken. To the contrary, according to the lawsuit, the company expressed anger with the area manager for making the complaints and retaliated against him by increasing his workload and taking away the tools needed to perform his job responsibilities. Ultimately, the EEOC alleged, the company demoted the area manager to lead custodian and then fired him.

How might this have been avoided?

The lawsuit alleged that there were dozens of people (applicants and employees) that knew about the discrimination that was allegedly occurring. We know that Diversified had a policy requiring harassment to be reported and that at least one employee did report. What if more people had reported? Did the reports get into the hands of the right people? If not, is that the reason that no remedial action was taken?

Companies would be well-served to have a robust and easy-to-use ethics hotline or reporting system, and remind employees and applicants about it early and often. After all, an ethics hotline that no one knows about and therefore doesn't use won't be very effective.

You should also take all reports of potential ethics violations seriously and investigate them. We don't know exactly what Diversified did or didn't do in this case, but it's possible that if the right people had known about the alleged practices early on, some of the time, expense, and significant legal fees could have been avoided.


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