The Employment Law Review: Global Diversity and International Employment
During the past 30 years, many countries have passed some form of regulation to promote diversity in the workplace. Although diversity management is a common imperative for multinational corporations, the evolution of legal and regulatory developments reveals a landscape filled with varied and multidimensional approaches. For several years, different regions of the world have experienced unique successes and challenges in achieving workplace diversity. Although many law firms and Fortune 500 companies in the United States have embraced diversity initiatives as a whole, the European Union has pioneered efforts to achieve gender parity in corporate management, and countries in Asia have set progressive quotas to increase the representation of disabled employees. This chapter addresses some of these recent initiatives to promote corporate diversity in the multinational workplace and the particular challenges that corporations with a global presence may encounter in the administration of both internally and legally mandated diversity initiatives. These challenges include barriers to the collection and retention of employee diversity statistics imposed by international privacy regulations, the difficulties in adapting an integrated diversity initiative to regional demands, and the ever-present gaps between legislation and enforcement.
In a world populated by an increasing number of multinational corporations, diversity management has not only become an issue of strategic importance, but also a driver of economic and competitive success. Not only does an increasingly diverse workforce mean better access to resources and customers, greater legitimacy in heterogeneous societies and opportunities for learning and innovation, but corporations also perceive added value in distinguishing themselves from their homogeneous competitors. In addition to being driven by business incentives, diversity initiatives sometimes are externally imposed in the form of equal employment opportunity, affirmative action and other initiatives aimed at eradicating prejudices and stereotypes that historically have limited the representation of disadvantaged groups. The proliferation of private and public diversity initiatives in recent years has been the result of these complementary forces.
II Recent diversity initiatives
i Positive discrimination
Although most countries have laws prohibiting discrimination against members of protected classes, some jurisdictions have gone a step further by enacting laws requiring positive discrimination (i.e., the practice of giving an advantage to a certain group to increase diversity or combat prejudice). In the United Kingdom, for example, employers are legally required to implement 'positive action' in their recruitment processes under the Equality Act 2010. The Act allows employers to favour an applicant if the employer believes the individual experiences a 'disadvantage connected to the [protected] characteristic' and that positive discrimination will 'enable or encourage persons who share the protected characteristic to overcome or minimise that disadvantage'. A similar regulation was signed into law in 2007 in South Africa. The European Union has also passed regulations that allow for participating Member States to take positive action to promote workplace equality.2 In 2019, members of the US House of Representatives passed a similar piece of legislation, also named the Equality Act, which would amend and expand the landmark Civil Rights Act of 1964 to embrace a more robust vision of equality, banning discrimination in various areas of people's lives, including employment, public education, housing and credit, among others, on the basis of gender, sexual orientation and gender identity. Although the bill never passed in the second congressional chamber, the US Senate, and so did not become law, President Biden remains publicly committed to passage of the Equality Act.
In India, there is a constitutional basis and reservation programme in place to allocate a quota of public service positions for traditionally under-represented groups, which include certain castes and religious minorities. Similarly, Malaysia and Nigeria have affirmative action programmes for public service employees to attain the desired balance of ethnicities. In contrast, however, outright quota programmes have been rejected for the most part in the United States by the Supreme Court, where the prevailing philosophy is for employers to make blind determinations with respect to race, national origin, gender and other protected classes. As typically well-represented groups (e.g., white males) can claim reverse discrimination under Title VII and other discrimination statutes, employers must carefully design diversity programmes to avoid legal claims by employees who claim to have been disfavoured or excluded by diversity initiative programmes.
Further complicating matters for US federal contractors, the Office of Federal Contract Compliance Programs (OFCCP) has set forth regulations for contractors to benchmark, enquire and take positive action to ensure appropriate representation of veterans and individuals with disabilities. In 2015, the OFCCP extended protections against workplace discrimination by prohibiting discrimination based on sexual orientation and gender identity by federal contractors and subcontractors. In 2016, the OFCCP revised its Sex Discrimination Guidelines for the first time in more than four decades. The final rule outlined gender-based discriminatory practices that contractors must identify and eliminate, and clarified how contractors must take affirmative action to ensure that hiring and employment practices do not adversely affect employees on the basis of their gender. In 2020, the guidelines were updated again to reflect the new protected bases of sexual orientation, gender identity and discussing, disclosing or enquiring about compensation. For employers in the United States interacting with the finance sector, Section 342 of the Dodd-Frank Act establishes an office at every relevant federal agency to monitor and ensure the fair inclusion of minorities and women for every company and vendor governed by the Act.
ii Gender quotas on corporate boards
Legally mandated gender quotas on corporate boards are one effective form of positive discrimination that has taken hold in Europe. These metrics serve as a regimented means of removing inequities in the corporate boardroom and promoting women's economic interests. Before the first gender quota came into effect in 2003, the problem of female under-representation was strikingly apparent. Although the proportion of women in the workforce was continually increasing in most jurisdictions, this growth did not translate into increased representation on corporate boards.
Norway was the first nation to enact a legally mandated gender quota in 2003. Before then, women represented a meagre 6.8 per cent of board directors in the country. In response, the Norwegian parliament approved a rule requiring corporate boards to consist of 40 per cent women by 2008. The quota applies to all publicly owned corporations and public limited liability companies in the private sector. Affected corporations had until 1 January 2006 to voluntarily comply with the quota rule, after which time compliance became mandatory. The result was full compliance with the mandate by 2009, and in 2010 the percentage of female directors had increased to 40.3 per cent. In 2021, women represented 42 per cent of the board members of publicly traded Norwegian companies. The gender quota law has had, and continues to have, an undeniably positive effect as evidenced by Norway's No. 3 ranking in the World Economic Forum's 2021 Global Gender Gap Report.
In the years since Norway enacted its pioneering gender quota, many other countries have followed suit. Belgium, France, Iceland, Italy, the Netherlands, Spain and the United Kingdom have all passed laws establishing quotas for women on corporate boards. Also, in 2015, Germany passed legislation requiring major companies to allocate 30 per cent of seats on non-executive boards to women, although this gender quota has not been as successful as its European counterparts. Specifically, non-complying companies in France and Norway, for example, face fines and other sanctions. Under the initial German law, however, a company that failed to fill the requisite number of board seats with women only had to keep the seats empty until filled by female candidates. However, in August 2021, Germany passed new legislation that built on the 2015 law to require publicly-traded private companies to appoint at least one woman and one man to an executive board with more than three members, and for other private companies to set targets of at least one woman on their board or alternatively provide, and publish with its annual reporting, a justification for setting a target that is lower than one woman on its board. Non-compliance with the new German law can result in steep financial fines. Similarly, companies in the Netherlands, Finland and Denmark are simply required to explain their failure to meet the quota. In addition, a voluntary effort known as the '30 per cent club' has helped to increase women's representation on corporate boards substantially. In Australia, the Council of Superannuation Investors and the Australian Institute of Company Directors (AICD) each launched initiatives to achieve 30 per cent female representation on Australian Security Exchange (ASX) 200 boards by the end of 2017 and 2018, respectively. Moreover, in 2018, the ASX Corporate Governance Council issued a draft consultation recommending that ASX 300 boards also achieve a 30 per cent target. In its 2019 consultation response, the Council decided to proceed with the 30 per cent target. In December 2019, the AICD announced that women represented 30 per cent of directors on ASX 200 company boards. Interest groups then urged the AICD to reach 30 per cent female representation on the ASX 300 by the end of 2021, a figure that was reached and exceeded, with AICD reporting female board representation of 32.1 per cent for the ASX 300 at the end of that year. A number of other countries also have laws that require that gender be taken into account in appointing board members and that companies report on the gender balance of their boards. And in November 2013, the European Parliament voted in favour of legislation proposed in 2012 that would set an objective that women would make up 40 per cent of non-executive directors at companies listed on stock exchanges no later than 2020. Although the European Commission announced its plans to advocate for a similar gender quota, the legislation has been blocked by several Member States. However, the European Parliament continues to push for the legislation's passage and it remains on the Commission's priority list.
Legally mandated gender quotas are also starting to appear outside Europe. In 2011, for example, Malaysia's Ministry of Women, Family and Community Development succeeded in passing an amendment to the 2004 regulation requiring 30 per cent of directors on boards in the public sector being women. Similarly, Brazil has a 40 per cent target, by 2022, for female representation on the boards of state-controlled enterprises; India's Companies Act 2013 requires prescribed classes of companies to have at least one female board member; and Israel and the United Arab Emirates require all companies and government agencies to have at least one woman on the board, a requirement that has been expressly adopted by the United Arab Emirates' Securities and Commodities Authority to be listed on the exchange. In Japan, Prime Minister Shinzo Abe announced in 2015 the goal of increasing the percentage of women in executive positions at Japanese companies to 30 per cent by 2020, and a new law that promotes women's career activities, which took effect on 1 April 2016, requires private and public sector Japanese companies with more than 300 employees to disclose gender diversity targets. However, in 2021 women occupied less than 13 per cent of corporate management positions in Japan and the government pushed back the 30 per cent target to 2030. In 2018, the US state of California passed a law that mandates that all public companies with their principal executive offices located within the state must have at least one female director on their corporate board by 31 December 2019. In 2020, California passed a second piece of legislation mandating minimum representation by minority individuals on corporate boards by the end of 2021. Several lawsuits have been brought in a California federal court, alleging that the California quota laws are unconstitutional. Colorado, Illinois, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania and Washington have similarly introduced or passed legislation or resolutions concerning board diversity. In August 2021, the US Securities and Exchange Commission adopted new listing rules submitted by Nasdaq that require all companies listed on Nasdaq's US exchange to disclose aggregated statistical information about each board's voluntary self-identified gender and racial characteristics and LGBTQQ status for the current and prior years, and either include on each company's board or publicly disclose why the board does not include a certain number of 'diverse' directors.
iii Pay equity regulation
Equal pay for men and women has also become a hotly discussed topic around the globe. In the area of pay disparity, gender creates the widest gaps of any protected characteristic.
In the United States, the issue has become a linchpin of congressional debate since the early years of this century. In January 2009, President Obama signed into law the Lilly Ledbetter Fair Pay Act to supplement existing pay equity legislation. The Act effectively extends the time in which an individual can bring an equal pay discrimination claim. In 2014, President Obama signed a Presidential Memorandum that required federal contractors to submit data on employees' compensation by race and gender to help ensure fair pay. In addition, in 2016, the US Equal Employment Opportunity Commission announced new EEO-1 pay equity reporting requirements to assess allegations of pay discrimination and to provide equal pay for equal work by increasing transparency. Although some of these actions were rolled back by the Trump administration, they have largely been reinstated through executive orders under President Biden or through federal court decisions. In several US jurisdictions, including Alabama, California, Colorado, Connecticut, Delaware, Hawaii, Illinois, Maine, Maryland, Massachusetts, Nebraska, North Dakota, New Jersey, New York, Oregon, Pennsylvania, Puerto Rico, Utah, Vermont and Washington, governors have signed measures into law aimed at narrowing the gender wage gap and closing loopholes that employers use to defend unfair wage practices. However, the pay disparity between men and women in the United States still hovers around 20 per cent.
Other countries also continue to confront pay disparity issues. Although foundational treaties in the European Union guarantee equal pay for work of equal value for all citizens, the gap between men's and women's hourly gross earnings throughout the European Union remains at approximately 14.1 per cent and several Member States have adopted remedial measures. The French parliament introduced legislation in 2006 that required firms to develop a framework to eliminate pay disparity by 2010, and in the United Kingdom, the Equality Act 2010 obliges a corporation with more than 250 employees to disclose pay information, with the intent to expose gender discrepancies. In 2014, the European Commission published a recommendation focusing on pay transparency that proposed measures for Member States to facilitate wage transparency in companies, such as improving the conditions for employees to obtain information on pay or establishing pay reporting and gender-neutral job classification systems from companies, among other things. In 2017, Germany's Pay Transparency Act came into effect, which grants employees in companies with more than 200 workers access to information about how their wages compare to their colleagues' and provides for mandatory pay equity reporting for companies that have 500 or more employees. In 2018, France passed a law requiring that companies with 50 or more employees publish gender pay gap information, and the Ministry of Labour has announced it will publish the results for companies with 250 or more employees in March 2021.
The issue of pay equity has garnered attention outside the European Union as well. In the Philippines, for example, the Senate approved a bill in 2012 that would protect women from discriminatory compensation policies in all areas, including wages, salary and employment benefits. In early 2018, Iceland passed legislation requiring that public and private companies with 25 or more employees certify that they are providing equal pay for equal work. Icelandic employers must confirm their compliance every three years or risk daily fines.
iv Sexual and moral harassment policies
An uptick in sexual and moral harassment legislation also evidences an increased focus on diversity awareness and sensitivity in the workplace. This has been especially true in the United States, where New York authorities passed legislation in October 2018 requiring that employers maintain written anti-sexual harassment policies and implement mandatory annual sexual harassment prevention training as soon as possible. Since then, several other US jurisdictions have enacted similar laws, including California, Connecticut, Delaware, Illinois and Maine. Developments in India have focused on gender and gender programmes, with the Supreme Court recognising the legal rights and status of transgender individuals as a third gender and the Indian parliament's enactment of a wide-reaching sexual harassment law. The latter mandates workplace committees and a range of penalties to protect women from unwelcome sexual advances, comments and conduct in the workplace. This law is unique in that it also covers third parties in the workplace, including clients, customers and daily wage workers. Similarly, other Asian nations, such as Bangladesh, Nepal and Pakistan, recognise a legal third gender for intersex and transgender individuals. Of the EU Member States, both France and Germany recognise gender identity beyond woman and man, and Belgium's federal government announced plans in October 2020 to introduce the possibility to register under gender identifier 'X'. Further, in Denmark, citizens may self-determine their legal gender without any medical approval. Though not a Member State, in 2019, Georgia adopted its own sexual harassment law, defining and criminalising this type of conduct. Similar to Belgium's proposed law, a new progressive self-determination gender change law took effect in Iceland on 1 January 2020, which includes a third gender option, 'X', on official documents. South American countries that recognise non-binary gender include Argentina and Uruguay.
Some EU Member States have addressed the problem of workplace harassment by placing an affirmative duty on employers to prevent and redress this behaviour. These Member States have implemented specific anti-discrimination and sexual harassment legislation. In Germany, the General Act on Equal Treatment, enacted in 2006, places a duty on employers to protect employees from discrimination not only from superiors and co-workers but also from third parties, such as customers. In France, as of 1 January 2019, large French employers are required to designate someone at the company to whom employees can report concerns or allegations of instances of sexual harassment. The Croatian Labour Act similarly requires that employers protect their workers from the harmful, unwanted conduct of superiors, colleagues and third parties. And sexual harassment appeared as prohibited conduct in Turkish legislation for the first time in 2003. Additionally, the European Union has issued a directive on sexual harassment (Directive 2002/73/EC), which implemented the principle of equal treatment for men and women concerning access to employment, vocational training and promotion as well as working conditions.
Also interesting is the passage of sexual harassment legislation in several countries that have not historically focused on these issues. China, for example, passed progressive legislation that gives victims of sexual harassment a cause of action under Chinese law. In 2005, the national legislature amended the Law on the Protection of Women's Rights and Interests to explicitly prohibit workplace harassment but, at the time, the law did not impose obligations on employers to prevent harassment in the workplace. In 2012, however, the Special Provisions on Occupational Protection for Female Employees took effect and gave victims of harassment a mechanism to redress their claims under Chinese tort law. Under these regulations, unless an employer establishes a corporate anti-harassment policy, it may be liable for negligently or intentionally failing to stop harassment that it knew or should have known could occur. Moreover, in 2018, Chinese authorities took their anti-sexual harassment initiative a step further and formulated new Civil Code provisions creating an affirmative duty on employers to establish reasonable anti-sexual harassment measures. In May 2020, the National People's Congress issued Article 1010 as part of its first civil code, which clarifies what may be considered harassing conduct and establishes a civil liability framework to hold harassers accountable. Similarly, in Bangladesh, the initiative to protect equal rights of women and non-discrimination has gained momentum, and has successfully mobilised women to uphold their rights. The Bangladeshi government has adopted policies, legislation and strategies to empower its women. However, weak enforcement of these laws remains common.
Progress also is apparent, although not as far-reaching, with respect to anti-discrimination initiatives for lesbian, gay, bisexual, transgender and queer (or sometimes questioning)(LGBTQ) employees in the global workplace. In Europe, the EU's Charter of Fundamental Rights was the first international instrument to explicitly include the term 'sexual orientation', and Article 13 of the European Commission Treaty prohibits discrimination based on sexual orientation. Also, Article 19 of the Treaty on the Functioning of the European Union provides that the European Union will 'combat discrimination based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation'. Member States vary in their application of this anti-discrimination law. The Equality Act in the United Kingdom makes it direct discrimination to treat LGBTQ employees unfavourably on the grounds of their sexual orientation. The anti-discrimination provision applies to all areas of employment, including terms of contracts, pay, promotions, transfers, training and dismissal. Similarly, in Germany, the 2006 General Act on Equal Treatment defines sexual orientation to encompass discrimination against transsexual and intersexual as well as lesbian, gay and bisexual employees. These policies stand in stark contrast to the laws of several countries where homosexuality and homosexual acts are legally prohibited. Countries such as Algeria, Libya, Nigeria, Singapore and Somalia permit employers to discriminate based on sexual orientation and some even punish homosexual acts with protracted periods of imprisonment.
Until 2018, India was indicative of this dichotomy. As noted above, in April 2014, India's Supreme Court recognised transgender people as constituting a legal third gender, grounding its decision on rights guaranteed by the nation's Constitution as well as international law, and determining that gender identity and sexual orientation are fundamental to the rights to self-determination, dignity and freedom. In December 2013, however, a two-person bench of India's Supreme Court put a colonial-era portion of the Penal Code (Section 377), which described homosexual acts as 'against the order of nature' and punishable by up to life in prison, back into law after a 2009 ruling by the High Court of Delhi struck down Section 377 as unconstitutional. Although the Supreme Court ruled that only Parliament can make changes to the law that bans consensual same-sex sexual activity, it has since re-examined the issue and reversed its decision. In holding that consensual same-sex sexual activity is now legal, the court reasoned that '[c]riminalising carnal intercourse is irrational, arbitrary and manifestly unconstitutional'.
Stop-and-go progress on LGBTQ rights is a common theme around the world. In the United States, the Supreme Court has paved the way for gay marriage. Additionally, several US jurisdictions have outlawed discrimination based on sexual orientation and the Equal Employment Opportunity Commission concluded in 2015 that Title VII of the Civil Rights Act of 1964 prohibits sexual orientation or gender identity discrimination in employment because it is a form of sex discrimination. The US Supreme Court agreed. In Bostock v. Clayton County, GA – a consolidation of three separate cases – the Court held that Title VII prohibits discrimination based on sexual orientation and gender identity. Back in 2015, New York State Governor Andrew Cuomo announced that he would take executive action to protect transgender people from discrimination in housing and employment, among other areas. Governor Cuomo noted that this action was long overdue, explaining that the law 'left out the T' because transgender people had been left out of previous anti-discrimination laws protecting gay and bisexual men and women. Further, in 2018, Governor Cuomo signed an executive order banning state agencies and authorities from conducting business with any 'entities that promote or tolerate discrimination'. Despite this progress, including the help of the Affordable Care Act, there remain significant obstacles to equality for transgender individuals, who continue to face discrimination, harassment and barriers to access in the healthcare system, as well as in society generally. For example, in 2016 and 2017, several states, including Arkansas, Tennessee, Mississippi and North Carolina, introduced or enacted anti-LGBTQ legislation. In addition, many employers still struggle with policy decisions regarding health insurance coverage of transgender employees, including, for example, whether to cover sex-change surgeries. As this issue continues to make headlines, there are likely to be many more legal developments on LGBTQ protections in the coming years.
III Challenges facing multinational corporations
It is clear that with such varied legislation across the globe, multinational employers must keep abreast of a panoply of regulations, laws and international policies. On top of this challenge, global corporations also may face a unique set of difficulties in implementing and administering internal diversity initiatives. These challenges include adapting an integrated diversity policy to a specific locale, gathering statistical data to measure the success of diversity programmes and understanding the complexities of the source of law and enforcement in each region.
i Global integration versus local responsiveness
For a global diversity policy to be successful, it must be tweaked to accommodate the culture and social context of each region and be continually monitored and adjusted. Studies have shown that policies created in one country and exported to another often lack the cultural legitimacy to be effective in other management situations. Differing attitudes towards corporate diversity and distribution of power among groups are common examples of the cultural differences that make the wholesale export of a diversity management programme difficult. For example, an overt emphasis on employee heterogeneity is uncommon in France, where it is illegal to register employees as members of an ethnic group. In China, gender stereotypes from thousands of years of feudal despotism still linger in a modernised, industrial society. As a result, lax diversity policies often result in tokenism rather than substantive change. Finally, differences in protected categories may cause difficulties in translating anti-discrimination policies aimed at remedying historical disadvantages. In Hong Kong, for instance, local ordinances prohibit discrimination on the grounds of gender, pregnancy, marital status, disability, race and family status. However, although the Labour Department has in place guidelines and codes of practice to prevent age and sexual orientation discrimination in the workplace, Hong Kong does not offer protection on the bases of age, religion or sexual orientation. Moreover, in India, caste is a protected category. International corporations should be aware of these differences throughout the implementation of an integrated diversity strategy.
ii Tracking progress
To gauge the success of corporate diversity policies, employers must also be able to gather statistics on employees and measure progress. However, the collection of sensitive data is difficult in light of regulations aimed at protecting data privacy. In the European Union, employers collecting identifying information regarding employees must disclose the purpose of these statistics before storing and transferring the data. Employers must obtain consent from employees when seeking to use the information for purposes other than those communicated or when transferring the information to a third party for a different purpose. Indeed, the enhanced protections offered to employees under the General Data Protection Regulation (GDPR), which took effect in May 2018, further emphasise the need for multinational employers to appropriately ensure employee data protection. Moreover, individual Member States often have their own data privacy laws that further complicate data collection and reporting. The French Data Protection Act, for example, largely prohibits employers from collecting and processing sensitive data, including information relating to racial or ethnic origins, political, philosophic or religious opinions, trade union affiliation, health or sexual identity. The Act also limits the length of time that employers may store employees' personal data. These regulations make it extremely difficult, if not impossible, for employers to track the progress of their diversity programmes.
Statutes similar to the EU model have been enacted in India, Malaysia, Mexico, South Africa, South Korea, Brazil and the Philippines, among other jurisdictions. In India, the 2011 Information Technology Rules not only distinguish personal information from sensitive personal information but also require corporate entities that collect, process and store personal data, including sensitive personal information, to comply with certain procedures. In Malaysia, the Personal Data Protection Act 2010 imposes strict limitations on the transfer of personal data outside the country, with limited exceptions similar to those embedded within the US–EU Privacy Shield principles. In Brazil, the Brazilian General Data Protection Law, which was passed in August 2018, contains numerous provisions similar to those in the GDPR, including requiring entities headquartered or handling personal information in Brazil to establish appropriate protective measures, and imposing hefty sanctions for non-compliance. Enforcement was due to begin in August 2020 but, because of covid-19, has been delayed until May 2021. In Serbia, the National Assembly enacted the Personal Data Protection Law, effective in August 2019, which is also modelled after the GDPR but imposes notably lower sanctions for non-compliance. In Mexico, the 2010 Law on the Protection of Personal Data Held by Private Parties and the related 2011 Personal Data Regulations, 2013 Privacy Notice Guidelines and 2014 Parameters for Self-Regulation are more lax in that they allow cross-border transfers of data within a corporation as long as Mexican employees are given rights of access and objection (for a valid reason), and the corporation meets certain security requirements. In 2016, the Turkish parliament enacted the Law on Protection of Personal Data, which distinguishes the transfer of personal data to third parties in Turkey from the transfer of personal data to third countries. In August 2021, China enacted the Personal Information Protection Law, which took effect on 1 November 2021, significantly tightening China's laws regarding processing of personal information, including by requiring disclosure and consent, and limiting the transfer of data across borders. In 2008, the US state of Illinois passed the Illinois Biometric Privacy Act, a broad state law that protects employees and others in Illinois against the improper collection, use, storage, transmission and destruction of biometric information, including biometric identifiers, such as retina scans, fingerprints, voiceprints or scans of the face or hand geometry. During the past few years, Illinois has seen a wave of litigation brought against employers under the Privacy Act.
As a greater number of countries consider, introduce and enact detailed data protection and privacy laws, multinational corporations must continue to be sensitive to regional legislation and maintain strict compliance with local laws.
iii Unconscious bias training
An increasingly popular trend within diversity and inclusion initiatives is the recognition of, and mitigation against, unconscious or subconscious bias in decision-making through awareness training. For example, unconscious assumptions can often overlap with common stereotypes: 'women are more emotional than men', 'assertive women are too ambitious', 'persons with disabilities cannot perform as well' and 'older people are out of touch with technology'. Though unconscious biases may not necessarily lead to biased decisions in the workplace, they may predict discriminatory non-verbal, subtle behaviours, such as sitting further away from someone, cutting interviews short, evaluating someone more poorly or disciplining someone more frequently. These types of behaviours can lead to negative consequences, such as poor morale, bad publicity, loss of time and productivity as well as erosion or loss of client relationships.
Significantly, employment courts in the United Kingdom have long accepted that discrimination can be a result of subconscious and unintentional bias. For instance, the Equality and Human Rights Commission has written, as part of non-binding guidance, that employers 'may have prejudices that they do not even admit to themselves or may act out of good intentions – or simply be unaware that they are treating the worker differently because of a protected characteristic'. In the United States, there have been cases in which plaintiffs' employment attorneys provided information and analysis about unconscious bias in jury instructions prior to releasing the jury for deliberation. As plaintiffs' bars around the world are likely to proffer this variety of 'evidence' to prove indirect discrimination, companies are increasingly taking a closer look at how to eliminate less overt bias in the workplace. For example, employers can encourage employees to make thoughtful, deliberate decisions in the workplace, and can use objective frameworks, such as checklists at key decision points, to encourage less biased outcomes. When hiring and promoting employees, employers can agree beforehand to basic merit criteria, militating against any biased tendencies that may influence decision-making. Employers can also conduct regular audits of key decisions, including hiring and promotion, to ascertain whether any patterns exist that could evidence unconscious bias in any particular parts of the business, and to ensure that diverse groups of people are represented on the panel of reviewers. However, companies should weigh the potential downside should a record be created that may prove damaging in the event of litigation.
Both for strategic reasons and in response to legal developments throughout the world, highly successful multinational corporations are focused on promoting diversity in the workplace and implementing robust diversity management programmes. These corporations are grappling with a complex set of legal issues that are relatively new in many regions of the world and remain untested in the global marketplace. As developments continue to unfold in the legal landscape, corporations will have to monitor and adjust their diversity programmes to remain compliant. Corporations in the United States can serve as a model for many business entities that are just beginning to promote diversity. Owing to a highly diverse population and a history of racial, ethnic, gender and LGBTQ inequality, the United States has been very proactive in working towards workplace equality, although this progress is not without setbacks. Europe is quickly catching up with legislation to address the increasingly diverse population resulting from the free movement of workers throughout the European Union.
As corporations become more diverse at all levels, these global initiatives will become not only more important for success in the marketplace but also more complex. Companies wishing to stay competitive will rely on their human resources professionals and legal advisers to aid them in navigating the wide range of regulations that affect this area.
1 Erika C Collins is a partner at Faegre Drinker Biddle & Reath LLP. The author extends special thanks to Kerry Zaroogian for her contributions to this chapter.
2 See, e.g., Racial Equality Directive 2000/43/EC, 2000 OJ (L 180) 22 (EC); Employment Equality Directive 2007/78/EC, 2007 OJ (L 303) 16 (EC).