EEOC vs. Merrill Lynch: Perils of Workplace Culture

A new government lawsuit against Merrill Lynch provides a fresh reminder that blindly participating in the less polite side of your workplace culture can damage your career.

The U.S. Equal Employment Opportunity Commission sued Merrill under the Civil Rights Act Tuesday, based on a quant analyst's complaint that he was fired after being verbally harassed about being an Iranian and a Muslim. Merrill has denied the allegations, and the five-page EEOC complaint is light on details. But few will be surprised if one or more low-level heads roll out the bank's door as a result of the incident.

An employer facing this kind of discrimination claim may seek to limit its liability by quickly identifying and firing a person who may have made inappropriate remarks, says St. Louis employment lawyer George L. Lenard.

Of course, "inappropriate" often has a different meaning on a rough-and-tumble trading floor than in the ideal world of a large employer's formal human rights policy. But when an EEOC lawsuit spotlights those conflicting meanings, guess which version carries the day in the C-suite?

To Stay Employed, "Follow the Policy" -- Not the Culture

If your employer's diversity guidelines say one thing but workplace culture says something different, "Follow the policy," Lenard says. If you don't, and something you said gets cited in a discrimination complaint, you won't be able to save yourself by pointing out that you just did what everyone around you was doing. "There is a high likelihood that you are going to be scapegoated and pushed out of there, if something like this happens," says Lenard.

Lenard is the managing partner at Harris, Dowell, Fisher & Harris, a St. Louis law firm specializing in employment and labor law. He also writes a blog focused on HR, labor law and today's workplace.

The complaint against Merrill was brought by Majid Borumand, who joined Merrill Lynch in early 2002 as a vice president-level quantitative analyst in the model development group, according to the EEOC filing.

Borumand holds a PhD in theoretical physics and a master's in mathematical finance. Although the document says he is of Iranian origin, it does not state his current citizenship or nationality at the time that Merrill brought him into the U.S. under a special visa program for highly educated foreign workers.

"While employed at Merrill Lynch, Mr. Borumand was subject to a number of remarks that reflected animus towards his national origin and religion, including but not limited to being told that 'the reason you are not allowed on the trading floor is because you are from a country which has a high risk factor and a threat,'" the EEOC complaint says. It goes on to allege that since June, 2005, the firm discriminated against Borumand on the basis of his nationality and religion by refusing to promote him, and then terminating him. It does not say when he was terminated.

Lenard, who had not heard about the suit until contacted by eFC, said, "Since 9/11 they've (the EEOC) been interested in Muslim and Middle East kind of discrimination cases. It's really a sensitive area."

How Will Management Respond?

He said the panel's decision to bring a lawsuit raises the heat on an employer. The EEOC elevates "very, very few" complaints to that level, he said. "And when they do, they put a lot of resources into it, and they do at least as good a job as any private litigator."

According to Lenard, an employer's liability for possible harassment or discrimination "would turn on whether they knew and failed to act on the problem." If management first learned about the complaint when served with a charge of discrimination, he says the safest response is to "investigate, and take disciplinary action if appropriate....There's a tremendous incentive to show that you, the employer, took action."

When an employer identifies a party that made offensive remarks and fires them, that person probably will have no legal recourse, the attorney says. In contrast, he says people who bring discrimination complaints enjoy many legal protections - even, in theory at least, the right to obtain damages against any future prospective employer who holds it against them that they formally complained about a previous employer.

The moral: when push comes to shove, that trading-floor culture you've grown comfortable in won't protect you if you get cast as the bad guy in a discrimination case. From a legal standpoint, Lenard says, a company's culture "is not 100 percent irrelevant. But it's not a very good defense" to claims of discrimination.