Costs of Discrimination

Unchecked bias has clear costs. According to the Level Playing Field Institute, more than 2 million professionals and managers leave workplaces each year due to unfairness, costing U.S. employers $64 billion annually. 27 percent of people who experienced unfairness at work within the past year said their experience strongly discouraged them from recommending their employer to potential employees. Similarly, 13 percent said their experience strongly discouraged them from recommending their employer's products or services.

Jason, a female-to-male transgender person employed at an Ivy League university, told HRC in 2004 that his immediate supervisor's reaction to his decision to transition was negative. Dismissing Jason's suggestion to provide awareness training and an open forum in which colleagues could ask questions, Jason's supervisor refused to help acclimatize his colleagues to his transition. Some of Jason's colleagues distanced themselves from him, and some of his male colleagues expressed discomfort with his use of the men's restroom. While the head of human resources eventually supported Jason's right to use the restroom that corresponds with his gender identity, without clear communication on the issue from management, it remained a source of discomfort for both Jason and his colleagues.

Before coming out as transgender, Jason had received no written complaints about his work and there was no indication in his personnel file of poor performance. Though it was in violation of the university's own policy to add performance complaints to an employee's personnel file without notifying that employee, Jason later discovered that e-mail correspondence from colleagues charging him of "uselessness" and "incompetence" had been placed in his file. Jason told HRC that he was looking for new employment.

Note: As of July 2006, all eight Ivy League schools explicitly prohibit discrimination on the basis of gender identity.

Dr. Lynn Conway provides a famous example of the opportunity cost of discrimination.

Lynn Conway underwent sex-reassignment surgery in 1968 and was fired by IBM for being transsexual. Before her termination, Conway had invented a method by which computer processors make multiple calculations simultaneously and dynamically, which consequently led to the creation of supercomputers that can take enormous amounts of data and compile them to look for patterns.

In the 1970s, Conway went on to work for the Memorex Corp. at the Xerox Palo Alto Research Center, where her innovations influenced chip design worldwide. Conway has since won many awards and high honors, including election as a member of the National Academy of Engineering, the highest professional recognition an engineer can receive. Conway is currently a professor and associate dean of the College of Engineering at the University of Michigan.

Note: IBM added the term "gender identity or expression" to its worldwide anti-discrimination policy in 2002.

Lawsuits claiming discrimination based on gender identity can be costly to an employer and also affect the employer's reputation.

Dana Rivers, a high school teacher in Sacramento, Calif., wrote a letter to colleagues in May 1999 explaining that she was undergoing a sex reassignment surgery from male-to-female. Rivers had worked in the school for eight years and was consistently rated by students as one of the best teachers they ever had. She had also developed a program for unmotivated students for which she was awarded an $80,000 grant as well as the school's "Stand and Deliver" award for the teacher who most inspired students.

In June of that year, the school board sent a letter to all 1,500 families in the district disclosing Rivers' status. Four parents wrote back in protest. The school board fired Rivers in September based on those parents' complaints. She settled her lawsuit against the school board challenging her dismissal for $150,000, including $15,000 for legal costs.

Mitigating the Risk of a Lawsuit

Businesses that have established educational programs and systems to address and resolve claims of discrimination and harassment may be less vulnerable to lawsuits and multimillion-dollar penalties.

For instance, in Cady v. Bristol-Myers Squibb Co., a gay man filed suit in 1998 alleging discrimination based on sexual orientation and a hostile work environment resulting from his supervisor's anti-gay comments. The court found that, while the supervisor's comments were "clearly reprehensible and unpleasant," because the company had acted swiftly, fairly and thoroughly to reprimand the supervisor — it forced him to accept a demotion, benefits reduction, and transfer or be dismissed with a loss of severance pay — the supervisor's comments did not rise to the level of a "hostile work environment." Bristol-Myers Squibb had established its policy prohibiting discrimination based on sexual orientation by 1993, the year the plaintiff first filed a complaint about his supervisor's comments.