By Rebekah Mintzer, From Corporate Counsel

Yahoo Inc., the Sunnyvale, California-based tech giant, got slapped with a lawsuit this week alleging gender discrimination, but not the kind one might typically expect, especially in Silicon Valley. Gregory Anderson, a former editorial director of several Yahoo news verticals, claims he lost his job because of discrimination against men in the company’s media department.

The allegation of reverse discrimination in male-dominated Silicon Valley has captured public attention. But what’s just as noteworthy is the role a controversial employee performance rating system, known as “stack ranking” or “forced ranking,” played in Anderson’s allegations. These systems may feed into existing biases or create the appearance of biases in employment practices.

According to Anderson’s complaint, Yahoo started using its “Quarterly Performance Review” system to rate employees in 2012 when Marissa Mayer stepped in as CEO. The complaint says that the system, which closely resembles stack ranking, involves supervisors assigning employees ratings based on their performance and ranking them along a bell curve with five sections—from “greatly exceeds” down to “misses”—on a quarterly basis. Upper-level management would review these rankings, often without consulting with employees. Those who wound up at the bottom of the bell curve, such as Anderson, were terminated, sometimes in large numbers.

Anderson claims that Yahoo abused the QPR system, with management adjusting ranking numbers in an opaque manner designed to get rid of male employees, while keeping and promoting females. He cites an instance where a man and woman were awarded the same ranking score but the man was dismissed and not allowed to appeal his score, as well as a disproportionate surge in the number of female high-level employees in his department.

Yahoo’s system has come under criticism before by complaints from company insiders who feel they have to give capable employees a low rating (and potentially the boot) in order to fit the bell curve.

Putting aside what the system does to workplace morale, does it invite legal liability for companies? “There’s nothing inherently wrong with the model,” says David Sanford, chairman at Sanford Heisler Kimpel, a firm that represents individual plaintiffs in employment law cases. “But if it turns out that using the model wound up having disparate impact on certain protected groups, then you have a problem.”

Sanford explains that while ranking employees may be perfectly fine, if these rankings are bumping people in a certain protected category into a lower group, that could be grounds for a suit such as Anderson’s. And the more subjective the ranking system, the more likely it is that a plaintiff could find reasons to sue.

Tamara Devitt, a partner at Haynes & Boone who represents employers, says the problem isn’t stack rankings, but how they are applied. “With any performance evaluation system, it’s really important for human resources personnel to be involved in ensuring that the system is designed for consistency, that it’s designed to provide as much objective feedback as possible to the employees that are being reviewed, and that there are checks in the process to help employers avoid claims of discrimination.”

Discrimination suits have arisen from ranking systems before. A 2015 suit against Microsoft Corp. alleged that its performance ratings discriminated against women. The named plaintiff claimed that despite exceeding performance expectations and getting high number rankings from her manager, the company lowered her numbers so it could comply with ranking caps.

In years past, similar suits have been filed against such companies as Ford Motor Co. and Goodyear Tire and Rubber Co. over alleged discriminatory effects of their rankings systems.

As for Anderson, his suit may have to get around a couple of issues. Gary Hanna, a plaintiffs labor and employment attorney, says that reverse discrimination claims can be more difficult to litigate than more traditional discrimination claims. “I think it’s going to be harder,” he says. “There is no question that juries and judges are going to be more skeptical of it.”

Hanna notes another wrinkle in the Yahoo case. Plaintiffs in discrimination litigation often use performance reviews to prove that they were performing well enough so that their termination must have been caused by another factor such as bias. But when the complaints are in part about the performance review system itself, a wrench is thrown into this argument. “In this case, it’s like the evaluations work the opposite way,” says Hanna. “It’s a reversal of the normal system, which is interesting.”

For more on this story go to: http://www.corpcounsel.com/id=1202749085844/Yahoo-Ranking-System-Driving-Discrimination-Lawsuit#ixzz3zhqog0cY