We're going to talk in a moment about your business, and the people you have working for you. But first, we're going to mention a word very few business leaders like to hear.

That word is: lawsuit.

Let's set the stage. In the year 2000, a 38-year-old former senior manager with EY named Joseph DiBenedetto landed a new job as a director in the tax department at AT&T.

Things were good, by all accounts. DiBenedetto rose through the ranks: first to executive director, and then assistant vice-president. He got good reviews and merit-based compensation awards, according to a lawsuit. 

(There's that word again.) 

After 20 years, however, when DiBenedetto was in his late 50s, his career hit a wall. According to court documents in his lawsuit, the chronology went something like this:

  • July 2020: DiBenedetto learned that his boss was about to retire, and he expressed the hope that he might be promoted. But he was told that as "an old, white male with not enough 'runway' left in his career," his chances were slim.
  • Around the same time, AT&T's chief finance officer sent a department-wide email about "attracting and retaining diverse employees throughout our organization, especially at our senior levels," which included "bar graphs and charts showing the race, ethnicity, and gender composition of the Finance Department."
  • Two months later, September 2020: DiBenedetto learned that not only would he not be promoted, but that he and a dozen other employees in the tax department (all of them white and over age 50, as he was, and nine of them male) would lose their jobs, supposedly because of "numbers related" reasons.
  • October 2020: During DiBenedetto's last few weeks on the job after getting his termination notice, top executives led a webcast in which they said AT&T would be "doubling down" on its diversity and inclusion efforts, and "planned to hold [senior leaders] accountable" with quarterly reviews.
  • Later that month: AT&T's CEO reported on the company's recent performance, stating among other things: "We announced strong third-quarter results this morning," and reporting the company's "solid third quarter" in a webcast.

Piecing it together, DiBenedetto, whose last day at AT&T was November 2, 2020, says it suggests his employer used financial performance as an excuse--one that didn't even turn out to be true, if you believe the CEO's quarterly report just weeks after DiBenedetto had been told his position would be eliminated.

(AT&T disputes the allegations and says it will continue to fight in court: "Reducing our workforce is a difficult decision that we don't take lightly, and each instance is reviewed thoroughly to ensure there is no discrimination of any kind," the company said in a statement to multiple news organizations reporting on the case.)

Now, these kinds of disputes and lawsuits happen all the time. But the DiBenedetto lawsuit against AT&T has now been allowed to go forward by two judges: first, a federal magistrate in May and now a federal district court judge in Atlanta. 

That means it's become a case that just about any company committed to diversity should watch, perhaps especially if your more senior employees aren't as diverse as your newer hires, and especially if your efforts focus on eliminating employees instead of recruiting new ones.

To be sure, nobody involved in this case -- least of all the judges -- suggests that diversity and inclusion are unworthy corporate goals. And I have no idea how this will turn out as the case progresses.  

But the pitfalls DiBenedetto alleges are pretty clear.

"If you follow a valid affirmative action plan that's focused on goals and not quotas, and you're dealing with hiring and not firing and it has some sense of a time element, if that's done, then it's lawful," Stewart Schwab, a Cornell University law professor, told CBS News in its reporting on this case, adding that in this case, "It does sound like some uncareful things were said to him ... And this person was fired, so that's a big deal."

The major takeaway seems to be that if you hope to increase diversity and inclusion, that's wonderful--but make sure you do it by the book, and in a way that won't risk creating more legal problems for you down the road.

Nobody wants their business to become entangled unnecessarily in lawsuits. The only thing worse? Becoming known for the lawsuit, rather than what you want people to think of when they think of your business.