RALEIGH – A Silicon Valley tech firm with a growing footprint in Raleigh has embraced gender diversity to the point that the CEO says he is going to utilize “quotas” to balance his workforce. But if he follows through on that declaration, there could be legal trouble, according to a labor lawyer.

In a tweet last week, Vineet Jain, the CEO and co-founder of Egnyte, announced that he has decided to establish formal company policies to address what he termed the “gender diversity challenge in tech, and specifically @Egnyte.”

His tweet used “quotas,” using quotation marks, and noted “Don’t see any other ‘structured’ way to address it, but address it we must.”

Yet Egnyte—or any company—may not be permitted to establish quotas, said Jerry Sayre, partner at Fox Rothschild LLP where he leads the Labor & Employment Department.  That’s because federal law — specifically, Title VII — generally prohibits discriminatory preference for any group, including biological sex, as well as race, color, religion, or national origin.

“First and foremost, you are correct that the law generally prohibits discriminatory preference for any group, including minorities and gender,” he told WRAL TechWire.

“Under Title VII, employers generally can’t establish true quotas except in very limited situations where they have been ordered to do so by a court or if they have agreed to establish a quota in connection with some sort of negotiated resolution with the government,” said Sayre.  “Hiring goals, on the other hand, are perfectly legitimate and, in fact, are sometimes required for certain federal contractors.”

However, there is some flexibility, Sayre noted.

Here’s what several Triangle companies are doing to boost diversity in tech

“This issue often comes up in the context of affirmative action initiatives. The agency that enforces Title VII (the Equal Employment Opportunity Commission or EEOC) allows employers to undertake voluntary affirmative action efforts if needed to address circumstances similar to what the Egnyte cofounder faces – that is, where certain categories of jobs historically lack diversity.

“The EEOC has published ‘Best Practices’ that state:  ‘An employer can adopt a voluntary affirmative action plan if it identifies a manifest imbalance in traditionally segregated job categories.’

“The EEOC specifically notes, however, that the use of quotas is not permitted.  Rather, any goals established by the employer must be flexible and temporary, and the employer must make sure that others outside the protected group (in this case, men) are not ‘unduly burdened.’”

Egnyte did not respond to multiple requests from WRAL TechWire for comment on this story.

The numbers

So just how bad are the diversity numbers?

Entelo, a talent recruiting and management firm, reported in 2020 that women make up 19% of entry-level and mid-level jobs in the tech industry. At the senior level, some 16% of positions are held by women. At the executive level, the percentage falls again to 10%.

How another tech firm addresses diversity

Pendo, a Raleigh-based software firm that is growing recently, deals with diversity in other ways.

Jess Jolley, diversity, equity, and inclusion leader at Pendo, pointed out:

“We do not use or set quotas at Pendo. We do track our representation as a company and monitor our progress toward becoming a more diverse company, and having more diverse teams. We know that specific communities and populations have been underrepresented in tech, so we focus our efforts on increasing representation from these communities in our interview process. That starts with strategic sourcing, building the right community partnerships, standardizing our interview process, and increasing our brand awareness  — and ultimately being intentional that we aren’t leaving anyone out in our hiring process that could add to our culture or bring a different or new perspective to our teams.”

The issue

According to reporting from the Triangle Business Journal, Jain realized that the company he co-founded, including the Raleigh location with about 90 employees and plans to hire additional staff based in that office, may have a diversity problem. He told the newspaper that he was not aware until International Women’s Day the breakdown of his own workforce or what the industry average was for technology companies.

“Creating a workplace where women feel included, respected, and supported in their careers is a journey, not a moment,” reads a tweet published on the company Twitter account on March 18.

In December 2019, The Ladders published a Q&A with Jain that focused on building a culture that puts employees first. Jain is quoted saying “to be very transparent, as you steer and build the company, you just look for talent, irrespective of gender, irrespective of race.”

“The market itself drives it through,” he added. “For example, in engineering, it’s much more male-centric than women, but in marketing, you get more women. It’s just the way the industry is. You drive it through the talent pool that’s available. There’s no unstated or stated policy to say 30% of the workforce should be women, or 20% should be African American, or Asian…nothing like that,” he concluded at the time.

The Egnyte website does not contain a diversity or inclusion section, though its careers website currently lists as many as eight open positions in the Triangle office.

In December 2020, the company was ranked as the #42 best company for diversity by Comparably among a total list of 50 companies that each employ more than 500 people, 75 or more of whom identify as non-Caucasian and also elected to participate in the 50-question study that tracked 20 different metrics for company culture.

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