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When workers complain: Discrimination lawsuits accuse Vanguard of targeting workers

An IT employee at Vanguard Group, Rebecca Snow asked for a month off in 2013 to care for her dying mother in hospice and her ailing father.

At the Vanguard Group in Malvern. A spokeswoman for the 14,200-strong company notes that none of the bias claims "has resulted in any finding, award, or verdict against Vanguard."
At the Vanguard Group in Malvern. A spokeswoman for the 14,200-strong company notes that none of the bias claims "has resulted in any finding, award, or verdict against Vanguard."Read moreDAVID SWANSON / Staff Photographer

An IT employee at Vanguard Group, Rebecca Snow asked for a month off in 2013 to care for her dying mother in hospice and her ailing father.

Not long after her leave, Snow was fired from her computer systems job, despite 13 years of raises and excellent reviews. Colleagues who took a family leave routinely suffered bad reviews, pay cuts, and firings, Snow alleged in a suit she later filed.

Her manager Wanda Kirschbaum urged Snow to take the leave, and was also later fired. "I felt bad because I was the one who encouraged" Snow to take the leave, Kirschbaum said in a deposition for Snow's suit, "because they held it against her."

In November, Snow settled her suit, filed in Charlotte, N.C., where Vanguard has an office, and agreed not to discuss it.

Her case is the latest in a string of 20 suits against the $3.4 trillion investment giant, which is based in Malvern.

The suits allege that Vanguard pushes out older workers who don't get promoted, who take family leave, or who raise workplace complaints involving racial and age discrimination.

Vanguard spokeswoman Arianna Sherlock said in an email that she could not discuss specific cases, but she denied that any workplace discrimination was occurring.

"None of the claims you reference have resulted in any finding, award, or verdict against Vanguard," she wrote. "We value all of our crew members and promote a supportive, diverse, and inclusive workplace. We are proud of our low turnover rate and the long tenure of our crew members, both evidence of a satisfied, high-performing crew that is committed to serving our clients."

Of the 20 cases found by The Inquirer since 2010, 14 were settled; three were found in favor of Vanguard. Three are pending. The cases include 32 individuals.

Philadelphia whistle-blower lawyer Mark Schwartz said the number of lawsuits was small compared with the 14,200-strong Vanguard workforce.

However, the company also paid $300,000 in 2010 and $500,000 in 2008 to settle cases filed by the Equal Employment Opportunity Commission, alleging racial bias. The latter case is on the high side of EEOC settlements for an individual, an agency spokeswoman said.

"The fact that the EEOC got involved grants weight to the complaints that followed," Schwartz said.

Sidney L. Gold, a longtime employment lawyer in Center City, agreed. A cochair of the Philadelphia Bar Association's committee on labor and employment law, Gold reviewed the dockets in each Vanguard case for The Inquirer.

"Many of these are garden-variety suits," said Gold, who has no cases involving Vanguard employees. But the greater issue, he said, is why Vanguard continues to litigate rather than address the underlying problems.

Although the number of complaints isn't unusual, given the company's size, "it's clear that if even half of them have merit, there's a problem. Especially if I were a shareholder, I would be offended by these. If they [Vanguard] see even an inference of discrimination, they need to ask themselves, 'Why is this happening?' Regardless of the outcome, why is there retaliation and retribution? There's a broken wheel here."

Vanguard also does not offer severance when terminating employees, Gold added, which may be adding to the incidence of cases. "Severance is a deterrent to litigation," he said. "They could avoid a lot of these claims by giving severance."

Leigh Ann Harris is a former Vanguard employee who has filed suit alleging discrimination.

"There are themes in these lawsuits, including age discrimination, race discrimination, hostile work environment, and a strong history of retaliation," said Harris, whose blog at chronicles cases against the company.

Before 2014, "I was a typical Vanguard employee," she said. "I honestly felt good about what I was doing."

But "it's not great to 'manage out your older employees.' It's not great to look for opportunities to demote people when they use the Family Medical Leave Act or exercise their disability rights."

Vanguard's lawyers are disputing Harris' claims, and they denied Snow's allegations, as well.

The business and employment practices of Vanguard were, "at all relevant times, conducted in accordance with any and all applicable" laws, the lawyers wrote in the Snow case. "To the extent it may be found that plaintiff was subjected to any of the actions alleged . . . which Vanguard denies, such actions were contrary to the good-faith efforts of Vanguard to comply with the federal anti-discrimination statutes."

Vanguard is an investment juggernaut. Its assets grew by about $236 billion in 2015 alone.

Vanguard's name is synonymous with low cost. Locally, its funds have been used by retirement plans and shareholders ranging from employees of this newspaper and website to the Pew Charitable Trusts, the Philadelphia Phillies, and Philadelphia Eagles.

Former Vanguard managers say the company used a controversial system called "calibration," or forced ranking, to grade employees.

Once a year, the lawsuits say, each manager argued for a small number of employees to be at the top, then ranked the next level in the middle, and the rest dropped to the bottom.

Managers then debated with one another "why your employees were better than theirs. This is forced ranking," Kirschbaum testified in the Snow case. "They had to pick so many people to be at the bottom and force them out of the company."

Forced ranking was famously introduced at General Electric in the 1980s and has resulted in legal troubles for companies such as Microsoft, Ford, 3M, and Capital One.

Wharton professor Maurice Schweitzer, coauthor of Friend and Foe, about performance in the workplace, says forced ranking can work - but only at the beginning.

" 'Rank-and-yank' at GE worked magnificently improving productivity," he said in an interview. "But GE was a classic case of it working initially, and then a few years on, there's not much deadwood. Five years later, people aren't going to take risks, because they don't want to come out on the bottom. They become focused on what gets measured. If I'm getting ranked constantly, I start dispensing with everything else."

Amazon last year drew criticism after the New York Times highlighted its version of forced ranking.

Vanguard disputes former employees' claims that it uses forced ranking. "We do differentiate performance ratings and rewards based on results against expectations and standards," Sherlock wrote. "But we do not limit the number of crew members who can achieve a specific rating. Nor do we mandate that a specific number of crew members must achieve a specific rating."

She said changes were made to the year-end review process periodically. She declined to describe Vanguard's precise ranking system.

Those who settle cases against Vanguard typically agree not to discuss them, and the company admits no liability. Here are a few of the litigants who have settled cases against Vanguard:

Kelly Snyder. A resident of Phoenixville, Snyder was hired by Vanguard in 2006 to handle customer requests. She got excellent performance reviews until January 2011, when she applied for leave under the Family Medical Leave Act (FMLA) to care for her son, who had severe asthma.

Snyder discussed her leave and performance with a Vanguard human-resources official, who suggested Snyder "look for another job outside of Vanguard that would suit your needs for the care of your son," according to her suit, filed in 2013 in Pennsylvania.

In response, Snyder asked: "So, I didn't get a raise due to my FMLA?"

The HR official responded that Snyder "must be aware of how much [your] absence affects the business when you are not there."

The following year, April 2012, a coworker called Snyder over to her desk and referred to an African American coworker using a racial slur.

Snyder, who is white, found the comments offensive, and reported them to management.

Later that day, on her way home from work, Snyder's boss called and informed her that she was being fired immediately.

In court documents, Vanguard admitted that the slur occurred and that Snyder was fired over the phone. The firm denied her other allegations.

Snyder's lawyer, Jared A. Jacobson, declined to comment, other than to say Vanguard resolved the Snyder case confidentially.

Jacobson, who has settled another case against Vanguard, said of other lawsuits in which he's not involved: "Retaliation appears to take the form of negative performance reviews, and performance improvement plans, that often and ultimately end in a final termination.

"Once you complain, they use it against you. Then you're on the fast track to the door."

Ingram-DiGiovanni-Kenworthy. A group of women - two of whom took family leave and one who says she was unlawfully fired - sued in 2014 to bring sex, age, and racial discrimination claims against the fund giant.

They alleged that "Vanguard uses the 'managing out' process to get rid of employees by subjecting them to unmerited write-ups and performance critiques," according to the complaint, filed by Donna Ingram, Jo DiGiovanni, Wendy Kenworthy, and others.

"Such employees are generally older, minority and/or female," their suit alleged.

Kenworthy, of Downingtown, said she began receiving lower performance reviews after she returned from short-term disability for breast cancer.

DiGiovanni, who lives in Exton, said she was retaliated against for not "managing out" an African American colleague. Hired in 2004, DiGiovanni worked as a supervisor in bank services. She joined the suit and, in a filing with the Pennsylvania Human Rights Commission, alleged a pattern of discrimination that was "widely practiced at Vanguard against employees who are not under 40, Caucasian and male."

Ingram of Philadelphia recalled a similar experience, saying that she was asked to "manage out" two older African American women, which "she refused to do without merit," according to the suit.

In its answer, Vanguard denied all the specific allegations.

The case was settled confidentially.

Crystal Tucker. Hired in 2000 as a supervisor in internal audit, Tucker mentored many junior African Americans, and often referred their discrimination complaints up the chain within Vanguard. She later joined a suit against Vanguard brought by seven fellow African American women.

Tucker, who lives in Downingtown, was ultimately promoted to senior manager. She discovered that a black woman with an M.B.A. was not promoted to management while a white man with a high school degree and less experience was. She also found pay discrepancies among men and women, and raised these and other incidents to Vanguard's chief diversity officer and crew relations.

They took no action, Tucker alleged in the case. Vanguard admitted that as a manager, she had access to the files, but the company denied her and the other women's allegations. The case ultimately was settled.

Francois Lafate. Hired in 2007 as a line manager, Lafate was overseeing about 100 employees at Vanguard's Malvern office. He had previously worked for Discover for almost 25 years and at Vanguard oversaw institutional retirement plans such as 401(k)s.

But after working at Vanguard for several years, Lafate was told by his team leaders that other line managers who were white would often refer to him using the N-word.

Lafate, a resident of New Castle, Del., was asked by his bosses to "manage out" other minorities at Vanguard, according to his suit, filed in Pennsylvania.

"The 'managing out' process is used by Vanguard to reduce the number of individuals within a department who receive excellent performance ratings and to force employees out of the company, either through termination or resignation," his suit said.

"Minority employees were also targeted to receive lower performance reviews, such as 'further development needed,' even if they have performed well, as part of the 'managing out' process," Lafate's 2013 suit said.

Vanguard denies that Lafate's race or "any other impermissible factor played any role in the employment decisions relating to him." The company said that Lafate had been offered a lower-paying job after two years of poor performance reviews but that if he remained in the manager position, "there would be further performance management up to and including termination of his employment."

Lafate's lawyer declined to comment. The case was dismissed; Lafate appealed and the case was settled for an undisclosed amount.

List of lawsuits

In 2008 and 2010, Vanguard settled two lawsuits brought by the U.S. Equal Employment Opportunity Commission over the firm's alleged racial discrimination against African American employees*. The claims were settled for $500,000 and $300,000. Here is a breakdown of some other suits and an EEOC complaint filed against the company since then:                                                                             

Plaintiff(s)                 Year of Filing    Location    Reason                                           Status

Leon Binder                       2011             Ariz.       Age discrimination.                               Settled.

Ramona Fasula                   2011             Pa.       Racial and sex discrimination.                   Settled.

Kelly, Gilbert,

Lindsey, Tucker, et al.             2011             Pa.       Racial and sex discrimination.                   Settled.

Jama, Wulc, et al.                 2012             Pa.       Age discrimination                              Settled.

Christopher DeMeo                 2013             Pa.       Disability discrimination and retaliation.     Settled.

Jennifer DeStolfo                   2013             Pa.       Age discrimination.           Found in Vanguard's favor.

Carol Freeman-Parker             2013             Pa.       Age, racial, sex discrimination.                   Settled.

Iris Henry-Aiken                    2013             Pa.       Age discrimination.                               Settled.

Christina Johnson                   2013             Pa.       Religious discrimination.   Found in Vanguard's favor.

Francois Lafate                       2013             Pa.       Racial discrimination.                              Settled.

Kelly Snyder                       2013             Pa.       Family-leave retaliation.                         Settled.

Hieu Bui                          2014             Pa.       Sex discrimination and retaliation.                Settled.

Ingram, DiGiovanni, et al.          2014             Pa.       Racial, age, sex discrimination.             Settled.

Stephen Kennard                    2014             Ariz.       Disability discrimination.                         Settled.

Joan Preston                       2014             Pa.       Age discrimination.            Found in Vanguard's favor.

Rebecca Snow                    2014             N.C.       Age discrimination.                               Settled.

Cassandra Ballard-Carter          2015             Pa.       Disability discrimination.                         Pending.

Leigh Ann Harris                    2015             N.C.       Religious discrimination.                         Pending.

Thom Parson                       2015             Pa.       Age and racial discrimination.       Settlement pending.

*Aeritha James filed a racial discrimination complaint with the EEOC in 2015 in Arizona. A lawsuit has not yet been filed.

SOURCES:, plaintiffs lawyers, and Vanguard