The U.S. Supreme Court’s decision to overturn affirmative action policies in college admissions raises concerns for many employers about the viability of workplace diversity, equity and inclusion (DEI) initiatives. While the Equal Employment Opportunity Commission (EEOC) noted that the decision “does not address employer efforts to foster diverse and inclusive workforces,” this view has already proven contentious.
Shortly after the decision was handed down, Fortune 100 CEOs received dueling letters from state attorneys general, with 13 arguing for the illegality of “explicitly race-based initiatives.” In the other letter, however, 21 countered that corporate efforts to “address historic inequities, increase workplace diversity, and create inclusive environments” comply with the “spirit and the letter of state and federal law.” The immediate impact for private employers is a likely increase in scrutiny of DEI efforts, and potentially even related litigation. In fact, two cases were recently filed challenging the legality of diversity fellowships offered by international law firms.
As a result, employers face significant challenges when building diverse and inclusive workforces. To minimize risk, employers should monitor the shifting legal landscape and consider a thorough review of their DEI initiatives for areas of potential liability.
The Legal Landscape for DEI
In Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, the Supreme Court overturned affirmative action programs at Harvard and the University of North Carolina. The court found that the programs could not survive strict scrutiny because they were not sufficiently measurable or linked to their stated goals. They also impermissibly used race as a “stereotype or negative” in the admissions process and did not have “a logical end point.” However, the court noted that universities may continue to consider an individual applicant’s discussion of how their race impacted their life, “be it through discrimination, inspiration, or otherwise.”
In reaching this decision, the court considered the affirmative action programs under the Equal Protection Clause of the 14th Amendment to the U.S. Constitution and Title VI of the Civil Rights Act of 1964. Private employers are generally prohibited from engaging in workplace discrimination under Title VII of the Civil Rights Act. While the Students for Fair Admissions decision does not directly and immediately impact most employer DEI initiatives, it suggests a level of skepticism among a majority of Supreme Court justices toward attempts to combat discrimination through action involving racial distinctions rather than through “color-blind” efforts.
Separate from the decision, Title VII makes it clear that private employers generally are prohibited from making employment decisions on the basis of race, national origin and other protected personal characteristics. Even factoring in how race has impacted the life of an applicant—deemed permissible for colleges in the Students for Fair Admissions decision—could be considered an impermissible basis for employment decisions. However, the courts have interpreted Title VII as allowing certain race-conscious diversity efforts. For example, the Supreme Court previously upheld a race-based affirmative action plan that had the goal of “break[ing] down old patterns of racial segregation and hierarchy,” and did not “unnecessarily trammel the interests” of white workers. The court later extended this analysis to permit gender-based affirmative action.
The EEOC regulates private employers seeking to create a Title VII-compliant affirmative action plan. To be lawful, the plan or program must be written, dated and include: 1) a reasonable self-analysis of the employer’s relevant employment practices; 2) a reasonable basis to conclude that an employment practice has or will adversely affect a group previously denied or limited employment or promotional opportunities, fail to correct prior discrimination, or result in disparate treatment; and 3) a narrowly tailored and reasonable action to address the problem identified.
Given the specificity of these requirements, many DEI initiatives may not currently meet the EEOC’s guidelines. Therefore, DEI initiatives that favor a particular race or gender or treat race or gender as a “plus” factor in employment decisions come with legal risk. This need not be a death knell for efforts to combat historic discrimination or inequality outside of formal affirmative action plans, but employers should be cautious when structuring and documenting such efforts moving forward.
Assessing Internal Processes
To minimize legal risk, employers should reevaluate their processes to ensure they do not engage in systemic discriminatory patterns, day-to-day disparate treatment, or outright cases of discrimination and harassment. Legacies of employment discrimination, both subtle and blatant, can affect employment decisions. The EEOC has investigated discrimination in workplace patterns for over 50 years and, while the number has trended down in recent decades, it still received nearly 21,000 charges of race discrimination in 2022.
Organizations should consider how past practices influence current workforce decisions. By adjusting and managing the impact of their actions and decisions, organizations can make sure the patterns that have historically caused discrimination do not continue. This process is not the same as setting arbitrary quotas and mandating individual decisions without legitimate business criteria.
To help promote diversity within their organization, employers can expand their recruiting pipeline to different membership organizations, parts of the country, and academic institutions, including historically black colleges and universities (HBCUs). They can also extend mentorship, coaching and leadership development opportunities to more employees. To mitigate legal risk in doing so, organizations should avoid stated preferences or firm quotas based on race, gender or other protected characteristics.
Capitalizing on Values
Just about every organization has values, whether expressed in public statements, codes of conduct or handbooks. These values should serve as a guide for establishing standards and practices, including setting goals related to DEI. In creating such goals, organizations should consider diversity beyond EEOC-standard race and ethnic categories, which the Supreme Court noted can be both under- and over-inclusive and fail to capture other types of diversity. Organizations should be wary of initiatives that expand opportunities for particular underrepresented groups at the specific expense of others, or that fail to focus on finding the best, most qualified talent. By incorporating these values into reasonable DEI goals, organizations can build cultures that get the best results while limiting the risks of illegal discrimination.
The Path Forward
More broadly, an operational and legal vision for DEI initiatives should include the following five objectives:
- Orient affirmative action and DEI efforts with organizational values and law, and ensure executives and leaders understand and are able to communicate these efforts.
- Hire and promote the best talent from a broad array of workplace communities and sources, based on consistent and legitimate job-related criteria.
- Evaluate systems and practices based on business need, but also consider disparate treatment and disparate impact on groups of employees.
- Avoid specific quotas, stated preferences or providing a “plus” factor based on protected characteristics when making employment decisions.
- Fully engage all employees in the workplace to create an inclusive environment and to deliver the best results.
By establishing consistent core behaviors that emphasize inclusion, respect and adherence to legal operations, organizations can ensure that they meet these DEI objectives. Organizations can then cultivate cultures that proactively address issues before they can cause lasting harm to the business, teams or external stakeholders.