The Supreme Court’s landmark ruling on affirmative action in college and university admissions has a limited but potentially significant impact on employers and private diversity, equity and inclusion (DEI) and Environment, Social and Governance (ESG) programs.
“Employers should consider their workplace DEI programs and strategies as they brace for the potential impact of the court ending affirmative action for college admissions,” explain Andrew Turnbull, Carrie Cohen and Michael Schulman, who are employment attorneys with the law firm of Morrison & Foerster.
Private DEI programs are controversial and widely viewed as divisive and coercive by many people. A number of states have challenged these initiatives and 19 of them have introduced or enacted anti-DEI legislation of various kinds.
“While these initiatives are focused on state agencies and state-funded higher education, they may cause concern for private employers,” warn attorneys Emily Bushaw and Elizabeth Gardner of the law firm of Perkins Coie. “Private employers should take note of these efforts as well as broader attacks on ESG initiatives.”
ESG also has become so much of a political hot potato that one of its earliest and most powerful proponents, Larry Fink, chief executive of BlackRock Inc., recently announced he is abandoning the term, if not the ideas behind it. “I
don’t use the word ESG anymore, because it’s been entirely weaponized by the far left and weaponized by the far right,” he explained.
Legal experts appear to be divided on the decision’s ultimate impact on non-university employers.
To the Biden appointed Equal Employment Opportunity Commission Chair Charlotte A. Burrows, it “does not address employer efforts to foster diverse and inclusive workforces or to engage the talents of all qualified workers, regardless of their background. It remains lawful for employers to implement diversity, equity, inclusion, and accessibility programs.”
Andrea Lucas, a member of the EEOC appointed by President Trump, disagrees, predicting, that the Supreme Court ruling will lead to an increase in court challenges to what she holds are already illegal corporate DEI programs.
“I think this is going to be a wake-up call for employers,” she said. “Today is a time – the best time – for lawyers to really take a look at the lawfulness of their corporate diversity programs. Even though many employers don’t use the word affirmative action, it’s rampant today, from ESG, to focuses on equity, pretty much everywhere.”
“Employers should review their DEI and affirmative action initiatives and consider how and
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if to revise those programs in light of the potential implications of the court’s decision,” says Andrew Turnbull, Carrie Cohen, and Michael Schulman of the Morrison & Foerster law firm.
“There may be heightened scrutiny of business efforts on multiple fronts, and questions from employees and stakeholders about what these rulings mean for their business.” This includes being able to explain how their diversity strategies align with legal and practical considerations.
They say companies consider lessening the risk of legal challenges to their DEI programs by:
- Review existing DEI efforts with an eye toward areas of vulnerability and confirm that the initiatives do not create unlawful preferences based on protected characteristics or include quotas or set asides. “Employers should consider including race-neutral factors, such as socioeconomic status, first-generation professionals, and geographic diversity, which could help increase racial diversity in the workplace while mitigating the risk of potential challenges,” they add.
- Looking over DEI program materials for any statements that describe their companies’ practices in a manner that could be viewed as unlawful. The attorneys also note that in some cases, those suing employers have used statements in DEI policies and literature to support reverse discrimination claims.
- Being prepared to justify the importance of their existing DEI programs and how those programs are consistent with the law.
- Make sure that company leaders and managers are educated about the benefits and objectives of the DEI and affirmative action programs. “It will be important for managers to understand what DEI means and that they cannot give preferential treatment to underrepresented groups when making employment decisions,” the lawyers stress.
- Undertaking a review of current diversity trainings, including unconscious bias training, considering recent legislation aimed at limiting DEI programs and trainings that might make their programs vulnerable to legal attack.
They also stress that companies should continue to monitor state and local laws and regulations aimed at limiting or requiring DEI efforts to ensure compliance with those laws.