Although developments in higher education on the issue of affirmative action in admissions may not seem relevant to private employers, the U.S. Supreme Court’s recent decision should prompt employers to reexamine their own diversity, equity, and inclusion (“DEI”) and voluntary affirmative action initiatives to ensure that employment decisions are not unlawfully based on membership in protected classifications.

The Supreme Court Holding
On June 29, 2023, the Supreme Court issued its decision in Students for Fair Admissions (SFFA) v. President & Fellows of Harvard College and SFFA v. University of North Carolina. The cases challenged student admissions policies at Harvard University and the University of North Carolina. At both schools, race was one factor that decision-makers considered when evaluating an applicant’s file. SFFA argued that the consideration of race violated Title VI of the Civil Rights Act of 1964 and the Equal Protection Clause of the Fourteenth Amendment to the U.S. Constitution. The schools contended that their admission programs were lawful under prior Supreme Court affirmative action cases, including the Court’s 2003 decision in Grutter v. Bollinger. Under Grutter, race was found to be a permissible factor in college admissions decisions provided its use was narrowly tailored to achieve a compelling interest and race was meaningfully and holistically evaluated among other admissions factors. In a 6-3 decision, the Court held that the Harvard and UNC admissions policies were unlawful because they: (i) did not have “sufficiently focused and measurable objectives warranting the use of race,” (ii) used race as a “negative” or a “stereotype,” and (iii) did not have clear durational end points. Notably, the Court emphasized that under the Equal Protection Clause, “[e]liminating racial discrimination means eliminating all of it.” Consistent with that principle, the Court determined that advantaging one race over another, even with the aim to foster campus diversity that benefits all students, serves no compelling interest.

The Court’s decision did not involve Title VII of the Civil Rights Act of 1964, the legislation that prohibits discrimination in employment on the basis of race and other identified protected classifications. As such, the decision is not directly applicable to employment decisions. Nonetheless, the Equal Employment Opportunity Commission (“EEOC”) issued a press release immediately following the Court’s decision that cautioned employers to review their corporate DEI programs to ensure that race (or any other protected characteristic) is not used as a factor in determining the terms and conditions of employment. However, as EEOC Chair Charlotte Burrows further explained, “it remains lawful for employers to implement diversity, equity, inclusion, and accessibility programs that seek to ensure workers of all backgrounds are afforded equal opportunity in the workplace.”
 
Implications For Employers
The Supreme Court’s decision in the Harvard and UNC cases has no immediate impact on the legal standards that govern affirmative action and DEI in private employment. However, in light of the notoriety of that decision, employers should prepare for new challenges in an already complex legal landscape and anticipate a surge in private plaintiff claims challenging DEI policies as well as increased scrutiny from shareholders concerning corporate DEI initiatives. Nevertheless, organizations committed to ensuring a diverse, equitable and inclusive environment for all employees do not need to abandon their commitment to diversity or, in appropriate circumstances, to voluntary affirmative action efforts. The approach employers adopt going forward will likely depend on their preferences and risk tolerance.

Employment decisions based on race (or any other protected characteristics) are – and long have been – unlawful under Title VII and Executive Order 11246. Nothing in the recent Supreme Court decision changes that. Voluntary affirmative action efforts undertaken by employers beyond measures focused solely on expanding recruitment (other than affirmative action obligations imposed on federal contractors) are only permissible under narrowly limited circumstances. In fact, formal guidance on voluntary affirmative action was issued by the EEOC over 40 years ago. 29 CFR Part 1608. Under that guidance, voluntary affirmative action efforts are only appropriate where the employer has conducted a self-analysis that demonstrates that an employment policy or practice has an adverse effect on a protected group, to correct the effects of prior discriminatory practices; or would result in disparate treatment. Then and only then, may the employer may develop and implement an affirmative action plan that is reasonable in relation to solving the problem disclosed by the self-analysis. 29 CFR § 1608.4. Complex? You bet.

The following actions are suggested for employers as they review their DEI initiatives:

Audit the Effect of Your Employment Practices: Employment decisions may not be based on personal characteristics protected under Title VII. Employers should also review their employment policies, hiring practices, and other marketing materials to ensure that they do not reflect implicit bias and do not illegally impact employees based on protected characteristics.

Review Your DEI Initiatives: DEI initiatives must be carefully implemented to comply with state and federal law. Employers may continue to engage in good faith efforts to expand the diversity of your qualified candidate pool for hiring, promotions, and other workplace functions. Outreach and recruitment can focus on underrepresented groups, but preferences and quotas are unlawful.

Review Written DEI Materials: Review DEI-related communications, internal and public-facing, to avoid statements that may be characterized as violations of law. Employers should review their DEI program materials for any statements that describe their policies and procedures in a manner that could be viewed as unlawful. In some cases, plaintiffs have used statements in DEI initiative materials to support reverse discrimination claims. In addition, carefully consider communications about the Supreme Court decision and DEI programs to ensure that they could not be misinterpreted to suggest noncompliance with law. Be clear that the company is committed to inclusion for all, regardless of race, gender, or another protected characteristic. 

Continue Employee Training: Review and update training efforts on diversity, anti-discrimination, anti-harassment, and bias across the entire organization. In developing trainings, stay apprised of changing local laws. Some states and localities have enacted their own anti-discrimination laws, many of which prohibit discrimination based on characteristics such as family status, caregiver status, and socioeconomic status not covered by federal law. Remind managers and employees that DEI measures, in and of themselves, do not constitute, mandate, instruct, or otherwise sanction decision-making based on protected characteristics. 

Voluntary Affirmative Action Programs: Other than for federal contractors whose obligations remain unchanged, must be preceded by self-analysis demonstrating the circumstances identified by the EEOC as appropriate for affirmative action and any resulting program must be reasonably related to correcting the problems identified by your self-analysis.

If you have questions about workplace DEI initiatives or application of the EEOC Guidance to your recruitment and hiring practices, please contact your labor and attorney at Spilman.