On June 29, 2023, the U.S. Supreme Court upended affirmative action in higher education admissions in its landmark Students for Fair Admission v. UNC and Students for Fair Admissions v. Harvard decision. The decision will no doubt force colleges and universities to reevaluate how they determine the makeup of their student bodies.

The effects of the Supreme Court’s decision, however, will likely be felt beyond just the classroom. Specifically, the decision may well have wide-ranging implications for employers, particularly with respect to corporate diversity, equity, and inclusion (DE&I) initiatives, which many employers use to attract diverse applicants and to retain and promote diverse employees.

In light of the Court’s decision, U.S. employers will want to consider how their DE&I programs are structured and whether their initiatives may be challenged by individual plaintiffs, third-party advocacy groups, state attorneys general, or administrative agencies tasked with enforcing equal opportunity at work (such as the US Equal Employment Opportunity Commission (EEOC)).

The Supreme Court Ends Affirmative Action

By way of background, in a 6-3 decision, the Supreme Court struck down the use of affirmative action admissions policies at Harvard University and the University of North Carolina at Chapel Hill. The Court’s conservative majority held that these policies violate the equal protection clause of the Constitution’s 14th Amendment, effectively ending decades of precedent on affirmative action in college admissions. The ruling had an immediate impact on higher education institutions, prompting many colleges and universities to re-evaluate their admissions processes and diversity initiatives.

Our prior coverage of the decision can be found here.

US Employers Wonder About Workplace Impact

Though the Court’s decision pertains directly to university admissions, U.S. employers immediately began to wonder, following issuance of the ruling, whether there would be repercussions for the American workplace.

With that in mind, shortly after the decision was handed down, Charlotte Burrows, the Chair of the EEOC and a Democratic appointee, issued a statement noting in pertinent part that “the decision in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College and Students for Fair Admissions, Inc. v. University of North Carolina 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 that seek to ensure workers of all backgrounds are afforded equal opportunity in the workplace.”

After Chair Burrows issued the above statement, however, Andrea Lucas, an EEOC Commissioner appointed under a Republican administration, penned this article in which she laid out a potential roadmap for the EEOC to more closely scrutinize workplace DE&I programs should there be a change in political administration, as follows:

“[T]wo Title VII cases the Supreme Court may hear next term could have further ramifications for corporate diversity programs. Federal courts across the country uniformly hold that Title VII applies to hiring, promotion, and termination decisions. But recently, the EEOC and DOJ have advocated a broader, textualist reading of what constitutes ‘adverse action’ in the workplace under Title VII — and some federal appellate courts have begun to agree. This issue will be before the Supreme Court next term if it agrees to hear Muldrow v. St. Louis and Davis v. Legal Services Alabama, Inc.

A more expansive view could have serious implications for certain diversity programs. The EEOC and DOJ’s existing position is that Title VII bars discrimination in all actions affecting ‘terms, conditions, or privileges of employment’ — including actions falling short of hiring, firing, or promotion. This expansive reading of Title VII could implicate a host of increasingly popular race-conscious corporate initiatives: from providing race-restricted access to mentoring, sponsorship, or training programs; to selecting interviewees partially due to diverse candidate slate policies; to tying executive or employee compensation to the company achieving certain demographic targets; to offering race-restricted diversity internship programs or accelerated interview processes, sometimes paired with euphemistic diversity ‘scholarships’ that effectively provide more compensation for ‘diverse’ summer interns.”

Commissioner Lucas has not been alone, however, in her suggestion that the Harvard/UNC decision may have seismic implications for corporate programming and the US workplace.

Shortly after the Court issued its decision, for instance, 13 Republican attorneys general issued a letter to business leaders warning against race-based discrimination in corporate DE&I initiatives. The attorneys general argued that the Court’s reasoning applied not only to university admissions but also, and equally, to employment and contracting practices. They stated that racial discrimination, even for allegedly benign purposes, is unlawful, and urged companies to avoid using quotas or race-based preferences in their hiring practices. The attorneys general further warned that employers who engage in such practices could face investigations and would be held accountable “sooner rather than later” and concluded their letter by bluntly stating that “the Supreme Court’s recent decision should place every employer and contractor on notice of the illegality of racial quotas and race-based preferences in employment and contracting practices.” 1

In a similar letter, Senator Tom Cotton wrote to 51 of the county’s leading law firms (including Reed Smith) on July 17, 2023, warning against (i) firms advising their clients on the clients’ DE&I programs and (ii) the continued use of DE&I initiatives within the firms themselves. Like the attorneys general, Senator Cotton’s letter focused on the perceived “race-based quotas and benchmarks” allegedly adopted by some law firms and their corporate clients as part of their DE&I programs. Senator Cotton concluded by warning that such programs may violate federal law and “[t]o the extent that your firm continues to advise clients regarding DEI programs or operate one of your own, both you and those clients should take care to preserve relevant documents in anticipation of investigations and litigation.”

Threats of investigation and litigation for maintaining DE&I programs are only expected to intensify in the coming months and years, particularly if there is a challenge in the political administration in the White House. Indeed, experts around the country had already reported an uptick in reverse discrimination lawsuits filed by white employees even prior to the Court’s decision. After the decision, third-party advocacy groups who oppose DE&I initiatives can be expected to turn their focus from university admissions to employers’ hiring, retention, and promotion practices.

Best Practices for Employers Going Forward

In light of the above, employers should consider how the Supreme Court’s decision might affect their own DE&I initiatives, and be proactive in ensuring compliance with state and federal laws. Employers should be especially mindful of the following:

  1. Employers should be cautious about considering race as a basis for employment decisions – either positive or negative decisions – as it is unlawful to use in hiring or promoting practices. Clear evidence that race influenced hiring or promotion decisions can lead to legal risks, with potential claims of discrimination.
  2. The Supreme Court’s decision may limit the slim exception allowing companies to remediate “manifest imbalances” in segregated job categories. This exception, which is already difficult to meet, could become even more challenging to invoke.
  3. Race-based quotas have long been illegal, but employers can set aspirational goals for improving diversity. However, after the Court’s ruling, quantitative goals may face greater legal risks than qualitative ones. Employers must be careful to avoid practices that could be seen as granting race-based preferences or unlawfully setting aside positions.
  4. While the Court allowed schools to consider race in application essays, private employers might be tempted to ask applicants about their experiences overcoming obstacles. While such information may be relevant, selective questioning or not offering equal chances could result in legal trouble.

To protect against potential legal challenges, employers should thoroughly review their DE&I programs, ensuring that they align with lawful considerations, and do not rely on race as a factor. Employers can prioritize diversity and inclusion without employing race-based quotas, while embracing inclusive decision-making processes and avoiding discriminatory practices. Open communication about DE&I goals, without resorting to profiling, is vital in creating diverse and inclusive workplaces.

As the legal landscape surrounding DE&I initiatives evolves, employers must stay informed about new legal trends and seek counsel to ensure their programs are compliant with existing laws. While the Supreme Court’s decision raises questions and potential risks, proactive measures can enable employers to advance their DE&I initiatives in ways that promote diversity, equity, and inclusion while staying within the bounds of the law.

1 Notably, on July 14, 2023, the Democratic Attorneys General Association (DAGA) issued a statement in response to the Republican attorneys’ general’s letter. In its response, DAGA wrote that “[w]e strongly condemn this anti-diversity, anti-business, and anti-economy letter by some Republican Attorneys General. They have wasted no time in trying to misinform the public and the business community on the Supreme Court’s recent affirmative action rulings by trying to take businesses and workers hostage with overt threats. Their letter contains cherry-picked sources that paint a false picture of America’s workforce today. They have impugned the integrity and skills of Americans with backgrounds and ability levels that are different from their own – whether those Americans are of a different race, a different sexual orientation or gender identity, or of a different ability level. To be clear: it is legal for businesses to be responsive to their workforce’s wishes and concerns through diversity programs and initiatives.”