Considerations for Employers Facing Challenges to Workplace DEI Policies

By: Gregory Vanden-Eykel and Parker L. Williams

In June 2023, the United States Supreme Court issued its decision in the Students for Fair Admissions, Inc. v. President and Fellows of Harvard College case (“SFFA”) and curtailed the use of affirmative action in college admissions. Specifically, the Court held that the University of North Carolina’s (“UNC”) and Harvard College’s race-conscious admissions programs violated the Equal Protection Clause (“EPC”) of the Fourteenth Amendment to the U.S. Constitution. The Court found that UNC’s and Harvard’s respective uses of race as a “determinative” or “plus” factor in their admissions decisions violated the EPC because the schools considered certain applicant’s race to their detriment and discriminated against them.  

Although the Court held that the admissions programs were unlawful, it allowed for a narrow exception under which colleges and universities could consider race in their admissions programs to permit an applicant to explain how their race impacted their life if the applicant connected it with a personal characteristic or unique skill that they could contribute to a college or university. While the SFFA case addressed affirmative action in education, its effects may extend into the employment context, as well, specifically concerning employers’ diversity, equity, and inclusion (“DEI”) initiatives and programs.

For employers to lawfully implement DEI programs, they must first understand what DEI is. Although these three terms are typically clustered together, they are not synonymous. In an employment context, “diversity” means who is represented in a workplace; “equity” means fair treatment for all employees so they can thrive in their workplace, regardless of background; and “inclusion,” means the way employers support their employees and allow them to make meaningful contributions to the workplace. DEI initiatives and programs are intended to support and uplift diverse groups across all protected classes in the workforce. Further, their objectives include retaining top talent, maintaining higher employee morale, incorporating multiple perspectives into decision-making, and allowing employers to improve responses to evolving client needs. DEI may apply to all facets of the employment lifecycle, including, for example, recruitment, hiring, retention, policy development and implementation, and compensation and benefits programs.

Since SFFA, certain workplace DEI programs and initiatives have come under increased scrutiny. Lawsuits have been filed against employers in multiple sectors, alleging that the employers unlawfully discriminated against certain employees based upon race through programs and initiatives broadly falling under the DEI “umbrella.” These lawsuits challenge the steps some employers undertake to achieve greater diversity and promote DEI more broadly in their workforces, alleging that such steps constitute unlawful discrimination, sometimes referred to as “reverse discrimination.” The challengers contest this goal by alleging that DEI programs and initiatives unfairly disadvantage certain applicants because of their race.  

For instance, in October 2023, a lawsuit was filed on behalf Mid-American Milling Company, LLC and Bagshaw Trucking, Inc. against the U.S. Department of Transportation (“USDOT”) and several of its employees in the U.S. District Court for the Eastern District of Kentucky.  The plaintiffs allege that the USDOT’s Disadvantaged Business Enterprise Program (“DBE Program”), which was created in 1980 to “remedy ongoing discrimination and the continuing effects of past discrimination in federally assisted highway, transit, airport, and highway safety financial assistance transportation contracting markets nationwide” and “level the playing field” for small businesses owned by traditionally marginalized groups, discriminates against certain companies based on their owners’ race and gender. Specifically, the lawsuit alleges that the DBE Program violates the Fifth Amendment’s Due Process Clause’s prohibition against denying persons equal protection under the law and seeks to prohibit the USDOT from including any race and gender-based classifications in the DBE Program. The Defendants filed a motion to dismiss the complaint in January 2024, which is pending before the Court. Should this case proceed, it may provide insight into how courts may address DEI initiatives in the employment, public bidding, and procurement contexts.

This is just one example of emerging litigation against employers concerning their DEI policies. Nationwide, plaintiffs have filed or threatened lawsuits against employers across many industries, including law firms, pharmaceutical companies, and media conglomerates.  This potential wave of litigation may impact employers; and this legal uncertainly may leave employers questioning how to implement DEI in their workplace and still comply with the evolving legal framework – without inviting unwanted outside scrutiny or litigation.  

Despite the recent shifts in the legal landscape, workplace DEI programs and initiatives remain lawful. That said, employers should review their DEI policies to ensure they are legally compliant, reflect the company’s specific mission and culture, and do not promote favorable treatment of one group over another, or even appear to promote favorable treatment. Non-discrimination is a core component of effective DEI policies. For instance, while employers may still undertake steps to promote recruitment of a diverse workforce (e.g., attending job fairs targeted to potential applicants with diverse and historically disadvantaged backgrounds), they should not maintain any hiring or retention quotas based on protected characteristics (e.g., race, ethnicity, sex, etc.). An employer’s careful review of its hiring policies would also be wise to avoid appearing to favor or target certain groups to the disadvantage of others. Additionally, employers should avoid linking workplace diversity with any type of financial compensation for membership in a certain protected class to mitigate their potential legal exposure.  There is no exact science to this process, and employers are encouraged to reflect upon these issues to mitigate their risk and maintain compliance with applicable laws and regulations.

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