Supreme Court’s Affirmative Action Decision: Uncertainty Looms Over the Future of DEI in the Workplace

Since the U.S. Supreme Court decided in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College (SFFA) that the undergraduate affirmative action admissions practices of Harvard College and the University of North Carolina (UNC) violated the equal protection clause of the Fourteenth Amendment to the Constitution and Title VI of the Civil Rights Act of 1964, there has been significant concern among employers that their own diversity, equity and inclusion (DEI) practices may come under scrutiny. Now, two months later, employers have more questions than they have answers about the future legality of DEI in the private workplace.

Various stakeholders were quick to react to the SFFA decision and seek to apply it to the activities of private employers under Title VII and other employment discrimination laws. For example, some politicians accused employers that have DEI programs of engaging in unlawful discrimination and threatened legal action. Others responded by assuring the same employers that they can stay committed to DEI in the workplace without running afoul of the law.

As a legal matter, the SFFA ruling does not directly bear on the practices of private employers, as it addressed claims under the Constitution and federal law covering public institutions and institutions that receive federal funding. But as a practical matter, employers are right to be concerned about how the SFFA ruling will impact private sector diversity initiatives and programs in the future. And the flurry of inconsistent reactions in response to the decision has only contributed to increased concern. This alert offers practical advice to employers that can be deduced from the Court’s decision and commentary and reflects on where employers might go from here.

The SFFA decision

Harvard’s and UNC’s admissions processes under challenge in SFFA involved the explicit consideration of race in making positive acceptance decisions. In addition, at least with respect to Harvard, its admissions committee considered the relative breakdown of applicants by race to ensure there would not be a drop-off in the percentage of minority students from prior admitted classes. The Court held that these practices violated the Constitution, and thereby Title VI, because neither permits any distinctions based on race or color, and unless excepted under strict scrutiny, there is no permissible justification for using race as a factor in affording educational opportunities. In reaching that decision, the Court held that the universities’ articulated interests regarding the benefits of a diverse student body were not sufficiently measurable and the use of race was not narrowly tailored because the admissions practices impermissibly had a negative effect on applicants of other races and promoted stereotyping. Moreover, neither Harvard nor UNC could ensure an end to the use of race-based admissions practices as required by Supreme Court precedent.

Responses to the SFFA decision

Promptly after the SFFA decision came down, EEOC Chair Charlotte A. Burrows issued a statement that “[i]t 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.” Notably, however, the EEOC amended its Compliance Manual to caution employers that “very careful implementation of affirmative action and diversity programs is recommended to avoid running afoul of the law.” (EEOC Compliance Manual Section 15(VI)(C).)

On July 13, Republican attorneys general from 13 states penned a letter to the CEOs of the Fortune 100 to “remind [them] of [their] obligations as an employer under federal and state law to refrain from discriminating on the basis of race, whether under the label of ‘diversity, equity, and inclusion,’ or otherwise” in light of the SFFA decision, which in their view reiterated a commitment to racial equality in employment through compliance with race-neutral employment practices. The letter claimed to observe that racial discrimination in employment and contracting is “all too common” among the Fortune 100 through the implementation of overt race-based initiatives that are akin to Harvard’s and UNC’s admissions practices and thus illegal. The letter also warned that the SFFA decision “should place every employer and contractor on notice of the illegality of racial quotas and race-based preferences in employment and contracting practices.”

In direct response, 20 Democratic attorneys general wrote their own letter to the Fortune 100 CEOs on July 19, assuring them that “corporate efforts to recruit diverse workforces and create inclusive environments are legal and reduce risk for claims of discrimination.” They opined that the SFFA decision does not apply to private employers and that employer programs developed pursuant to and consistent with decades of precedent under Title VII and Section 1981 can and must continue.

Fortune 100 companies are not the only employers that received cautionary letters. On July 17, Sen. Tom Cotton (R-Ark.) sent letters to 51 leaders of major law firms warning them that the principles espoused in SFFA and the plain text of Title VII prohibit private employers from basing hiring decisions on race and instructing them that “[t]o the extent 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.”

How should employers think about all of this?

As the dueling reactions and letters described above demonstrate, the proper course for employers in the wake of the decision in SFFA is less than clear. Employers should not, however, feel hopeless or compelled to roll back all DEI initiatives; indeed, employers that do so may face enhanced risk of claims of discrimination and actions by shareholders. Instead, employers should think critically — and creatively — including using the below guidelines about how to promote diversity of all kinds in the workplace within the contours of applicable law.

Start with a strong message

A statement of your company’s continuing commitment to diversity, equity and inclusion might be the place to start. The message should emphasize that diversity means diversity of all kinds, and not just racial or gender diversity. The message can come from the most senior executives, but it may take multiple other forms, including newsletters that highlight diversity efforts, training programs on DEI topics, and regular reinforcement of the commitment to diversity in communications and gatherings.

Pipeline, pipeline, pipeline

Employers committed to a diverse workforce will benefit from expanding the sources from which their candidates are drawn and capturing candidates from nontraditional backgrounds. Simply increasing the number of schools from which you recruit will make a difference. Chief diversity officers and human capital professionals will be instrumental resources in tapping into varied types of institutions from which to draw candidates. Your existing workforce, with its own connections to educational institutions and other communities, may also provide opportunities to extend your reach. Employers might also consider investing in their talent pipeline earlier in candidates’ careers by working with high school or college students before they go on to get advanced degrees. Increasing the diversity of your pipeline can contribute significantly to DEI efforts.

The SFFA decision explicitly permits consideration of race within the context of evaluating the whole individual

Roberts’ majority opinion in SFFA concluded with a clear statement that institutions need not be entirely race-blind:

[N]othing in this opinion should be construed as prohibiting universities from considering an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise . . . . A benefit to a student who overcame racial discrimination, for example, must be tied to that student’s courage and determination. Or a benefit to a student whose heritage or culture motivated him to assume a leadership role or attain a particular goal must be tied to that student’s unique ability to contribute to the university. In other words, the student must be treated based on his or her experiences as an individual — not on the basis of race.

143 S. Ct. 2141, 2176 (2023). What this means is that universities cannot systematically take race into account, but can evaluate a candidate based on how race affected their lives. The same principle should apply to employers. But the SFFA cautioned that “universities may not simply establish through application essays or other means the regime we hold unlawful today.” Employers should therefore similarly be careful not to replace one potentially unlawful process with another used to achieve the same result.

Remember what not to do

Employment practices and programs that give preferences in terms and conditions of employment based purely on protected categories will be the most vulnerable to attack in the current legal climate. These kinds of programs were already the subject of litigation prior to the SFFA decision, and it is expected that such litigation will be more common now. Employers should consider eliminating or modifying programs that are marketed to or reserved for only certain groups. Of course, quotas and racial balancing are never acceptable.

Evaluate current DEI policy and strategy and consider alternatives

Now is a good time to take stock of your DEI policies, programs and related materials and determine whether alternatives should be considered.

Diversity is not synonymous with racial and gender diversity, and factors such as race and gender are not the only workable metrics in bringing about a diverse workforce. For instance, employers can focus on underrepresented groups that are not identifiable by legally protected characteristics. Following legislation in California and Michigan outlawing affirmative action, for example, institutions in those states had to rethink admissions. In addition to taking action that demonstrated a continued commitment to achieving diversity and recruiting diverse candidates of all backgrounds, the universities in those states were successful at experimenting with race-neutral practices, such as giving preferences to those who are economically disadvantaged or are the first generation in their family to attend college. In fact, it was reported that in 2015, UCLA attained the diversity levels it had achieved before affirmative action was outlawed. Using these institutions as examples, employers might also consider similar race-neutral measures. But in so doing, employers should be careful to avoid using nonprotected factors as a mere proxy for protected categories like race and gender.

Removing barriers to employment opportunities also may be effective in increasing and maintaining diversity of perspectives in the workplace, such as by adopting application practices aimed at evening the playing field. For example, this might include interviewing candidates using the same set of questions or removing names, addresses and interests from resumes. It might also include revising job postings to ensure they use inclusive language that is focused on the skills necessary for the role.

This alert offers just some examples of what employers might consider implementing, and we can expect more innovative ideas will come to the fore. As you may engage in a process of trial and error with these and other approaches, employment counsel may be a helpful resource to brainstorm and discuss and conduct privileged audits of current practices.

Please contact a member of Kramer Levin's Employment Law department if you have questions about the issues addressed in this alert.