The U.S. Supreme Court Recently Overturned Affirmative Action Precedent in Higher Education – Will Employer DEI Efforts be Invalidated Next?

• The United States Supreme Court recently ruled that race-conscious admission programs violate the Fourteenth Amendment and overturned affirmative action admissions policies in higher education.
• Justice Neil Gorsuch’s concurring opinion makes a direct reference to Title VII of the Civil Rights Act, which applies to private sector employers, and this reference is anticipated to be cited by plaintiffs’ lawyers prosecuting employment discrimination claims.
• As a result of this decision, employer DEI programs and policies will likely be more closely scrutinized, subjecting employers to allegations of discrimination.
• Employer initiatives or policies that are based on or conscious of protected characteristics are expected to face more scrutiny than those that do not.

On June 29, 2023, the United States Supreme Court ruled in Students for Fair Admissions, Inc. v. President & Fellows of Harvard College that race-conscious admissions programs at Harvard College and the University of North Carolina violates the Equal Protection Clause of the Fourteenth Amendment, and, therefore, struck down affirmative action admissions policies in higher education. While the Court’s decision involved only higher education, the ruling is expected to have ripple effects on private-sector employer voluntary affirmative action programs and diversity, equity, and inclusion (“DEI”) policies and initiatives. With the potential for increased scrutiny on such DEI efforts, employers should speak with counsel to review whether any changes should be made to their current practices, as well as the practical tools that can be used to continue advancing DEI in the workplace, while mitigating against legal exposure in this evolving area of law.   

Summary of the Decision

In a 6-3 decision, the majority opinion held that the two universities’ use of race as a plus factor in the admissions process violated the Fourteenth Amendment. Namely, while the Court noted that promoting diversity in higher education was a “commendable” goal, in the Court’s opinion, the affirmative action policies at issue were not “sufficiently coherent” to survive strict scrutiny in the context of having racial preferences in the admissions process for an indefinite period of time. Therefore, the Court’s decision bars virtually any use of race as an independent factor in the admissions process.  

Notably, the Students for Fair Admissions decision does not directly apply to private employers because it arises in the context of the Fourteenth Amendment (which applies to government and quasi-government actors) and Title VI of the Civil Rights Act of 1964 (which applies to educational institutions that receive federal funding). In contrast, employers are subject to Title VII of the Civil Rights Act. Indeed, shortly after the Court’s ruling, EEOC Chair Charlotte A. Burrows issued a statement confirming the inapplicability of the decision to the workplace and stating that the decision, “does not address employer efforts to foster diverse and inclusive workforces or to engage the talents of all qualified workers, regardless of their background.”

That being said, in his concurring opinion, Justice Neil Gorsuch stated that Title VI prohibits universities from “treating any individual worse even in part because of his race, color, or national origin” and explicitly connected Title VI to Title VII by stating that the laws have “essentially identical terms” and together “codify a categorical rule of individual equality, without regard to race.”

Types of Employer Practices at Issue

There are two main types of employer practices that may be subject to heightened scrutiny as detailed below:

1. DEI Efforts – Many employers choose to engage in DEI efforts, which often involve recruiting diverse prospective job applicants, providing anti-discrimination and workplace sensitivity and inclusivity training, creating opportunities limited to underrepresented groups (i.e., professional development programs and scholarships available only to specific race/ethnicity or gender groups), and maintaining employee resource and affinity groups.
2. Voluntary affirmative action programs (“AAPs”) – AAPs are programs in which employers are temporarily permitted to provide preferential treatment on the basis of race, sex, and national origin in employment decisions. Under current federal precedent, AAPs are lawful in extremely narrow circumstances as such programs must be established to remedy the: (1) effects of prior discriminatory practices; (2) effects of historically limited labor pools; or (3) “adverse effects” if the employer has conducted an analysis revealing that its practices have resulted in “actual or potential adverse impact.” As such, AAPs are not common. Further, it’s important to note that quotas have long been prohibited.

Notably, certain federal contractors and subcontractors are legally required to enact affirmative action programs pursuant to Executive Order 11246 and regulations issued by the United States Department of Labor’s Office of Federal Contract Compliance Programs. The Supreme Court’s decision should not directly or indirectly impact those obligations.

Implications for Employers

Employers will face additional risks in the wake of this ruling, particularly with respect to reverse discrimination claims. Namely, employees are anticipated to reference the Court’s decision to assert that an employer’s consideration of race (or any other legally protected category for that matter) when making employment decisions amounts to unlawful discrimination. Indeed, they are likely to recite Justice Gorsuch’s concurring opinion regarding Title VI and Title VII having “essentially identical terms.”

The waters employers must now navigate are murky. On the one hand, employers want to continue their DEI commitments and foster an inclusive working environment for everyone, regardless of race, ethnicity, gender, etc. On the other hand, even before the Students for Fair Admissions decision, plaintiffs have increasingly attacked employers’ DEI efforts as evidence of discriminatory intent in reverse discrimination cases. For example, in Duvall v. Novant Health, a jury in the Western District of North Carolina issued a substantial verdict to a plaintiff who alleged that his employer’s DEI initiatives resulted in white men being targeted for termination and improperly replaced by women and racial minority candidates. As noted above, the Students for Fair Admissions decision will very likely be used as further support for such claims. Indeed, just a couple of weeks after the decision, on July 13, 2023, attorneys general of 13 states issued a warning to the chief executive officers of Fortune 100 companies, threatening “serious legal consequences” over race-based employment decisions and DEI policies and citing the Students for Fair Admissions decision for support. 

Overall, initiatives or policies that are based on or conscious of protected characteristics will face more scrutiny than those that do not. Importantly, employer DEI efforts cannot “unnecessarily trammel” the rights of non-diverse employees under existing Title VII precedent.

Taking Steps to Protect Your Company

Consulting with counsel to conduct a comprehensive review of all current DEI efforts and messaging may prove to be a valuable exercise and can be incorporated into your 2024 business goal planning. Employers may still achieve and maintain diverse and equitable workplaces through broader strategies that focus on all aspects of diversity beyond the legally protected characteristics. The evaluation of these efforts and messaging should not only consider applicable federal and state law, but also take practical considerations into account. For example, all applicants should be required to meet the same minimum qualifications for a position. Additionally, development of a DEI communication plan is key, especially as the type of messaging and level of detail provided may differ internally versus externally. Further, the old adage still holds true: education is power, so conducting effective employee training programs, which should vary based on an employee’s role within the organization, also plays a large role in shaping company culture, while at the same time mitigating risk for legal exposure.