Reviewing Workplace ...

Reviewing Workplace DEI Practices in Light of Students for Fair Admissions Ruling

August 4, 2023 | by Melissa F. Spence

On June 29, 2023, the United States Supreme Court found affirmative action in the college admissions programs of two well-known universities to be unconstitutional.  Despite the opinion only addressing two specific college admissions processes, political leaders throughout the United States have used the opinion to call into question some diversity, equity, and inclusion (“DEI”) efforts of corporate America.  But despite the political chatter, an examination of the ruling shows well-implemented DEI practices that comply with applicable federal and state law still have a place in American workplaces.

In Students for Fair Admissions, Inc. v. President and Fellows of Harvard College,[1] (“SFFA”) the Court analyzed whether the admissions systems used by Harvard University and the University of North Carolina were lawful under the Equal Protection Clause of the Fourteenth Amendment.  The Equal Protection Clause of the Fourteenth Amendment guarantees that “[n]o State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”  SCOTUS has held that the Equal Protection Clause applies to all individuals and “[t]he guarantee of equal protection cannot mean one thing when applied to one individual and something else when applied to a person of another color.  If both are not accorded the same protection, then it is not equal.”  Regents of University of California v. Bakke, 438 U.S. 265, 289-290 (1978).  Thus, any exceptions to this guaranty must meet a two-step test better known as “strict scrutiny,” which asks the Court to consider first whether the racial classification is used to further compelling governmental interests and second, whether the government’s use of race is “narrowly tailored,” meaning it is “necessary to achieve that interest.”

Prior to SFFA, the Court addressed affirmative action in the university admissions process in Bakke and in Grutter v. Bollinger, 539 U.S. 306 (2003).  In Bakke, the Court, for the first time, considered whether a race-based admissions decision complied with the Equal Protection clause.  In doing so, the Court found that the interest in obtaining the educational benefits that flow from a racially diverse student body was a “constitutionally permissible goal for an institution of higher education.”  However, race could only be used as “plus” for an applicant’s file and a university could not reserve seats, thereby enacting a quota, for individuals of a particular race or exclude an individual from consideration due to their race. The Court visited its analysis again in Grutter and explained the limits on how universities may consider or use race in their admissions, emphasizing the two risks the limits are intended to prevent: the first being that race will devolve into illegitimate stereotyping (i.e. that minority students express a minority viewpoint on any issue) and second, that race would be used to discriminate against those who are not members of the race-based preference group. In Grutter, the Court held that the race-based admissions programs must end eventually, noting “a permanent justification for racial preferences would offend” the fundamental principle of the Equal Protection Clause. 

In SFFA, the Court found that Harvard and UNC’s admissions programs were unconstitutional for failing to comply with strict scrutiny in that the interests Harvard and UNC argued were compelling — including “training future leaders, acquiring new knowledge based on diverse outlooks, promoting a robust marketplace of ideas, and preparing engaged and productive citizens” — while commendable, were not subject to “meaningful judicial review,” as it was unclear how such goals could be measured.  The Court found that the programs failed to “articulate meaningful connection between the means they employ and the goals they pursue.” Additionally, the admissions programs failed to comply with the Equal Protection Clause’s demand that race should not be used as a negative and should not operate as an illegal stereotype, finding that the use of race by Harvard’s admission progress led to the admission of fewer Asian-American students. Finally, the Court relied on the Grutter decision, finding the admission programs are without a meaningful end point.  However, the Court noted that its decisions should not hinder an applicant from discussing how race impacted their life, “so long as the discussion is concretely tied to a quality of character or unique ability that the particular applicant can contribute to the university.”

Since the publication of SFFA, there has been an outcry regarding the implications of the decision outside of the college admissions process.  On July 13, 2023, 13 state attorneys general circulated a letter to the Fortune 100 CEOs, warning them to take heed of the decision in light of their employment practices:

Accordingly, 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. As Attorneys General, it is incumbent upon us to remind all entities operating within our respective jurisdictions of the binding nature of American anti-discrimination laws. If your company previously resorted to racial preferences or naked quotas to offset its bigotry, that discriminatory path is now definitively closed. Your company must overcome its underlying bias and treat all employees, all applicants, and all contractors equally, without regard for race.

Within the same week, U.S. Sen. Tom Cotton of Arkansas sent a letter on July 17, 2023, to 51 law firms, warning the firms that their clients may be violating federal civil rights law with their DEI programs, advising the firms to preserve documents relevant to DEI practices in preparation for potential investigations and lawsuits concerning the same.  Notwithstanding, on July 19, 2023, attorneys general from 20 other states and the District of Columbia issued a letter to Fortune 100 CEOs, in response, asserting that corporate diversity programs remain lawful.

Despite the political responses triggered by SFFA, employers need not make any abrupt decisions to overturn their DEI programs. First and foremost, SFFA does not directly address or pertain to private sector businesses. Discrimination in the college admissions process is governed by Title VI of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race, color, or national origin by any program or activity that receives federal financial assistance.   Private employers that employ 15 or more employees are governed by Title VII of the Civil Rights Act of 1964, which prohibits discrimination on the basis of race and other protected categories in the workplace.  Title VII is enforced by the United States Equal Employment Opportunity Commission (EEOC).  In a June 29, 2023, statement, Charlotte Burrows, chair of the EEOC, clarified that the SFFA decision did not impact private workplaces and “[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.”[2] For federal contractors, the Office of Federal Contract Compliance Programs (OFCCP), updated its Affirmative Action Frequently Asked Questions webpage to address SFFA:

Are the affirmative action obligations OFCCP enforces similar to the affirmative action steps taken by some educational institutions to increase the racial diversity of their student bodies?

No. OFCCP enforces nondiscrimination and affirmative action obligations to ensure equal opportunity in the federal contractor workforce, while some post-secondary educational institutions have implemented a wholly distinct concept of affirmative action that permitted the use of race to be weighed as one factor among many in admissions processes. Further, the Supreme Court’s decision in Students for Fair Admissions applies only to higher education admissions programs and does not address the employment context. See Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, No. 20-1199, slip op. at 2-5, 23-30 (U.S. June 29, 2023). There continue to be lawful and appropriate ways to foster equitable and inclusive work environments and recruit qualified workers of all backgrounds. OFCCP’s affirmative action requirements enable employers to reduce the risk of discrimination in their workforces and recruit and retain diverse talent.[3]

In addition to Title VII, many private employers are also bound by 42 U.S.C. Section 1981, which prohibits discrimination on the basis of race when making and enforcing contracts, including but not limited to an employment relationship.  

Although Justice Neil Gorsuch’s concurring opinion cites and makes comparisons to Title VII, the prevailing and precedent-setting Opinion of the Court makes no mention of Title VII, Section 1981, or any other law or statute governing the workplace.  Notwithstanding, employers may experience the indirect impact of this decision as more non-minority employees may attempt to rely on it while bringing reverse discrimination claims.  Now is the time for employers to review and audit their current policies and procedures for hiring, performance reviews, compensation, and promotions. Any employment decisions based on an individual’s race, including quota-like practices or employer preference for an applicant or a specific employee based on their race, are illegal under Title VII and were illegal long before SFFA.  Employers should ensure that all employment decisions are based on legitimate, non-discriminatory reasons to protect against any type of discrimination lawsuit. 

If you have any questions about your employment practices, please contact a Butler Snow Labor and Employment attorney.