Title VII & DEI Program Implications of the Supreme Court’s Recent Affirmative Action Decision

As observed in Dykema’s original alert on the Supreme Court’s recent decision in Students for Fair Admissions, Inc. v. President and Fellows of Harvard College, Nos. 20-1199 & 21-707, corporate diversity, equity, and inclusion policies may be impacted by the Court’s broad language on race-based decision making. The ruling has already emboldened those currently in litigation over diversity efforts to push for the elimination of such programs entirely, as discussed in a recent article by the Wall Street Journal.

So today, Dykema takes a closer look at the foundation of these programs and discusses how businesses at all levels, and in all industries, should be proactively taking steps to avoid or minimize exposure.

In Justice Neil Gorsuch’s concurring opinion (joined by Justice Clarence Thomas), he points out that in addition to the Equal Protection Clause of the Fourteenth Amendment, Title VI of the Civil Rights Act of 1964 prohibits race-based decision making such as the admissions programs at Harvard and the University of North Carolina. To support his position, Justice Gorsuch cites the plain meaning of the words of Title VI, observing that it “prohibits a recipient of federal funds from intentionally treating one person worse than another similarly situated person because of his race, color, or national origin.” By treating some applicants worse than others on account of their race, the college admissions programs fall within the conduct prohibited by Title VI.

What is critical, however, is that Justice Gorsuch’s concurring opinion goes even further by linking the interpretation of Title VI to similar language in Title VII, which makes it “unlawful… for an employer… to discriminate against any individual… because of such individual’s race, color, religion, sex, or national origin.” Looking back to the Supreme Court’s decision interpreting Title VII in Bostock v. Clayton Cty., 140 S. Ct. 1731 (2020) (a decision he authored), Justice Gorsuch reaffirms the idea that both Title VI and Title VII “codify a categorical rule of ‘individual equality, without regard to race.’” Note, while the issue presented to the Court in Students for Fair Admissions was the use of race as a determining factor, the impact of these cases includes making decisions based upon other statuses such as gender.

Although not the majority opinion of the Court, Justice Gorsuch’s concurring opinion puts employers’ diversity, equity, and inclusion programs on notice where a similar rationale is used to support such programs. In Justice Gorsuch’s concurring opinion, he cites the use of race as a “tip” or “plus” factor in admissions decisions as evidence that such programs treat some applicants worse than others based on their race. It may be argued that, depending on how the program is crafted, certain employers’ diversity, equity, and inclusion programs’ use of race, gender, gender preference, sexual orientation, disability, or veteran status in hiring and advancement decisions will come under attack and be scrutinized.

Of course, the answer cannot be to simply erase all efforts by an employer to promote diversity, equity, and inclusion in a business. Neither the majority opinion of the Court nor Justice Gorsuch’s concurrence compels such a result. And to do so may, ironically, create disparate impact concerns because even though a policy neutrally applied and on its face is compliant with Title VII, the employer may nevertheless be held liable if it has a disparate impact on a protected class. This is so because the statute protects against intentional discrimination as well as policies that result in discrimination, even when the consequences are unintended.

The answer likely lies somewhere in the middle, by promoting diversity, equity, and inclusion without making race or gender a factor. For example, the use of racial quotas or the use of race as a “plus” factor in hiring and advancement decisions likely fall dangerously close to the types of activity that Justice Gorsuch’s concurring opinion makes clear he believes will violate Title VII by treating a similarly situated person differently because of the person’s race. Additionally, even internal programs have the potential to expose a company to risk and potential litigation, such as employee resource groups available only to employees of certain races or genders, or mentoring and sponsorship programs aimed at promoting diversity to the exclusion of white males.

Policies that are not seen as disadvantaging a specific category of individuals may fare better against future challenges, such as increasing the total applicant pool for new positions or drawing a clear link between the efforts to diversify, on the one hand, and business advantages, on the other. The majority opinion also instructed that universities could continue to consider how race impacts a candidate’s life, and by extension, employers should be able to make these distinctions as well so long as the employer ties the distinction to a legitimate business need. Thus, an employer may be able to consider an applicant’s description of the role that race (or some other factor such as gender) has played in their life rather than imposing a diversity quota.

Another aspect of the admissions programs that the majority opinion criticized was the lack of an end date. “Neither university embraced any temporal limit on race-based affirmative action in higher education, or identified any end date for its continued use of race in admissions.” The takeaway for employers being that they should consider making their programs short-term or limited in nature and subject to regular audit and adjustments to stay in compliance with future legal developments.

As additional litigation works its way through the courts and those cases are decided, clearer guidance should become available. Currently, pending cases against Amazon and Starbucks appear to be the next battlegrounds where these arguments may be tested.

And small organizations should also pay attention because the impact of this litigation is not limited to mega employers. If an employer has at least 15 employees, the employer is subject to Title VII.

Please reach out to us if you have any questions about how this recent ruling may impact your organization, specifically, or if you would like Dykema’s experienced attorneys to suggest strategies for pre-empting such litigation and minimizing legal exposure.