Recent Legal Challenges to Diversity, Equity, & Inclusion Initiatives in the Workplace

Diversity, Equity, and Inclusion (“DEI”) initiatives and programming continue to be a priority for employers and are often reflected in employers’ public statements, hiring practices, and employee trainings. However, recent legal developments indicate that these programs and initiatives may be subject to increased scrutiny.  Specifically, the June ruling from the Supreme Court on affirmative action in the higher education space and the uptick in “reverse” employment discrimination claims show a potential trend toward increasing challenges to such programs.

The Supreme Court’s Decision on Affirmative Action in Higher Education

In Students for Fair Admissions, Inc. v. President & Fellows of Harvard College, the U.S. Supreme Court considered the question of whether race can be considered a “plus factor” when evaluating an applicant for admission to Harvard College and determined that considering an individual’s race in the college admissions process violates the Equal Protection Clause of the Constitution. The practical effect of this decision is that it is now largely unlawful for colleges and universities to use affirmative action in their admissions process with the limited exception that they can consider “an applicant’s discussion of how race affected the applicant’s life, so long as that discussion is concretely tied to a quality of character or unique ability that the particular applicant can contribute to the university.”

Employers’ DEI efforts are not immediately impacted by this decision as the decision is based on the Supreme Court’s assessment of Title VI, which applies to any program or activity that receives Federal funds or other Federal financial assistance, not Title VII, which applies to private employers. In fact, the Chair of the EEOC released a statement clarifying that the Students for Fair Admissions 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.” The EEOC Chair specified that it 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.

However, decisions on affirmative action in education often signal how courts will review and analyze workplace DEI efforts and practices, and even though the statement from the EEOC Chair indicates how the EEOC may approach complaints or challenges to DEI efforts in the workplace, that statement is not binding on courts. Thus, the Court’s decision could signal that courts may scrutinize employers’ DEI programs more closely to ensure that these efforts are inclusive to all employees regardless of their race, gender, or other protected characteristic, and that these efforts do not treat, or encourage others to treat, individuals with a particular protected characteristic more favorably than others.

Reverse Employment Discrimination Claims

Under Title VII of the Civil Rights Act, it is illegal for an employer to consider a candidate’s or employee’s race, color, religion, sex and/or national origin in any employment decision. As such, employers cannot create hiring quotas, or reserve roles for candidates based on a certain protected category, even if the intent is to increase diversity. Such practices can result in “reverse” employment discrimination claims against employers.  

Over the last few years, there has been a significant uptick in lawsuits claiming “reverse” employment discrimination, with many of them focusing on an employer’s DEI efforts and practices. For example, in a 2021 North Carolina case, the plaintiff, a white male executive, won a $10 million verdict based on his claim that his termination was the result of race and gender discrimination. To support his claim, the plaintiff demonstrated that (1) 50% of a long term incentive plan was specifically dependent on senior leaders’ abilities to meet their underrepresented minority hiring targets; (2) a number of white male senior leaders had been terminated and replaced by candidates who were female and other underrepresented minorities; and (3) by 2019, every senior leader who was a white male had been terminated and every senior leader who was a woman or minority had been promoted.

Plaintiffs bringing these “reverse” employment discrimination claims are citing the language used in their employer’s DEI campaigns as evidence of discrimination, making an employer’s language around these efforts increasingly important.  For example, in a 2022 class action suit in Arizona, plaintiffs brought claims of race discrimination, racial harassment, and hostile work environment on the basis that they were subjected to frequent, racially charged town halls where the CEO of their employer decried America and his own company as systemically racist and suggested that employees, when interacting with one another, must view each other’s race first and foremost because white employees all harbor some form of bigotry. This case is currently pending before the Ninth Circuit. In another recent case in Washington, the plaintiff alleged that he was subject to a hostile work environment based on race as a result of a Race and Social Justice Initiative adopted by an employer. The plaintiff claimed the trainings around this initiative aggressively promoted white privilege and collective guilt and required the plaintiff to acknowledge his complicity in racism. Plaintiff also alleged that when he raised claims of discrimination with the employer, he was told that he could not be a victim of discrimination because he possessed white privilege. The Judge in this case has already denied the employer’s motion to dismiss the timely claims, finding that the plaintiff’s complaint alleged enough facts to state plausible claims for a hostile-work environment and disparate treatment based on race, an equal protection claim, and a retaliation claim. This case is currently set for trial in 2024.  

In addition to the foregoing, in the weeks since the decision in Students for Fair Admission Inc. a new wave of lawsuits alleging reverse employment discrimination based on diversity initiatives in the workplace have emerged. These lawsuits include actions brought by the American Alliance for Equal Rights in Texas and Florida against two major law firms alleging that the law firms’ fellowship programs dedicated to minority applicants amount to unlawful race discrimination in violation of Section 1981. Both complaints allege that these fellowships give preference to particular minority groups because they require applicants to belong to a group historically underrepresented in the legal profession, including racial/ethnic minority groups and members of the LGBTQ+ community.  These kinds of programs are popular amongst larger employers and these cases will directly impact whether employers can continue to run similar minority fellowship programs. In another recent case filed in a Virgina federal court against Gannett, a newspaper publisher, the plaintiffs allege they were fired or passed over for promotions to make room for members of minority groups. The complaint argues that these decisions were driven by a Gannett policy aiming to ensure that Gannett’s newsrooms reflect the demographics of the communities they cover by 2025. Similar allegations have been filed against Morgan Stanley in a New York federal court by a former executive who is a white male. According to his complaint, he was terminated and replaced with a much less experienced Black woman and never given an explicit reason for his termination. The complaint also alleges that several of his colleagues, including the Managing Director and Global Head of Equity Solutions, opined that his termination was the result of the Firm’s diversity initiatives and targets. As these cases have just been filed, it is too early to speculate on their outcomes. However, it is evident that the holding in Students for Fair Admissions Inc. fueled this wave of lawsuits, perhaps suggesting a trend in employment litigation that is likely to continue.

As the legal landscape around DEI initiatives continues to change, employers may want to revisit the DEI programs they already have in place and any programs they are considering implementing to determine how these programs may be implemented in a manner to promote DEI goals while remaining legally compliant. When structuring DEI initiatives, employers should consider whether they are incentivizing their workforce to make employment decisions that favor a group of employees based on race, gender, or any other protected characteristic or are inadvertently implementing impermissible quotas. Employers should also review any employee DEI training programs or public statements for content that employees may point to as evidence of preference for employees of certain protected characteristics or reverse discrimination, for example, statements that may be seen as stereotyping or generalizing a group of employees based on a protected characteristic. Employers can continue to prioritize DEI in the workplace and conduct initiatives and programs related to DEI, but they should keep certain parameters in mind when doing so. Employers who have questions about their DEI initiatives and whether they should be modified in light of recent developments should contact Caroline Secola at csecola@fglawllc.com, or any attorney at the Firm.

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