Key Takeaways

• DE&I efforts across all institutions, including private employers, remain beneficial, positive and welcome efforts provided that such efforts are inclusive and do not rely on protected categories in any decision-making process.
• With future legal attacks on DE&I efforts likely, private employers should take inventory of all of their current programs and policies and audit them for risk.

In a 6-3 decision, the U.S. Supreme Court held in Students for Fair Admissions, Inc. v. President and Fellows of Harvard Coll., No. 20-1199, 600 U.S. – (U.S. June 29, 2023) (available here) that affirmative action programs at educational institutions fail to satisfy the narrow restrictions of the Fourteenth Amendment’s Equal Protection Clause.

While this ruling only immediately impacts educational institutions, the decision will almost certainly have an effect on employers’ diversity, equity and inclusion (DE&I) efforts. Understanding the decision as it applies to educational institutions is critical to understanding its potential implications on private employers, so let’s start there.

How the Decision Impacts Educational Institutions

The opinion directly impacts both public and private educational institutions. The opinion is based on two underlying cases, brought by Students for Fair Admissions, Inc. against the University of North Carolina and Harvard College[1] (collectively, the Universities). Relying on decades of past Supreme Court precedent, the Universities had been considering race as a factor in the admissions process to further student body diversity. The majority, however, held that unless such admissions processes comply with narrowly proscribed restrictions, they must be “invalidated under the Equal Protection Clause of the Fourteenth Amendment.” Specifically, the Court applied the following standard in its analysis, and ultimate rejection, of the Universities’ admissions processes:

1. University programs must comply with the strict scrutiny test (i.e., whether the program is used to further compelling governmental interests);
2. University programs may never use race as a stereotype or negative factor; and
3. University affirmative action programs must, at some point, end.

The Court found that the Universities’ admissions programs failed each of these prongs.

First, the Court found that the Universities’ stated goals in the structure of their admissions processes were not sufficiently coherent for purposes of strict scrutiny in that they failed to provide a meaningful connection between the means employed and the pursued goals, and there was no concrete way to measure progress towards the Universities’ stated goals.  Consequently, the Court concluded that the programs were not used to further compelling governmental interests.

The Court next found that the Universities’ admissions processes impermissibly used race as both a negative and a stereotype. The Court reasoned: “How else but ‘negative’ can race be described if, in its absence, members of some racial groups would be admitted in greater numbers than they otherwise would have been?” The Court also found that the Universities’ admissions processes used race as a stereotype because the reasoning proffered by the Universities for the programs could be summarized as a finding that a student of a certain race can usually bring something that a person of a different race cannot or that race itself “says [something] about who you are.”

Finally, the Court, relying heavily on its prior decision in Grutter v. Bollinger, which mandates that affirmative action programs have an end date, found unconstitutional the Universities’ failure to have any adequate guideline for, calculation of or projected end to their purported need to utilize race in their admissions processes.

Now, educational institutions must comply with the rule that “the student must be treated based on his or her experiences as an individual – not on the basis of race” -- understanding that “an applicant’s discussion of how race affected his or her life, be it through discrimination, inspiration, or otherwise” may be relevant to an individual’s experiences. Consequently, educational institutions that have been considering race as a component of their admissions criteria will need to review their policies, revise them as appropriate and ensure ongoing compliance as we enter the post-affirmative action era.

How the Decision Impacts Private Employers

One might argue that it does not – at least not directly. Indeed, the Fourteenth Amendment does not apply to private companies, and Title VII of the Civil Rights Act of 1964, not Title VI, covers employment. Thus, the different legal frameworks, applicable case law and agency guidance on the laws at issue in this decision limit the reach of the Court’s ruling. Moreover, affirmative action, generally and in the context of this decision, is a government mandate imposed on certain organizations that receive federal funding. Most private employers are not educational institutions, nor do they receive federal funding, and therefore they are not governed by the affirmative action programs that are the subject of the high court’s opinion.

But is there a broader reach that private employers can expect to see from the opinion? Are there trickle-down effects or implications that private employers should be aware of? We think so – to a degree.

First, it is worth reminding private employers that they have always been prohibited from considering protected categories (in favor, or against) as a factor in employment-related decisions such as whom to hire or whom to promote, and proper DE&I programs – meaning those that are lawfully designed and implemented – do not allow for the use of quotas or the consideration of protected categories in decision-making. Even employers that are federal contractors and subject to requirements under the Office of Federal Contract Compliance Programs (OFCCP) are generally prohibited from using race (or other protected categories) in the decision-making process, since “affirmative action” in the OFCCP context only requires, with some nuance in special circumstances, targeted diversity recruiting efforts aimed at increasing the diversity of applicant pools and pipelines.

But therein lies the rub. If a private employer has implemented an affirmative action-like or DE&I program that involves quotas or relies on protected categories in employment decisions, that program is unlawful, and it always has been, even before the Court’s Students for Fair Admissions decision. But with this decision, the Court has now opened the door to, and made more likely, future legal challenges against a private employer’s DE&I efforts – as Justice Gorsuch pointed out in his concurring opinion, both Title VI and Title VII (which prohibits discrimination in the employment context) codify “a categorical rule of ‘individual equality, without regard to race.’”  Such programs, which previously flew under the radar, could now be put under a microscope and subject to challenge. It is for this reason that private employers should take a hard look at their DE&I programs and adjust them as necessary to avoid the heightened risks that the Supreme Court decision brings.

What Exactly Employers Should Do in Response to This Decision

Private employers should immediately take inventory of their DE&I communications, initiatives, mission statements, policies, programs, resource groups, etc. and audit them to confirm they are operating within the current laws.

This includes, among many other things, taking steps to ensure that employment practices – including hiring, pay and promotions – are equitable and not based on any protected categories; knowing how to address diversity or protected status in the decision-making process; ensuring that affinity or business/employee resource groups are open and available to all employees (not just those for which the groups were created); and checking the language of diversity-related mission statements, among other actions.

And depending on the organization, decision-makers within the advancement, compensation and hiring process, along with DE&I committees and personnel, may need to be retrained on how to properly address DE&I in accordance with the law.

The bottom line is that private employers can indeed maintain current DE&I programs and initiatives, so long as they serve to ensure principles of fairness and inclusion, meaning that employees of all backgrounds are afforded equal opportunity in the workplace.