With the recent spate of legal challenges against DEI initiatives, business leaders are being forced to balance their commitment to principles of diversity, equity, and inclusion with the risk of costly and time-consuming lawsuits and other challenges. Two of the founding members of Davis Wright Tremaine's DEI Counseling Group – Vicky Slade and Rachel Marshall – share their perspective on how companies can navigate this conundrum and why in the coming year it is more important than ever to stay committed to DEI initiatives.

In June 2023, the U.S. Supreme Court made a groundbreaking decision that sent shockwaves across the nation, igniting a heated debate about the future of Diversity, Equity, and Inclusion ("DEI") programs. In two similar cases, Students for Fair Admissions v. Harvard and Students for Fair Admissions v. UNC, the Supreme Court was asked to determine whether the consideration of race in college admissions was unlawful under the Equal Protection Clause of the Fourteenth Amendment. The court's ruling was a seismic shift, overturning two decades of precedent. It held that race could not be used as a factor in college admissions as it violated federal law. This decision sent ripples of uncertainty through DEI programs across the country, creating doubt over their future with companies that fear that their DEI programs may be targeted.

Those fears were well-founded. In the aftermath of the Students for Fair Admissions decisions, a group of Attorneys General from thirteen states and Arkansas Senator Tom Cotton issued warnings to business leaders about the potential risks associated with their DEI programs. They cautioned against using racial preferences or quotas to combat discrimination, likening employer DEI programs to unlawful discrimination, and they threatened companies that their DEI programs would be subject to investigation by state agencies. Next came lawsuits targeting law firm diversity fellowship programs and investment funds aimed at leveling the playing field for minority-owned businesses, as well as a slew of administrative challenges and threatening letters sent to some of the country's most well-known companies and organizations, challenging aspects of their DEI programs, including trainings, affinity groups, hiring goals, public statements, executive incentives, and other efforts to advance equity. These claims are still working their way through the legal system, with no clear answers yet emerging regarding the legitimacy of the attacks.

Over the last few years, as our society's understanding of systemic inequities and hidden barriers to equity has grown, and as companies have determined that fostering diverse, equitable, and inclusive workplaces is an important business interest, our work as labor and employment lawyers has included an increasing amount of advising businesses around their DEI programs. This has involved both reviewing the programs to ensure they are compliant with the law and also helping to identify areas of opportunity where the employer could do more to dismantle barriers to equity. In response to the increasing importance of this work since the Students for Fair Admissions decisions and ensuing surge of anti-DEI sentiment, DWT formally launched its DEI Advice and Counseling practice earlier this year.

With the landscape shifting around DEI, business leaders are anxious. In some cases, executives, board members, and in-house counsel who previously had no involvement in their organization's DEI work are now playing catch-up, trying to understand what their programs are, why they exist, and what the legal risks are. DWT's DEI Advice and Counseling group helps decision-makers get up to speed, advises them on the interplay between DEI and employment law, and supports them in determining the best way to move forward. The ways that we work with companies to advance their DEI programs while staying compliant with the law and mitigating litigation risk varies. However, there are two key messages that likely apply to anyone who is reading this article and wondering how to move forward:

• Don't overreact! The Students for Fair Admissions cases did not change the law that governs private corporations' DEI initiatives. If your DEI program was carefully crafted to ensure compliance with federal and state anti-discrimination laws before the decisions, then it should not require significant changes. Nor should the increase in litigation around this area prompt you to drop an effective DEI program. There are legal risks inherent in any path you take with regard to DEI—don't forget that DEI programs grew up out of a need to address systemic inequities and hidden barriers that led to disparate outcomes for individuals from different groups. If you ditch your DEI program now, you are opening yourself up for claims from historically excluded groups that your business has decided to allow a discriminatory status quo to persist. Instead of reacting based on fear and uncertainty, think carefully about the purpose of your program, what you are trying to achieve, and how it ties into your strategic plan, and determine what level of risk you are comfortable accepting in order to meet your goals.
• Proceed with caution. While the law has not changed around DEI programs, the level of scrutiny certainly has. Not only are conservative non-profits filing targeted administrative charges and pursuing impact litigation, but the idea of discrimination against individuals belonging to majority groups is entering the public discourse in a way that it previously had not. This could lead to increased litigation by individuals who believe private DEI programs are leaving them behind. Think about ways you can proceed with your DEI program while insulating your business from risk. Among other things, this may include:
  • Completing an inventory of all DEI activities that occur at your organization and assessing each to determine whether adjustments, such as to program content or eligibility, may decrease legal risk.
  • Reviewing your messaging around DEI, internally and externally, to flag any language that could make you an easy target for anti-DEI activists, such as by suggesting that certain tangible benefits are distributed based on protected class.
  • Ensuring your leadership and your stakeholders understand what your DEI program entails and how it fits into your organization's objectives.
  • Educating your staff and other stakeholders to ensure they understand recent developments and are proceeding with a nuanced understanding of what is lawful in this arena.
  • Especially in an employment setting, being intentional about how you respond to individuals who feel slighted or harmed by DEI work: thoughtful and effective responses to concerns at the time they are raised is, bar none, the most effective way of preventing future litigation.
  • Rather than focusing on creating opportunities for historically excluded groups, rooting out and removing the hidden systemic barriers in your organization that have perpetuated inequities.

This is a pivotal moment for DEI. Following years of steady progress and then a rapid escalation of the work during the period of social unrest commencing in the summer of 2020, the pendulum on DEI is swinging back in the other direction. The anti-DEI trend will only intensify in 2024 as the country barrels towards what is certain to be another contentious presidential election, the outcome of which will have significant ramifications for DEI. At this inflection point, business leaders need to do some soul-searching. Some may determine that addressing historic and ongoing inequities through DEI programs is not something worth taking any risks over. If your organization believes that the cause of removing systemic barriers to an equitable business environment remains a critical business imperative, however, then you should proceed accordingly. This means doubling down on those efforts, even in the face of headwinds, while moving forward with intention and appropriate care. All of us on the DEI Advice and Counseling team are passionate about building a more equitable future and are excited to do our part to make that future a reality.

[View source.]