The United States Supreme Court made headlines recently by ruling that colleges and universities may no longer take race into account when making admissions decisions. At a time when the population is growing ever more diverse and businesses are facing scrutiny from various constituencies on the demographic makeup of their workforces, some employers wonder exactly what this new decision means for the policies and practices they have been developing to enhance diversity, equity, and inclusion.

The short answer is that the Supreme Court’s decision in Students for Fair Admissions, Inc. v. Harvard (SFFA)did not change any law related to employment. Before the SFFA decision, colleges and universities had a very narrow exception to the general rule that race could not play a part in decisions made by state institutions or organizations accepting federal funds. Despite that general rule that such entities could not discriminate on the basis of race, for half a century the Supreme Court had held that taking race into account in college admissions, as long as it was done narrowly and in very controlled circumstances, was acceptable so that colleges could enhance the educational experience of students through diversity among classmates. In SFFA, the Supreme Court eliminated that narrow exception.

No such exception exists in the employment arena. Title VII of the Civil Rights Act of 1964 prohibits an employer from discriminating on the basis of race, color, religion, sex, or national origin. While the Supreme Court had approved some race-conscious hiring plans from the 1970s that were designed to address past discrimination by a particular employer that was instituting such plans, there was no case that approved race-conscious employment decisions in order to generally enhance diversity in the workplace. Therefore, the law concerning use of race in employment has not changed after SFFA; it remains unlawful to do so.

The longer answer, however, is more complicated. Here are some of the areas that may be impacted by the SFFA case:

• Affirmative Action Plans for government contractors: Federal government contractors are required to prepare affirmative action plans in compliance with Executive Order 11246 and associated regulations. The Office of Federal Contract Compliance Programs has long prohibited such plans from including race as any factor in hiring or promotion and has specifically stated that the limited use of race in college admissions was NOT lawful for federal contractors. Federal contractor obligations will continue unchanged. Future presidential administrations, however, might change those requirements.
• Voluntary affirmative action plans for private employers: Very rarely, private employers may have an affirmative action plan that explicitly includes race-conscious hiring or promotion policies. The Supreme Court has said in the past that such plans may be lawful if they follow three criteria: (1) There must be a “manifest imbalance” in the relevant workforce; (2) the plan must be temporary, seeking to eradicate traditional patterns of segregation; and (3) the plan may not “unnecessarily trammel” the rights of non-beneficiaries. Johnson v. Transportation Agency, 480 U.S. 616 (1987). Such plans are exceedingly rare in the private sector in 2023, but to the extent any still exist, the SFFA reasoning would almost certainly invalidate them.
• Individual lawsuits: Employers are likely to face a wave of scrutiny over individual hiring and promotion decisions, with formal and informal statements concerning diversity commitments likely to be used as evidence that race (or sex, or any other protected characteristic) was used by the employer in making a decision and that such use was illegal. Employers that make strong public commitments to increasing diversity may need to also emphasize to people who are making hiring and promotion decisions that race (or other protected characteristics) may not be taken into account in those decisions.
• Boards of directors: Members of an organization’s board are typically not employees, and therefore the employment discrimination rules generally would not apply to those positions. Thus, corporations may have more leeway in seeking racial diversity among their board members.
• Mentor programs and affinity groups: To the extent that an organization offers to employees opportunities that are limited to individuals of a certain race or sex and exclude others, such programs are likely unlawful. However, properly crafted programs that do not exclude employees on the basis of race, sex, and other protected characteristics will almost certainly remain lawful.

Employers seeking a more diverse workplace have always needed to pay close attention to antidiscrimination laws. Nothing in the SFFA ruling imposes new or different legal obligations on employers. The increased focus on the limits on the tools available to organizations for attaining and sustaining a more diverse workplace, however, means that employers should be very deliberate about such programs and can expect legal challenges.

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