Thursday, July 25, 2024

Companies Expect New Challenges to Diversity Policies After Court Ruling

They also say the ruling, which prohibits race-conscious college admissions, will lead to challenges to internal diversity, equity and inclusion initiatives, many of which were put in place or augmented over the past few years.

Many large employers have said that affirmative action assists businesses by helping them serve a diverse universe of customers and clients. They have cited research showing that diverse teams are more creative and make better decisions than homogeneous ones.

Opponents of affirmative action and diversity initiatives in the workplace say such policies are ineffective, divisive or based on illegitimate factors.

Many companies said they plan to continue diversity initiatives after the Supreme Court’s ruling. The decision, though, will require employers to articulate why programs meant to increase representation matter to a company’s performance, executives say.

“It doesn’t change our focus,” said Iesha Berry, chief diversity and engagement officer and head of people experience at DocuSign. The technology company plans to reiterate that diversity is “not a stand-alone, and it’s not something that is, unfortunately, seen as the flavor of the day, but critically important to the business and the business success,” Berry said.

In a joint amicus brief filed to the court on behalf of large companies such as Procter & Gamble, Facebook parent Meta Platforms, Starbucks and dozens of others, employers argued that companies relied on universities to help them recruit from a broad pool of prospective candidates. Students trained in diverse environments also gain the skills needed to compete better in the global economy, the companies said in the brief.

“For marketing and other commercial reasons, many corporations need to pay attention to diversity,” said Roger King, senior labor and employment counsel for the HR Policy Association, a business group that filed an amicus brief supporting affirmative action. “The bottom line will dictate diversity in many instances.”

About 60% of workers believe workforces should reflect the diversity of the communities in which they operate, according to a new survey of U.S. employees’ views about discrimination and equity. At the same time, around 20% say they are opposed to workplace programs designed to ensure that people of color are treated equally when it comes to job opportunities, according to the survey, which was conducted by the Heldrich Center for Workforce Development at Rutgers University.

Federal law prohibits organizations from considering race—and many other characteristics, such as sex, national origin and religion—as a factor in employment decisions except in rare circumstances. In recent years, though, particularly after the murder of George Floyd in police custody, companies stepped up efforts to increase diversity in their workforces. Many companies appointed chief diversity officers for the first time, or published specific goals for the representation of women or minorities.

“Employers have always been walking this tightrope of having targets and goals and not quotas,” said Ian Carleton Schaefer, a partner in the labor and employment practice at the law firm Sheppard, Mullin, Richter & Hampton in New York. “This decision just snapped the tightrope.”

The ripple effects of the Supreme Court’s decision on companies could be extensive and felt for years to come, executives, employment lawyers and corporate advisers say. Rules for federal contractors, which require submission of a workforce analysis based on race, gender and other characteristics, could get a closer look, they say.

Some employers said they expect existing initiatives to be questioned more frequently by employees, while others predict such efforts could face legal challenges if the existence of race- or gender-based goals is seen by some as discrimination.

“Is just having a DEI goal on its face de facto saying you’re going to provide preferential treatment to a demographic? I don’t think that’s the case,” though some might attempt to interpret it that way in discrimination or harassment claims, said Sheila Willis, co-chair of the affirmative action and federal contract compliance practice group at Fisher & Phillips.

Affinity groups, meant to bring together groups such as women, Black or Latino employees, could draw fresh scrutiny, lawyers say, while chief diversity officers might encounter questions or skepticism about what they are trying to achieve inside companies.

“The concern here is that all of a sudden these efforts become a target,” said Cat Ward, who has been discussing the two affirmative-action cases, which involved admissions policies at Harvard University and the University of North Carolina, with companies in her role as a vice president at the nonprofit Jobs for the Future.

Victoria Lipnic, a former commissioner of the Equal Employment Opportunity Commission, said companies and workers should be wary of making a direct link between the Supreme Court’s education ruling and companies’ diversity practices.

“The workforce is a much bigger pool that people are swimming in, and it’s filled with so much more opportunity,” said Lipnic, who served as an assistant secretary of labor in George W. Bush’s administration, and is now a partner at the employment consulting firm Resolution Economics. “Opportunities in the workplace for everyone is not a zero-sum game,” she said, referring to language in Chief Justice John Roberts’s majority opinion.

Recruiting a broad pool of new graduates from top institutions could be harder for big companies in the wake of Thursday’s decision, executives and lawyers say. In states such as California that have already banned race-conscious college admissions in the state’s higher education system, alternative efforts to boost the numbers of Black and Hispanic students on campus to reflect the state’s demographics have consistently fallen short of goals, data show.

“The pipeline needs continual and expanded attention,” said King, from the HR Policy Association. “We haven’t made enough progress.”

Pedro Guerrero, chief executive of the Chicago-based media company Guerrero, said he sees himself as a product of affirmative action. He grew up in Hayward, Calif., near San Francisco, and won a scholarship to attend a boarding school in Rhode Island before going on to graduate from Bowdoin College in Maine.

Affirmative action policies, said Guerrero, 44, allowed him and others to step into an environment that was far different from his upbringing.

“It opened my world,” Guerrero said. “I went from the West Coast to the East Coast; I went from a local Mexican-American community to the halls of an elite boarding school.”

Without those opportunities, Guerrero said he still could envision himself being successful, but his trajectory likely would have changed. “What affirmative action afforded me was an expansion of my line of sight on what is possible,” he said.

Write to Lauren Weber at [email protected] and Chip Cutter at [email protected]

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