On June 29, 2023, the United States Supreme Court released the long-awaited decisions in the consolidated cases of Students for Fair Admissions v. President & Fellows of Harvard College and Students for Fair Admissions, Inc. v. University of North Carolina. In the decisions, the Supreme Court struck down the race-based admissions policies of both Harvard College (a private entity) and of the University of North Carolina (UNC) (a unit of state government). The Supreme Court’s majority stated it was reaffirming “the absolute equality of all citizens of the United States politically and civilly before their own laws.” Id. at 201. While these cases are primarily about college admissions practices, the implications of them will most likely effect employers and hiring practices moving forward. This case is a good reminder for employers that race-based employment decisions are prohibited.

Decisions

Students for Fair Admissions (SFFA) sued Harvard and UNC, two of the oldest institutions of higher learning in the United States, over their respective highly selective admissions processes. SFFA, a nonprofit organization that defends civils rights, alleged that Harvard’s and UNC’s respective race-based admissions programs violated Title VI of the Civil Rights Act of 1964 and the Equal Protection Clause of the 14th Amendment. Harvard and UNC argued that their admissions programs were consistent with prior Supreme Court precedent, which provided that universities could lawfully consider an applicant’s race without violating Title VI or the U.S. Constitution as long as race was only one factor among many factors considered. While prior cases prevented the use of racial quotas, race conscious recruitment and admissions were permitted. However, in a 6-3 decision in the Harvard case, and a 6-2 decision in the UNC case (Justice Jackson took no part in that decision), reversed course. The majority of the current Supreme Court held that admissions policies using race or diversity as a factor violate the Equal Protection Clause of the 14th Amendment of the United States Constitution. 

The Court held:

  1. The non-profit had standing to file the lawsuits;
  2. Neither Harvard’s nor UNC’s asserted compelling interest for race-based admissions was sufficiently measurable to survive strict scrutiny for equal protection;
  3. Neither Harvard nor UNC articulated a meaningful connection between the means they employed and their diversity goals;
  4. By using race as a stereotype (albeit a positive one), the admissions program of each institute failed the strict scrutiny test; and
  5. Admissions programs of each institution failed the strict scrutiny test by lacking a logical end point.

This about-face wasn’t exactly a surprise given the current makeup of the Court, yet, this reversal in Supreme Court precedent has some wondering what’s next. 

EEOC Statement on the U.S. Supreme Court’s Decision

The Equal Employment Opportunity Commission (EEOC) did not wait long to broadcast what it thought about the impact of the Students for Fair Admissions decisions on employers. The same day the decisions were released, the Chair of the EEOC, Charlotte A. Burrow, issued a statement. While, the statement scolded the Court for turning away from decades of precedent that would hamper colleges and universities from achieving a diverse student body, it reminded employers that the decision did not address employer efforts “to foster diverse and inclusive workforces.” The EEOC stated its position that it remains lawful for employers to implement diversity, equity, inclusion, and accessibility programs” (DEI) at work.   

Attorneys General Letter to Employers

On the other hand, the Iowa Attorney General and twelve[1] other Attorneys General appear to disagree. In a warning letter dated July 13, 2023, the Attorneys General warned Fortune 100 companies about the unlawfulness of race-based policies.  Companies such as JPMorgan, Goldman Sachs, Airbnb, Apple, Cisco, Facebook, Google, Intel, Lyft, Microsoft, Netflix, PayPal, Snapchat, TikTok, Uber, Wells Fargo and John Deere were among those who received the letter. The letter warned the companies that if they violated the Supreme Court’s rulings in Students for Fair Admissions, they would be subject to legal action. The letter noted that the Supreme Court recognized that federal civil rights statutes prohibiting private entities from engaging in race discrimination apply as broadly as the Equal Protection Clause. The Court’s statement that the commitment to racial equality extended to “other areas of life,” was interpreted by these Attorneys General to include “employment and contracting policies.” 

The letter urges employers to “immediately cease any unlawful race-based quotas or preferences your company has adopted for its employment and contracting practices.”  It ends with a warning that failure to do so will result in employers being “held accountable—sooner rather than later—for your decision to continue treating people differently because of the color of their skin.” 

Law Firm Programs in the Crosshairs

Using the Students for Fair Admissions decisions as a springboard, the American Alliance for Equal Rights (“Alliance”) brought lawsuits against two law firms in August, and sent threatening letters to three other law firms in October, about their law student diversity fellowship programs. The firms sued were Morrison Foerster and Perkins Coie. Both lawsuits were dropped in October after the firms eliminated and replaced their fellowship programs making eligibility for them “non-race-based”.  Firms receiving letters include Winston & Strawn, Hunton Andrews & Kurth, and Adams and Reese. The Alliance wants to insure that “No student should be treated differently because of their race or ethnicity.”

For Iowa Employers, Race-Based Employment Decisions Have Already Been Prohibited

Private employers with 15 or more employees are governed by Title VII of the Civil Rights Act. Under Title VII, using a protected characteristic, such as race, to make employment decisions is illegal, even if considering race was intended to increase the diversity of the workforce. This is consistent with the Iowa Civil Rights Act, which applies to all employers in Iowa with four or more employees. For instance, in Davis v. City of Waterloo, the Iowa Supreme Court held that the City may not rely upon its affirmative action plan as justification for having made race a controlling consideration in a promotion decision. 551 N.W.2d 876 (1996). 

Impact on Affirmative Action Plans and DEI Programs

Since Executive Order 11246 was issued in 1965, federal government contractors and subcontractors have been required to take affirmative action to increase diversity in the workforce. Without further litigation, it is unlikely that the U.S. Supreme Court’s decision in Students for Fair Admissions impacts federal government contractors or subcontractors with affirmative action plan (AAP) obligations under EO 11246. That’s because EO 11246 does not require federal contractors or subcontractors to use race in their employment decisions. In fact, EO 11246, as amended, specifically prohibits federal contractors and subcontractors from discrimination in employment on the basis of race, color, religion, sex, sexual orientation, gender identity, or national origin. EO 11246 also imposes record-keeping requirements on federal contractors, which require federal contractors and subcontractors to analyze data related to women and minorities in their current workforce and compare it to the relevant labor pools. Based upon this data, federal contractors and subcontractors then set goals for recruitment. Because EO 11246 has not been challenged, and it is distinctly different from making a race-based employment decision, federal contractors should continue to comply with their AAP obligations under EO 11246. 

Employers not covered by EO 11246 have taken voluntary affirmative action efforts. And, in the last decade, many employers have implemented robust DEI programs with a similar, but expanded aim. 

Do employers need to scrap their affirmative action and DEI efforts in light of the Students for Fair Admissions decisions? Not so fast, don’t dump your programs just yet. 

How can you protect yourself moving forward?

Affirmative action and DEI programs have become more important than ever, in worker shortages and an increasingly diverse population. But, with the potential risk of litigation, now heightened by the implications of Students for Fair Admissions, employers would be well advised to refocus their efforts in the following ways:

  1. Hiring Policies and Practices – Evaluate selection policies and practices to make sure they do not create unlawful preferences based on protected characteristics. For example, do not have expressed or implied quotas. Hiring and other selection decisions should be based on business criteria and merit and not on a protected characteristic. Review the EEOC’s recent guidance on the use of artificial intelligence in hiring practices to make sure you are not using tools (i.e., tests or software) that inadvertently violate the law.  Assessing Adverse Impact in Software, Algorithms, and Artificial Intelligence Used in Employment Selection Procedures Under Title VII of the Civil Rights Act of 1964
     
  2. DEI Programs – Evaluate DEI Programs and other diversity efforts and address whether they might be vulnerable to attack for creating preferences.  Review policies, procedures, and promotional materials for any statements that could be considered unlawfully preferential. Stay on top of state legislation aimed at restricting DEI programs. Be careful, you do not want to be the employer whose own policy is used against them in court.
     
  3. Affirmative Action Plans – Evaluate Affirmative Action Plans, both mandatory & voluntary, for any statements that could be considered unlawful. Be sure that facially-neutral policies are not implemented in unlawful ways, and do not have an adverse impact on protected groups, albeit unintentional. 
     
  4. TrainingTraining is KEY. Having great policies is only half the battle. Implementing those policies properly is key to mitigating the risk of litigation. Proper implementation means managers are trained on the policies and programs of the organization, and how to interpret and apply them so that preferential treatment based on race (or any other protected basis) does not affect employment decisions. While hiring a diverse workforce is a priority, so is ensuring fair and lawful employment decisions, regardless of an individual’s protected characteristic.

[1] Alabama, Arkansas, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Montana, Nebraska, South Carolina, Tennessee, and West Virginia.