There is a wide variety of approaches to promoting DEI. These may focus on the marketplace, the workforce, or the workplace. For example, companies are attempting to address marketplace inequity through community efforts, such as supporting non-profit organizations, adopting supplier diversity programs, or taking public stands on political or other issues that disproportionately impact minority groups. Regarding their workforces, businesses have worked to increase the representation of minorities among their applicant pools, such as by creating pipeline programs or supporting students of color through targeted scholarship programs. To create a more inclusive workplace for historically underrepresented groups, businesses have embraced Employee Resource Groups for diverse employees, instituted unconscious bias and other trainings, and presented programming intended to raise cultural awareness. Some businesses have even publicly committed to concrete goals, such as increasing the representation of different minority groups in their leadership within a certain timeframe.
Many businesses see DEI not only as moral and ethical duty, but also as a business imperative. Mike Jackson is the Assistant General Counsel/Senior Director & Diversity & Inclusion Lead at Microsoft. Of the importance of promoting DEI, he writes, “We must invest in diversity, equity, and inclusion (DEI) because the horizon continues to adjust before us, and if history is instructive (and I think it is), we have to rise up to meet it. The future will belong to those organizations who take this opportunity seriously and seize it to become better, stronger, and more inclusive, which is exactly what we’re committed to doing within Corporate, External, Legal Affairs (CELA) at Microsoft.”
Just as there is a range of approaches to addressing DEI issues, there is a range of associated risks. And, as with many issues we address as attorneys, there is no bright line separating what is permissible and what is not. For example, the legal landscape of DEI has changed significantly for federal government employers. In September 2020, the Trump administration issued an Executive Order that barred federal agencies and their contractors from conducting diversity training. It specifically identified training that included “divisive concepts,” such as the idea that the United States is inherently sexist or racist. This order was a significant threat to DEI efforts and left many organizations at a loss. Then, a few months later, President Biden rescinded the Trump order on his first day in office and issued his own Executive Order broadly proclaiming that the Federal Government “should pursue a comprehensive approach to advancing equity for all, including people of color and others who have been historically underserved, marginalized, and adversely affected by persistent poverty and inequality.” Biden’s order directed each government agency to “assess whether, and to what extent, its programs and policies perpetuate systemic barriers to opportunities and benefits for people of color and other underserved groups.”
On June 25, 2021, the Biden administration went further with another order, this time charging all federal agencies with “assessing the current state of diversity, equity, inclusion, and accessibility within their workforces, and developing strategic plans to eliminate any barriers to success faced by underserved employees.” The order required all federal agencies to review within 100 days “whether employees who are members of underserved communities face barriers to employment, promotion, or professional development within their workforce,” to seek opportunities to establish senior leaders to promote diversity within their workforces, and to expand diversity, equity, inclusion, and accessibility training throughout the federal workforce, among other things. While these orders currently apply only to federal agencies, the broad popularity of efforts to advance DEI mean it is possible they could be expanded to federal contractors.
Despite all this encouragement from the executive branch, however, businesses’ ability to promote DEI directly and aggressively falls into a legal grey area. Although government contractors are required in some situations to have affirmative action plans, private employers by and large are not permitted to use affirmative action to hire more minority employees solely to increase the diversity of their workforce, absent an approved voluntary affirmative action program. See, e.g., Taxman v. Bd. Of Educ., 91 F.3d 1547, 1550 (3d. Cir. 1996) (“Given the clear antidiscrimination mandate of Title VII, a non-remedial affirmative action plan, even one with a laudable purpose, cannot pass muster.”). Programs intended to increase diversity in hiring or initiatives to support the promotion of internal minority candidates therefore run the risk of violating Title VII and other state and local anti-discrimination laws.
The legal risk of claims from majority employees extends beyond direct discrimination allegations and into allegations that a company’s policies designed to promote diversity have negatively impacted majority group employees. See, e.g., Wilberg v. Google (white employee accused the company of favoring women and minorities in its internal hiring policies); Damore v. Google (white engineers alleged the company discriminated against white conservative men, including promoting practices of offering female and minority job applicants extra interviews and streamlining their hiring processes); see also Phillips v. Starbucks (white manager terminated in the aftermath of major public relations scandal resulting from arrest of Black customers in Philadelphia store claimed company improperly punished white employees who were not involved with the incident in order to repair its reputation).
There also is precedent for agency investigation of DEI programs. In 2020, the U.S. Department of Labor investigated Wells Fargo and Microsoft for their diversity initiatives, which they warned could reflect impermissible racial preference. The change in administration led to both investigations being dropped, and other recent lawsuits are still working their way through the courts or arbitration; however, it remains to be seen what the consequences may be to employers whose majority group employees feel their companies’ DEI efforts have left them behind.
Although there are legal risks associated with advancing DEI, legal advisors should be mindful that the more significant risk to today’s employers continues to be the risk of traditional discrimination claims. The EEOC reported that it received 67,448 charges of workplace discrimination in 2020 and that it secured $439.2 million for victims of discrimination or retaliation in the private sector and state and local government workplaces through voluntary resolutions and litigation. Regarding the EEOC’s work in 2020, EEOC Chair Charlotte Burrows observed that the pandemic had a disparate impact on already-marginalized minority groups. She remarked, “COVID-19 and its economic fallout is disproportionately impacting people of color, women, older workers, individuals with disabilities, and other vulnerable workers, and that impact has serious implications in the workplace.” Employers who become too focused on the risk of aggressive measures to advance DEI may in fact increase potential liability by failing to act to address barriers to the advancement of minorities within their organizations. Moreover, while the pandemic’s financial and operational impact may make it tempting to sideline DEI initiatives, COVID-19’s disparate impact on minority groups means this work is more critical now than ever.
As lawyers, we tend to be conservative and to warn clients against bold moves. In the area of DEI, there is risk in taking action. As with any other business decision, however, the business must weigh the importance of the interest at stake versus the risk and make an informed choice. With businesses increasingly focused on advancing DEI as a critical and core goal, and with the legal and political tides turning in favor of this work (at least for now), counsel should not discourage innovative and bold efforts but instead should partner with clients to help them achieve their DEI goals.
Vicky Slade is Counsel in the Employment Services Group of Davis Wright Tremaine, based in Seattle, WA. She partners with clients to further DEI initiatives, resolve personnel issues, and defend employment-related claims. She can be reached at VickySlade@dwt.com.
Chrys A. Martin has been a member of DRI for almost 40 years and has served in a number of leadership roles. She helped start the first DRI Diversity Seminar and is devoted to helping her clients address DEI legal issues. She can be reached at ChrysMartin@dwt.com.
Yusuf Zakir is the Chief Diversity, Equity, and Inclusion Officer for Davis Wright Tremaine. He can be reached at YusufZakir@dwt.com.