SCOTUS Decision on Affirmative Action: What SMBs Need to Know

June 29, 2023
SCOTUS Decision on Affirmative Action: What SMBs Need to Know

News broke recently about the Supreme Court’s decision to strike down affirmative action programs at Harvard and the University of North Carolina, which may have some entrepreneurs wondering how that may relate to running a business. The cases were decided under Title VI of the Civil Rights Act of 1964, prohibiting discrimination based on race, color or national origin in programs or activities that receive federal financial assistance. It applies to most institutions of higher education because all but a small percent receives federal money in the form of research grants and federal student aid. In the just-decided Harvard and UNC cases, the Court held that these universities could not give an applicant for admission preferential treatment based on race, even if race was just one factor considered. 

In contrast, private employers are governed by Title VII of the Civil Rights Act. Like Title VI, Title VII prohibits discrimination based on race, color, religion, sex and national origin. However, Title VII applies specifically to employment – and in the affirmative action rulings, the Supreme Court did not decide anything about Title VII or employment. 

Still, some employers may justifiably be concerned about whether the Court might do something similar in the future about Title VII and employment practices. And they may wonder about efforts to increase diversity in their workforce and whether Diversity, Equity and Inclusion (DE&I) initiatives and programs are still allowed after the Supreme Court’s rulings.

The answer is yes, efforts to increase workforce diversity including DE&I programs are still allowed as long as those efforts comply with Title VII – that is, without using a protected status as a factor in employment decisions.  And that has always been the law under Title VII.

However, if opponents of DE&I were to try to get a law passed to prohibit DE&I efforts, that would present a very different situation. There are already instances of state laws currently in place that are intended to prohibit various types of DE&I-related efforts. For example, Florida enacted the Stop WOKE Act in 2022 which prohibited employers from requiring Florida-based workers to attend certain types of DE&I training, such as training on critical race theory. In that case, however, a court declared the part of the law that applied to workplaces unconstitutional.

It’s good practice to stay on top of current legislation in the places where your organization employs its talent. Just as important, make sure your DE&I efforts are conceived and carried out properly. The best laid plans can lead to major problems if they are not well-founded or not executed or communicated correctly inside your organization. For example, any programs or practices regarding hiring, firing, promotions, training, or compensation that result in preferences to employees based on their protected characteristics, or that result in quotas or set asides, are likely unlawful under Title VII and will expose employers to risk of legal action.

Here are a few things to consider: 

First, make sure your HR teams – including talent acquisition and DE&I program managers – understand what DE&I can and cannot do and are able to identify unlawful employment practices under Title VII.

Second, ensure any communications, verbal and written, regarding your DE&I efforts clearly convey that your organization understands that DE&I is not about preferences, quotas, or set asides for individuals in protected or historically underrepresented groups.

Lastly, be certain managers understand that hiring and promotion decisions are to be based on skills, qualifications, experience, and merit, without regard to an employee or applicant’s race, religion, sex, national origin or color.

Bottom line: all decisions involving terms and conditions of employment must be based on business-related factors and merit. Also keep in mind any existing or proposed laws that may impact your DE&I programs or practices. If you do that, your DE&I efforts should be good to go.

© 2023 TriNet Group, Inc. All rights reserved. This communication is for informational purposes only, is not legal, tax or accounting advice, and is not an offer to sell, buy or procure insurance. TriNet is the single-employer sponsor of all its benefit plans, which does not include voluntary benefits that are not ERISA-covered group health insurance plans and enrollment is voluntary. Official plan documents always control and TriNet reserves the right to amend the benefit plans or change the offerings and deadlines. 

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