DEI Starts Over: How It Needs to Adapt to Survive the Battles of 2024
BY Andrea Sachs January 17, 2024When Elon Musk and other headstrong billionaires start using you as a punching bag, it might be a smart time to duck. In his latest tirade against diversity, equity, and inclusion (DEI), Musk attributed the door plug blowing off a Boeing 737 Max 9 jet earlier this month to the aviation industry’s efforts to diversify their workforces. “Do you want to fly in an airplane where they prioritized DEI hiring over your safety?,” he wrote on X, formerly Twitter. Citing no evidence, Musk’s claim echoed the conspiracy theory asserting that DEI led to last year’s collapse of Silicon Valley Bank, which proved to have no basis in fact. While corporate America proudly carried the banner of DEI in recent years, 2024 is shaping up as the year in which many companies will be lowering the profile of their efforts and changing the approach of their programs. Recognizing that the term DEI has become another cudgel in the culture wars, joining “wokeness” and ESG, corporate leaders are responding to a wave of legal and political challenges. Among them: The Supreme Court is considering a case that could inspire a raft of regulatory complaints against DEI programs, charging them with reverse discrimination; conservative billionaires are funding a wave of lawsuits against such programs; and red-state politicians are threatening to follow the example of Florida and Texas by passing new laws threatening to limit the scope of DEI. “They’re starting with letters, but I don’t think that they’re bluffs,” said Zamir Ben-Dan, a Temple University assistant professor of law. “It’s going to be a problem,” he told the AP. “It’s going to lead to a decline in racial diversity in the workforces.”Corporate America doesn’t want that to happen. In a survey late last year by the Conference Board, none of the 194 chief HR officers said they plan to scale back DEI initiatives, programs, and policies; 63% said they plan to attract a more diverse workforce. Employers say that an embrace of diversity and inclusion has become an important corporate value when it comes to recruiting the workers they need, especially younger ones who tend to favor diversity. As Fortune put it, “DEI Is Dead. Long Live DEI.” Yet companies are looking for ways to step away from the term “DEI” as well as aspects of programs that could make them legally vulnerable. “Companies are really starting to look at other ways to do the work without saying that they’re doing the work,” Cinnamon Clark, cofounder of Goodwork Sustainability, a DEI consulting firm, told Axios. Among the pressures and the responses that will characterize the evolution of DEI this year:The Supreme Court’s Other Shoe to DropOnly a day after releasing its historic decision last year to outlaw affirmative action in higher education, the U.S. Supreme Court agreed to hear a case that could have a parallel impact on DEI programs among corporate and government employers. In Muldrow v. City of St. Louis, a police sergeant alleges that she was transferred out of her prestigious job because of her gender, thus violating Title VII of the Civil Rights Act, which forbids discrimination according to race, gender, and other protected characteristics. Lower courts have upheld the city’s argument that Muldrow failed to demonstrate that the transfer amounted to an “adverse employment action” that caused material harm.The Biden Administration has supported Muldrow’s case because it could enable more people to file discrimination cases with the Equal Employment Opportunity Commission [EEOC], yet a broad interpretation of Title VII by the Supreme Court, relaxing the need to prove harm, could also “open the door to a flood of reverse discrimination claims against certain workplace diversity, equity and inclusion programs–such as mentoring and training programs for underrepresented groups–that ordinarily would not survive in court,” the Washington Post reported. “Such complaints have become more common since the Supreme Court overturned race-conscious college admissions in June.”Well-Funded Legal ChallengesEdward Blum (pronounced “bloom”), a white, 73-year-old former stockbroker, has made it his life’s work for more than three decades to stamp out affirmative action. He does not have a law degree, but he spends his day planning lawsuits to challenge affirmative action in the Supreme Court, helping to persuade the court to hear eight cases. Most recently, in June, he was in large part responsible for bringing the case that led to the court’s decision to outlaw affirmative action in higher education (Students for Fair Admissions v. Harvard College).Since then, he has been suing elite law firms over their DEI language. Many firms have yielded and made changes to avoid litigation. While Blum told Bloomberg Law that he’s done suing law firms–“There’s nothing left for us to do in that space,” he said–legal experts are watching where he’ll turn next. “Well, I think employment is one area that I think will garner greater attention, not just from me, but from other organizations, other legal policy foundations,” he told the New York Times. “I also think that some of the things that we associate with higher education–internships, scholarships, certain research grants–those need to be revisited if they have been race-exclusive.” One group that Blum founded, the American Alliance for Equal Rights (AAER), filed a lawsuit last August against Fearless Fund, “an Atlanta-based venture capital firm run by two Black women, alleging that the fund is engaging in racial discrimination by running a grant program exclusively for early-stage companies owned by Black women,” the Washington Post reported.While Blum has often been portrayed as a one-man-band, challenging major institutions on his own, a study by the Democratic Policy & Communications Committee, produced by seven prominent Democratic senators, called Blum’s various organizations “fronts for corporate mega-donors seeking to change the law through the courts.” In particular, the report cited Students for Fair Admissions as “funded primarily through the Koch [Brothers] operation’s shadowy dark-money operation DonorsTrust, known as the ‘dark-money ATM of the conservative movement.’” Blum has a fellow traveler in Stephen Miller, the arch-conservative former Trump Administration advisor best known for his hard line on immigration issues. Miller has been zealously targeting corporate DEI programs through his well-funded group America First Legal. Since 2022, his group has filed 25 complaints against companies with the EEOC. Miller’s organization has notched few legal victories, but that may not be the point. More than 85% of the AFL’s budget went to advertising, while only 4% was spent on legal services, the Daily Beast reported. Even so, “at least six major U.S. companies including JPMorgan Chase have modified policies meant to boost racial and ethnic representation that conservative groups threatened to sue over,” a Reuters review of corporate statements found.How Corporate Employers Can RespondWhile corporate leaders in the Conference Board survey said they don’t intend to pull back on DEI, the combination of corporate austerity and high-profile backlash is surely depleting the resources available to DEI. In a report last October, Forrester, a research and advisory company, found “the percentage of companies that funded a DEI function with an endorsed strategy and personnel dropped from 33% in 2022 to 27% in 2023; we predict that this number will fall to 20% by the end of 2024 in the wake of cuts that disproportionately affect DEI teams. As a result, too many companies will default to ‘check the box’ efforts such as heritage days, leading to performative–rather than substantive–DEI programs.”Organizations that are still motivated to maintain their commitment the principles of DEI will need to adapt their approach. “As the law inevitably evolves in a more conservative direction, the new legal standards will be absorbed into the field of DEI, transforming it as an enterprise. While this shift will occur organically, smart organizations can avoid a lot of pain and expense by thinking about how to adapt in a more intentional way,” reports Harvard Business Review. In their HBR story, Kenji Yoshino and David Glasgow, lawyers at New York University and authors of Say the Right Thing: How to Talk About Identity, Diversity, and Justice, identify three aspects that can make a DEI program legally risky: it confers a preference for some individuals over others, the preference is given to member of a legally protected group under Title VII, and the preference relates to a palpable benefit, like a job, promotion, or L&D opportunities.Given those criteria, write Yoshino and Glasgow, the specifically risky programs include hiring quotas, tiebreaker decision-making for hiring and promotions based on identity; group-specific internships and fellowships; and tying manager compensation to diversity goals. While all of those measures may be designed to compensate for systemic biases, “it is clear that the conservative supermajority of the Supreme Court does not agree with such a worldview.”Reshaping Programs as Well as the LanguageTo avoid charges of reverse discrimination, employers can make several changes to existing plans. Among other things, they can make DEI initiative more identity-neutral yet still designed to remove bias, like making employee-resource groups and other affinity groups open to all, rather than restricted based on identity. “These approaches do not ‘lift’ certain groups above others, but ‘level’ the playing field for everybody,” write Yoshino and Glasgow.The language, too, is shifting, with more focus on the “inclusion” aspect of DEI, as well as “belonging” and “well-being.” Reported the Post, “While some demographic-specific efforts will probably remain, overall, corporate DEI is likely to shift and focus more on ‘universal’ efforts to make recruiting, hiring and retention more successful for everyone.” Even as they adjust to the risk of being sued for reverse discrimination, employers have to make sure they don’t over-correct in the opposite direction. “Getting sued for a regular discrimination claim from someone who belongs to an underrepresented identity in the workplace is still more common than a reverse discrimination claim from a white person,” reports Thomson Reuters. Companies shouldn’t abandon DEI initiatives that help to make those from underrepresented backgrounds feel more welcome or offer more opportunities to succeed, NYU’s Glasgow told Reuters, “because doing so could create an environment that is more hostile and unwelcoming to people who belong to these marginalized groups.” For example, he said, eliminating mentorship or sponsorship opportunities that were helping more women advance through an organization might lead to a more one-dimensional leadership team–a prospective setback to decades of progress.Andrea Sachs, a graduate of the University of Michigan Law School, began her career as a lawyer in Washington, D.C., at the National Labor Relations Board, then spent nearly 30 years in New York City as a reporter at Time magazine. (Featured photo by Violeta Stoimenova/iStock by Getty Images)
The Supreme Court and the Diversity Backlash: How Employers Can Respond Now
BY Andrea Sachs July 05, 2023The backlash against diversity, equity, and inclusion (DEI) in corporate America is now in full swing. Conservative politicians have turned DEI programs into a campaign issue under the banner of anti-wokeness, with an increasing number of red-state legislatures seeking to ban DEI efforts altogether. Consumer boycotts have shaken name brands. Many corporate DEI budgets have been cut in the name of austerity, while surveys of employee sentiment show a rising tide of “diversity fatigue.” Many DEI leaders, who were given a mandate to help corporations “do better” in the realm of racial justice after the murder of George Floyd three years ago, have grown dispirited in their roles. In this environment, the U.S. Supreme Court’s 6-3 decision on June 27 striking down affirmative action as unconstitutional in higher education came as another blow to advocates of DEI efforts to make the U.S. a more equitable country. With the addition of three conservative justices by President Trump, the court’s action was widely anticipated by the academic community. But it was not only universities that were gearing up for the ruling. The business community was also expecting such a ruling; an impassioned friend-of-the court brief was filed by dozens of major technology, finance, and health care companies who support DEI efforts. Ranging from American Express to Walgreens, they pleaded with the high court not to come to the result that the majority ultimately did, because the named companies rely on “racially and ethnic diverse student bodies” to find their future workers.It is certain that there will be major workplace ramifications from the affirmative-action decision, even though that case applied to higher education rather than in the business world. (College admissions are governed by Title VI of the Civil Rights Act of 1964, whereas private employment is covered by Title VII.) Immediate questions arose in many workplaces about the consequences of the court’s ruling. Will DEI programs now be weakened or banned? Can race still be considered in employment decisions? And will an activist Supreme Court look for a suitable case in which to extend its controversial educational dictates to the workplace?Though the answers to those questions are not entirely clear at this point, legal and HR experts advise advocates of DEI to be proactive. Here are five essential steps that corporate leaders can take in this new, post-affirmative action world:Remind Stakeholders Why DEI Is Beneficial to EmployersThe corporate rationale for DEI has been twofold: not only is it morally right, but it brings benefits to corporate culture and the bottom line. “Study after study demonstrates that, across organizations, diversity enhances critical thinking, creativity and collaboration, as well as productivity, profitability and performance,” wrote Ford Foundation CEO Darren Walker last week in the New York Times. “It is a national tragedy that diversity is now a contested issue rather than a common interest.” Make Sure Your DEI Programs Aren’t in Conflict With Current LawsIt’s definitely time to review your current DEI framework in consultation with your legal team and employment-law experts. “Be sure your policies and programs don’t unintentionally run afoul of anti-discrimination laws and recognize that quotas and preferences–as well as perceived unfairness–can create legal problems,” advises the Fisher Phillips law firm. “You should also review your employee handbook and other written policies to ensure they are up to date, aligned with your goals, and legally sound.” New York University legal experts Kenji Yoshino and David Glasgow, authors of a new book on how to talk about DEI in the workplace, offer easy-to-follow instructions for a “self-audit” of current DEI initiatives to avoid unwanted legal exposure. They suggest using codes to sort programs as red (high risk), yellow (medium risk), and green (low risk). But they discourage making knee-jerk semantic changes to terms like DEI or diversity: “We think it is unnecessary to revamp the language in this field. Although the court held that the universities’ interests in achieving a diverse student body did not justify a race-conscious admissions policy, companies are still allowed to strive for a diverse workforce.” Take Prudent Steps to Avoid the Possibility of a Reverse Discrimination LawsuitThe number of corporate DEI programs surged after the 2020 murder of George Floyd and the social-justice movement that followed. The result has been a fierce legal backlash, with conservative politicians, right-wing activists, and red-state legislators working strenuously to challenge them. In the wake of the Supreme Court’s new ruling, this trend is expected to intensify. Andrew Turnbull, a partner at the Morrison Foerster law firm who represents companies in labor and employment litigation, told Axios, “When people hear affirmative action has been overruled, they may say, ‘Well, why is my company still doing diversity programs?” The decision is also expected to embolden conservative activists. Will Hild, the executive director of Consumers’ Research, a right-wing advocacy group, told the Washington Post that the ruling “will put the wind in the sails of groups like ours, who want to get the woke, racially based hiring and promotion schemes out of corporate America.” America First Legal, a group headed by former Trump adviser Stephen Miller, has recently filed complaints with the Equal Employment Opportunity Commission (EEOC), asking it to investigate corporate diversity and hiring practices at major companies such as McDonald’s and Unilever. And in June, a federal jury in New Jersey ordered Starbucks to pay a white former manager $25.6 million, finding that she had been fired became of reverse discrimination.Although reverse-discrimination cases are not a new phenomenon, the potential risk of these claims may be increased by the Court’s shift in position, as well as the political ferment. Employers now should educate themselves about state legislation targeted at restricting DEI initiatives, as in Florida and Texas and brace themselves for possible challenges. This is an area that may well benefit from a lawyer’s trained eye. Alvin B. Tillery, Jr., director of the Center for Study of Diversity and Democracy, cautions against overreacting. Tillery told the New York Times, “I do worry about corporate counsels who see their main job as keeping organizations from getting sued—I do worry about hyper-compliance.”Explore New Ways of Growing Your Job Candidate PoolCorporate America has become dependent on higher education to provide a pool of job-ready, diverse candidates. That flow is certain to be stanched in the future by the court’s affirmative-action decision. “I don’t believe that there’s a dispute that university demographics will become more homogenous and less diverse,” said Janine Yancey, founder and CEO of Emtrain, an inclusion-and-belonging consultancy. This will lead to “a smaller talent pipeline,” she told From Day One. It has measurably occurred already in the nine states that have banned race-conscious affirmative action policies, generally through ballot initiatives.This has been particularly true in Michigan and California. After California voters enacted a ban on affirmative action in 1996, the number of Black students at the elite University of California campuses in Berkeley and Los Angeles plummeted. Likewise, since Michigan voters ended affirmative action in 2006, the number of Black students at the University of Michigan has dropped dramatically.Employers will need to cast a wider net now to secure a diverse workforce. Rhonda V. Sharpe, the founder and president of a think tank on equity, the Women’s Institute for Science, Equity, and Race, sees a silver lining to such a result. Said Sharpe, “I will not shed a tear for affirmative action but will rejoice in the possibilities for Historically Black Colleges … and Hispanic Serving Institutions.” In fact, the impact of affirmative action was mostly in elite universities. “The majority of Black and Hispanic students attend universities that accept more than three-quarters of their applicants,” wrote academics Richard Arum and Mitchell L. Stevens in the New York Times. “The current opportunity to bring racial equity to American higher education lies in a collective re-commitment to the quality and success of more accessible institutions.” Many DEI experts recommend that corporate HR leaders look even further upstream, investing in programs to develop underserved youth long before they make a decision about higher education. Put More Stress on Employee RetentionWith a less diverse candidate pool, experts see more problems retaining a racially or ethnically representative workforce. “No one wants to work in an environment where they are ‘the only,’” Janice Gassam Asure, the founder of BWG Business Solutions, a consultancy designed to help organizations create more inclusive environments, wrote in Forbes. She warns that the affirmative-action decision “will not only make it more challenging to retain the employees you already have, but it will likely be more difficult to attract new talent from underrepresented communities.”It is important to pay close attention to employee sentiment in the immediate aftermath of the affirmative action decision. Y-Vonne Hutchinson, the CEO of ReadySet, a DEI consulting and strategy firm, asserts that some employees may be unsettled by this decision: “Your employees, particularly those from historically marginalized backgrounds, may be experiencing anxiety, stress, sadness, fear, and disappointment right now. They may be struggling to process what this all means–for them, and their families.” Hutchinson urges companies to both “provide space” for those employees and provide support such as employment resource groups (ERGs) or extra mental health resources.Stalwarts like Iesha Berry, chief diversity and engagement officer and head of people experience at DocuSign, have no intention of giving in to the current political pressure against DEI. “It doesn’t change our focus,” said told the Wall Street Journal. Diversity is “not a stand-alone, and it’s not something that is the flavor of the day, but critically important to the business and the business success.” Andrea Sachs, a graduate of the University of Michigan Law School, began her career as a lawyer in Washington, D.C., at the National Labor Relations Board, then spent nearly 30 years in New York City as a reporter at Time magazine. She is currently the editor of The Insider, a weekly digital publication.