On the Basis of Race—Affirmative Action in Business

Jul 12, 2023
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By: Hon. Ruth Bogatyrow Kraft and James M. Black II, Esq. 

This week, the United States Supreme Court, in Students for Fair Admissions, Inc. v. the University of North Carolina and  Students for Fair Admissions, Inc. v. the President and Fellows of Harvard College, has banned race-based admissions in higher education.  This issue was whether these universities conducted proportional representation in admissions under the guise of diversity. 

Sixty major American corporations, including Apple, GE and Starbucks filed an amicus brief with the Court in support of the universities to the effect that racial and ethnic diversity enhance business performance and produce diverse business leaders to achieve business goals and strengthen relationships with their constituencies.

Legal Background

Since 1978, the Supreme Court has prohibited the use of quotas in higher education admissions in the precedential case of Regents of the University of California v. Bakke.  However, the Court permitted the use of race as one of a number of factors in admissions toward the goal of ensuring diversity in education, not to correct for a legacy of systemic racism.   Historically, in a series of cases,  the Court recognized and permitted the use of diversity in admissions so long as it was narrowly tailored and, effectively, a temporizing maneuver, performed in the belief that it would not be needed 25 years later. 

The Due Process and Equal Protection Clauses of the Constitution prohibit federal and state governments from discriminating on the basis of race except in furtherance of a compelling government interest and via the least restrictive means available.

Immediately following Bakke, minority student enrollment declined;  this was exacerbated in California following the passage of Proposition 209 in 1996, reducing the number of black students at the highest rated of the University of California’s campuses by half during the ensuing 20 years, raising concern in terms of long-range consequences for them in terms of business and professional advancement. 

Diversity, Equity, and Inclusion (DEI) in the Workplace

Notably, the Harvard and UNC rulings do not facially apply to the workplace. The Harvard case resounds under Title VI of the Civil Rights Act, which prohibits discrimination programs receiving federal funding. Employers are governed by Title VII of the Act.

Many corporations instituted diversity, equity and inclusion programs DEI and used representational quotas to achieve targets.  This has already engendered two genres of litigation: one type brought by employees or investors alleges that companies engaged in misleading conduct with respect to articulated goals and practices.   The second group of litigations alleged outright discrimination on the basis of race.

To the extent that the court has banned representational diversity, many organizations which have implemented DEI goals and programs may need to review those or even dismantle them lest they be in violation of law. Title XII of the Civil Rights Act does not permit companies to consider race in hiring decisions, even in pursuit of workplace diversity.

Business Impact

From a business perspective, we may first see an impact on companies engaged in federal contracting and which could render their DEI efforts in violation of law. It is important for businesses to engage in consideration of their workplace cultures and re-visit their programs to insure compliance with a transforming legal environment. 

Companies should undertake critical review of their policies implicating DEI to ensure that they are not making hiring, promotion or wage decisions simply to meet diversity goals.  However, they may continue programs to encourage employee retention as well as  to encourage inclusive workplace culture. Additionally, there would still be concerns as to the reputational consequences of ending any existing programs.

If you need Employment Corporate or Compliance advice, we urge you to reach out to Falcon Rappaport & Berkman at (212) 203-3255 or contact the authors above. Our team is available to provide advice and support tailored to your needs.

DISCLAIMER: This summary is not legal advice and does not create any attorney-client relationship. This summary does not provide a definitive legal opinion for any factual situation. Before the firm can provide legal advice or opinion to any person or entity, the specific facts at issue must be reviewed by the firm. Before an attorney-client relationship is formed, the firm must have a signed engagement letter with a client setting forth the Firm’s scope and terms of representation. The information contained herein is based upon the law at the time of publication.

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