Corporate America’s understands diversity initiatives CANNOT CONTINUE the way they have and are being adjusted in response to LAWSUITS and INTENSE scrutiny.

Businesses are trying to fashion programs that foster inclusion without running afoul of the law and potentially bringing costly consequences,
according to lawyers and corporate advisers working on such policies. That means some are abandoning the most legally risky and potentially
discriminatory practices, such as numerical targets that can be seen as “quotas” or the use of unconscious bias training that casts blame.
A less-divisive approach is in at many organizations.

After George Floyd’s murder in 2020, U.S. businesses from sneaker company Nike to Wells Fargo bank rolled out diversity, equity and inclusion initiatives as the country took a hard look at racial inequality. But legal pressure following last year’s Supreme Court decision to strike down affirmative action in college admissions has led to, if not a retreat from DEI programs, a rethink in how to best approach them.

“Frankly, employers got really comfortable doing some things that were questionable,” said Johnny Taylor Jr., an employment lawyer who heads the Society for Human Resource Management, a trade group for human resource executives. “I just cringed at some of the pronouncements that were being made.”

“Some well-intentioned CEOs and board leaders made major pronouncements that [for example] one in three of our going-forward hires are going to be people of color or women. And you just can’t say that,” Taylor said.

Taylor said some business leaders he has spoken to have begun wholesale reviews of their organizations’ DEI policies. Any policy shifts tend to be undertaken quietly, however, because businesses don’t want to give plaintiffs’ lawyers a potential angle to sue by implicitly conceding a past policy might have been illegal, he said. “Not surprisingly, they’re not exactly announcing it,” he said.

Will DEI programs disappear?
The programs themselves don’t seem to be disappearing. Chief human resource officers don’t plan to scale back diversity initiatives, according to 194 executives who participated in a survey released in December by the Conference Board, a nonprofit business research organization.
Still, the tone has shifted, said Diana Scott, leader of the Conference Board’s U.S. Human Capital Center.

“Many companies felt pressure to jump on the bandwagon, and I think the pendulum swung way, way, far in one direction,” Scott said. “Some companies are quietly pulling back from quotas and things that could be perceived as discriminatory.”

The U.S. Supreme Court’s decision last year in the case challenging affirmative action at Harvard University didn’t directly touch on employment law, but prodded some businesses to reconsider their practices.
“The Harvard decision woke up a lot of people,” said Natasha Teleanu, a former U.S. Justice Department lawyer who now works at the law firm O’Melveny & Myers.

In the educational sphere, the Harvard case ended a legal epoch. PHOTO: BRIAN SNYDER/REUTERS

Challenges to DEI
Shareholder activists, politicians, conservative groups and employees all have repeatedly challenged what they say are illegal practices that some of the country’s most influential corporations have used in the pursuit of diversifying their workforces.

In the educational sphere, the Harvard case ended a legal epoch, but there is no single analogous case poised to redefine employment law. Some cases on discrete practices, though, are working through the courts.

At a hearing in Miami last week, for example, an appeals court heard arguments on the legality of a program, operated by the philanthropic arm of venture fund Fearless Fund, that awards grants to businesses owned by Black women. The U.S. Court of Appeals for the 11th Circuit voted to block the fund from picking new grant winners while it considers the appeal.

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