Seyfarth Synopsis: Companies have been following with interest the Harvard and UNC cases that address affirmative action in the context of higher education. Both cases were argued before the Supreme Court on October 31, 2022 and rulings are expected very soon. In anticipation of the Court's decisions, Seyfarth is highlighting key areas of interest for employers.
Overview of the UNC and Harvard Cases
The two cases are Students for Fair Admissions, Inc. v. University of North Carolina "(UNC"), and Students for Fair Admissions, Inc. v. President and Fellows of Harvard College ("Harvard"). The UNC case alleges the public university discriminated against White and Asian American students by allowing race to be considered as one factor in an overall holistic admissions process. The Harvard case alleges discrimination against Asian Americans under a similar approach, which allows race and ethnicity to be considered as part of a candidate's personal rating.
The UNC case involves claims under the Equal Protection Clause of the Fourteenth Amendment and Title VI of the Civil Rights Act of 1964 ("Title VI"). The Equal Protection Clause requires states and state-run institutions to govern impartially, and prohibits distinctions between individuals that are irrelevant to a legitimate governmental objective. Title VI prohibits discrimination on the basis of race by entities that receive federal funding. Since Harvard is a private university, the Fourteenth Amendment does not apply, and the claim is advanced only under Title VI.
The Harvard and UNC cases were initially consolidated before the Supreme Court due to the similarity of issues. However, Justice Ketanji Brown Jackson recused herself from the Harvard case because she had attended Harvard for both college and law school, and had recently finished a six-year term on Harvard's Board of Overseers. The two cases were thus divided before oral argument so that Justice Jackson could hear the UNC case.
Significantly, neither case involves claims related to employment.
The Plaintiff in both cases, Students for Fair Admissions, Inc., argued that the Supreme Court should overturn the landmark case of Grutter v. Bollinger from 2003. In Grutter, the Court held that an educational institution may consider an applicant's race as one factor in an admissions policy without violating the Equal Protection Clause of the Fourteenth Amendment, so long as the policy (a) is narrowly tailored to the compelling interest of promoting a diverse student body (because of the proven educational benefits of diversity), and (b) uses a holistic process to evaluate each applicant, where race/ethnicity is just one of many considerations (i.e., no quota system).
Both Harvard and UNC argue their programs are consistent with Grutter because race is not a determinative factor but, rather, just one "plus" factor in a comprehensive admissions process. The lower courts agreed and upheld the validity of the programs.
The Difference Between Affirmative Action in Education Versus Employment
Immediately following the hearings, some media outlets boldly predicted the "end" of "affirmative action." As explained below, that is unlikely to be true. But, the cases have garnered significant attention and a ripple effect has begun. While the Harvard and UNC cases have been pending at the Supreme Court, more than a dozen states have enacted or proposed legislation that would ban certain diversity measures by public institutions of higher learning. Funding for Diversity, Equity, and Inclusion ("DEI") initiatives is also being reduced at several schools.
Once decisions are issued in the Harvard and UNC cases, a new flurry of catchy headlines will ensue. This may lead to a barrage of questions for employers, both internal and external, about corporate policies and priorities. As such, employers should be aware of the distinctions between different types of "affirmative action."
The UNC and Harvard cases address only affirmative action in the context of higher education. In that setting, colleges and universities can use an applicant's race/ethnicity as a substantive factor in deciding who to admit. That is not the case with affirmative action in employment. Nonetheless, there is some concern that, if the Supreme Court endorses a strict race-neutral reading of Title VI for college admissions, that may leave the door open for other courts to do the same in other contexts, including employment (i.e., under Title VII of the Civil Rights Act of 1964). However, this is far from a guaranteed outcome, or even a likely one, given the divergent standards applicable in employment.
Affirmative Action in Employment
In the employment setting, racial/ethnic preferences are not permitted as part of affirmative action efforts, with very limited exceptions. This is a significant distinction from the Harvard and UNC frameworks.
There are two types of "affirmative action" in the employment context. They are: (1) "voluntary" affirmative action efforts (more commonly understood as DEI programs) undertaken by choice by a company, and (2) affirmative action mandated for federal contractors and subcontractors by the U.S. Department of Labor's Office of Federal Contract Compliance Programs ("OFCCP"). Neither voluntary nor OFCCP-mandated "affirmative action" use the Grutter framework to evaluate legality.
I. Voluntary Affirmative Action
Voluntary affirmative action programs are governed by the Supreme Court case United Steelworkers of America, AFL-CIO-CLC v. Weber, 443 U.S. 193 (1979). Weber established a three-part test employers must satisfy to consider a protected trait — like race, ethnicity, or gender – as a "plus" factor in employment decisions (or, in any discrete step of an employment decision, such as who will be interviewed for a job opening). Under Weber, an employer must establish that:
1. There is a demonstrated "manifest imbalance" between groups in one or more traditionally segregated or underrepresented job categories;
- This manifest imbalance must be evidenced by an appropriately structured statistical analysis. The more specifically tailored the analysis, the better.
2. The measures implemented are narrowly tailored, and do not "unnecessarily trammel" the rights of other groups;
- Even if there is a demonstrated imbalance, employers may not implement a hiring quota.
3. The affirmative action program is temporary and limited in duration, meaning that the measures will stop once the imbalance is rectified.
- To ensure this, efforts and results must be monitored over time, to gauge the impact of the affirmative action. When the imbalance is remedied, the extra measures stop, and EEO neutrality returns as the guiding principle for employment decisions.
See also Johnson v. Transp. Agency, Santa Clara Cnty, 480 U.S. 616 (1987) (upholding a voluntary affirmative action plan that considered sex as a factor in promoting skilled craft positions where female employees had been historically underrepresented). While many employers also implement various DEI related programs that focus on ensuring equal employment opportunities for all workers, there is no lawful basis for making a race or gender based selection decision in the absence of a finding that a "manifest imbalance" exists and that the remaining factors articulated in Weber, are also followed. In our experience, most DEI initiatives stop short of making race or gender-based employment decisions.
II. OFCCP-Mandated Affirmative Action
In the OFCCP context, private employers who do business with the federal government, and meet certain contractual thresholds ("federal contractors and subcontractors") are required to engage in affirmative action under three laws: Executive Order 11246 (for women and minorities), Section 503 of the Rehabilitation Act of 1973 (individuals with disabilities), and the Vietnam Era Veterans' Readjustment Assistance Act of 1974 ("VEVRAA," for veterans). The affirmative action requirements under these laws follow Title VII.
OFCCP obligations are very different from the "affirmative action" employed in higher education, despite using the same term. The OFCCP issued an FAQ on its website to emphasize that the affirmative action obligations it enforces are "wholly distinct from the concept of affirmative action as implemented by some post-secondary educational institutions in their admission processes."
The most notable contrast between the educational setting and the OFCCP is that federal contractors and subcontractors may not consider race or ethnicity (or any other protected trait) when making employment decisions. Quotas are expressly prohibited, as is any form of preferential treatment. Protected traits may not be a "plus" factor in any employment decision, including who to interview, who to hire, or who to promote.
Instead, OFCCP affirmative action is advanced through two primary activities: (1) a statistical analysis of a contractor's significant employment decisions (hiring, promotions, terminations, and pay) to ensure that no particular race, ethnicity or gender is adversely impacted by the company's policies and practices, and (2) diversity-focused recruiting of women, minorities, veterans and individuals with disabilities. For the second, the thought is that, the more diverse candidates apply for opportunities, the more likely it is that diverse candidates will be chosen through a neutral selection process. Contractors direct their diversity recruiting efforts to areas where the representation of a particular group or groups is unusually low compared to the available labor market, using "placement goals" to encourage improvement.
Again, though, even placement goals do not permit an employer to consider race, ethnicity, or any other protected trait in order to increase diversity, in stark contrast to the "plus" factor that colleges and universities can currently use in their admissions process. The regulations specify:
- "Placement goals may not be rigid and inflexible quotas, which must be met, nor are they to be considered as either a ceiling or a floor for employment of particular groups. Quotas are expressly forbidden." 41 C.F.R. § 60-2.16(e)(1). Instead, placement goals "are used to measure progress toward achieving equal employment opportunity." 41 C.F.R. § 60-2.16(a)
- "In all employment decisions, the contractor must make selections in a non-discriminatory manner. Placement goals do not provide the contractor with a justification to extend a preference to any individual, select an individual, or adversely affect an individual's employment status, on the basis of that person's race, color, religion, sex, sexual orientation, gender identity, or national origin." 41 C.F.R. § 60-2.16(e)(2)
- "Placement goals do not create set-asides for specific groups, nor are they intended to achieve proportional representation or equal results." 41 C.F.R. § 60-2.16(e)(3)
- "Placement goals may not be used to supersede merit selection principles. Affirmative action programs prescribed by the regulations in this part do not require a contractor to hire a person who lacks qualifications to perform the job successfully, or hire a less qualified person in preference to a more qualified one." 41 C.F.R. § 60-2.16(e)(4).
Potential Impact on Corporate DEI Programs and Initiatives
If the Supreme Court overturns Grutter, and rules against race-conscious college admissions programs, there will be no direct or immediate impact on employment policies, for several reasons. First, the higher education cases arise under Title VI and the Fourteenth Amendment, while employment programs are governed by Title VII, and/or Section 1981 of the Civil Rights Act of 1866. Different legal standards thus apply. In addition, the underlying social interests vary in the two contexts, with the UNC/Harvard cases focused on the educational benefits of diverse student populations and principles of academic freedom. There is also a clear historical record of racial and gender exclusion in higher education, during long periods in our nation's history when neither minorities nor women were admitted at many schools.
That said, there are likely to be indirect effects on corporate DEI initiatives and affirmative action programs. It is not hard to imagine a "chilling effect" that extends beyond education. For instance, the attention these cases will receive, particularly if Grutter is overturned, could cause more applicants and employees to scrutinize the perceived use of protected traits in employment decisions, especially hiring and promotions. There is already a flurry of recent efforts that challenge nonremedial corporate diversity practices. If Grutter is overturned, employees and candidates--equipped with the knowledge that affirmative action is no longer permissible in higher education--may start challenging diversity efforts at an even greater rate than currently seen.
In addition, it is possible courts will analogize these rulings from the educational context to other areas of the law, like employment. Though it would take time for test cases to reach judgment, the pendulum could start to swing further away from the use of remedial programs.
Employers might also experience an indirect adverse substantive effect on their diversity, if the Supreme Court curtails college diversity admissions. As student bodies become less diverse over time, so too may the pipeline of candidates that are available to be hired into job openings.
Finally, there may be a number of other practical implications. Companies may find themselves inundated with questions from employees, shareholders, boards, and even the media, as to the nature, extent, and justification of DEI programs. Amplifying the focus on diversity in society will draw more attention to employer measures that address race, ethnicity, gender or other protected demographics. Businesses could find themselves on the defensive, having to justify their DEI measures and to distinguish efforts from what may be found to be problematic in the UNC and Harvard cases. This will require employers to invest time and money on corporate communication strategies. There could also be a negative impact on employee relations and workplace morale, if the Supreme Court's actions cast doubt on the value assigned to inclusive workforces in America today. The purpose of corporate diversity initiatives is to foster a sense of belonging and to increase workforce participation for underrepresented groups. If those goals are deprioritized, there may be a negative reaction from employees and job candidates.
Impact on Employers Generally
Regardless of the outcome in the college admission cases, employers should reanalyze the risks associated with their affirmative action and DEI efforts, especially where race, ethnicity and/or gender play some role in recruitment or selection processes. Now is the time for employers to revisit their diversity efforts to ensure they are lawful, compliant, and non-discriminatory.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.