As higher education institutions, state and local governments, private employers, and federal contractors grapple with understanding the impacts of the Supreme Court’s decision in Students for Fair Admissions, it isn’t surprising that elected officials have markedly different views about the philosophy and effects of affirmative action and other race-conscious policies. Members of Congress, governors and President Joe Biden have all issued statements ranging from press releases expressing general views of support or opposition to legal memoranda extrapolating the Court’s holding to a variety of contexts.

Of particular note is the July 13, 2023, letter from 13 Republican state attorneys general (AGs) to the executives of Fortune 100 companies warning them about DEI programs in contracting and employment. The AGs admonish the companies “to refrain from discriminating on the basis of race, whether under the label of ‘diversity, equity, and inclusion’ or otherwise.”

One group that has been active in suing private companies is the America FirstLegal Foundation (AFL).

The AFL takes the view that “all DEI programs, and all ‘balancing’ in employment, training, scholarships and promotions based on race, national origin, or sex are illegal. “It’s engaged in an ongoing campaign to challenge what it calls “woke corporations” for “illegally engaging in discriminatory employment practices that penalize Americans based on race and sex.” To date, it has filed complaints against many large U.S. companies covering a range of industries and sectors.

The challenges to DEI programs have a pattern.

First, groups such as the APL use companies’ public statements, policies and programs about DEI — as highlighted in those companies’ Securities and Exchange Commission (SEC) filings, annual reports, DEI reports, CEO statements, press releases and other publicly available information — as alleged evidence of unlawful discrimination against whites, Asians, and men in violation of Title VII of the Civil Rights Act of 1964 and state/local civil rights laws. The policies and programs that are often targeted include:

Goals for the placement of people of color and women in leadership and leadership pipeline positions to match community demographics by a certain year (e.g., by 2025)

Employee training and apprenticeship programs focused on underrepresented groups; and

Quantitative representation metrics for leadership incorporated into annual incentive compensation awards for senior leadership.

Relying on the Equal Employment Opportunity Commission (EEOC) regulations’ provision that “any person or organization may request the issuance of a Commissioner charge for an inquiry into individual or systemic discrimination, “the AFL has sent letters to the EEOC claiming various companies’ employment policies and programs are facially illegal under Title VII and provide a basis for the agency to initiate investigations and issue commissioner charges.

One EEOC commissioner, Andrea R. Lucas, has expressed the view that the agency does “not impose ‘equitable’ outcomes” and stressed that “the [Supreme] Court never has blessed employers taking race-conscious employment actions based on interests in workplace diversity.” The number of signed EEOC commissioner charges rose dramatically to 29 in fiscal year (FY) 2022, with Lucas leading with 12 signed charges (41%).

Second, challenges have involved writing letters to the targeted companies’ CEOs and boards claiming mismanagement and waste of company assets, violations of federal and state/local anti-discrimination laws, and breaches of fiduciary duty. The letters generally include one or more of the following demands:

Cease and desist from all employment practices that allegedly discriminate based on race, color, sex, or national origin and/or that are designed to impose racial parity or balancing.

Disclose publicly (a) contemporaneous email and other communications regarding company programs, (b) evidence management relied on in determining the programs would create shareholder value, and (c) legal justification for the programs.

Retain independent counsel to conduct a comprehensive compliance audit of the company’s employment and contracting practices, and then make the report available to investors and shareholders.

Identify and remove individuals who determined the company’s best interests weren’t served by nondiscriminatory employment practices.

Preserve all records in anticipation of litigation.

The Students for Fair Admissions decision is having a noticeable impact on tactics in these challenges. For instance, the AFL filed a request to the EEOC for a commissioner charge against a consulting firm, citing Students for Fair Admissions as a leading authority for the contention that “decades of case law have held that — no matter how well intentioned — quotas and employment practices aimed to achieve ‘balancing’ are strictly prohibited.” Its letter to the consulting firm referred to DEI efforts as “cartoonish racism and rambling incoherence.”

That characterization seems to be partly inspired by the Students for Fair Admissions decision, where the majority favorably cites to Justice Neil Gorsuch’s concurrence regarding “the ‘incoherent’ and ‘irrational stereotypes’ that these racial categories further.” AFL’s statement also seems to derive inspiration from Justice Clarence Thomas’s concurrence, where he says, “The solution to our Nation’s racial problems thus cannot come from policies grounded in affirmative action or some other conception of equity. Racialism simply cannot be undone by different or more racialism.”

So, what should potentially affected organizations do in response to this legal uncertainty? We suggest taking a breath and bringing method to the madness. Here’s a methodical way to start:

Work to pinpoint the relationship between what you are or what you do and how the Court’s decision might apply to you.

Think through with legal counsel the specific bases of potential legal jurisdiction over you and claims against you-e.g., 14th Amendment Equal Protection Clause, Title VI (federal funds recipient), Title VII (employer status), state laws, and provisions of government contracts.

Identify the specifics of the programs or policies that could be argued to be race-conscious (being objective but expansive in potential scrutiny).

Review the rationale, language and reach of the policies and programs, looking for easy ways to tighten or alter those things that could be challenged or misunderstood.

Evaluate the profile of the policies and programs, the risk of legal challenge and the consequences and costs of legal process and liability.

Measure the risks against other potentially important interests, such as the mission and values of the organization, the views of valued constituencies and your long-term goals.

Determine whether and how change is required in those policies and programs.

There’s no question we are in a change environment. But as always, the first, best step is to cut through the noise and start to cope with that change in measured ways.

It remains lawful for employers to develop programs and policies aimed at providing equal employment opportunities. The Democratic Attorneys General Association took that position in its response to the letter sent by the 13 Republican AGs.

In light of the Students for Fair Admissions decision and increased attacks by interest groups, however, you must be careful when developing, communicating about, and implementing DEI programs. For instance, goals that really look like quotas, set-asides, and racial balancing are problematic, could draw challenges, and could find a sympathetic ear with the EEOC and judges.

Consider the steps outlined above to take stock after the Students for Fair Admissions decision. Understanding what and how DEI programs are being challenged is useful in this review process. In addition, you should train employees involved in the hiring, retention, and promotion processes to ensure that practical implementation of your policies is aligned with your mission and policy directives and is consistent with the law.

For more information on reviewing your DEI programs, please contact Brian Garrison, an attorney with Faegre Drinker in Indianapolis and editor for the Indiana Employment Law Letter, at brian.garrison@faegredrinker.com. This article is republished from the Upper Midwest Employment Law Letter, a monthly publication focusing on Iowa, Minnesota, Nebraska, North Dakota, and South Dakota.