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Diversity Programs vs. Title VII: Walking a Fine Line

March 13, 2021 by in "Two Minute Takeaway"

Corporate diversity has assumed new urgency in the US. Companies are committing to diversify their ranks and are insisting that their vendors do so as well.  BlackRock’s CEO Larry Fink, for example, announced that the giant asset manager will increase African-American staff by 30% and African-American senior management by 100% by 2024.  The chief legal officers at 170 major companies recently announced that outside law firms must diversify partner ranks or risk losing their legal business.  

But how can companies diversify without running afoul of Title VII’s prohibition of racial discrimination?

Affirmative Action vs. Diversity Initiatives

For the most part, Title VII equally protects white employees against employment discrimination.  Only when employers establish bona fide affirmative action plans may they consider minority employees’ race or ethnicity as a desirable “plus factor” when making employment decisions.  The Supreme Court has set strict requirements for affirmative action plans, including that they address “conspicuous racial imbalances in traditionally segregated job categories.”  See Steelworkers v. Weber.

Few companies today operate voluntary affirmative action plans.  Such plans fell out of favor because many viewed them as a divisive form of reverse discrimination.  Further, newer industries such as media, technology, and finance, do not have have — or do not want to admit they have — a legacy of segregation sufficient to establish the “remedial purpose” required for a formal affirmative action plan.  Consequently, most diversity and inclusion programs are not affirmative action plans and must remain race-neutral in making employment decisions. 

Diversifying Recruitment

To achieve diversity objectives, therefore, companies do not focus on hiring decisions, but instead focus on expanding recruitment.  It is legal for companies to broaden recruitment efforts to consider more minority candidates before filling a position.  In practice this means expanding searches to schools from which companies did not traditionally recruit, broadening the geographic reach of recruiting efforts, and proactively inviting diverse candidates to apply for open positions. 

For example, the organization DiversityLab has promulgated the “Mansfield Rule” which governs law firm recruiting and has been adopted by more than one hundred major US law firms.  The Rule requires firms to consider at least 30% minority/diverse candidates before filling senior positions.  Participating law firms report that instituting this relatively simple act of inclusiveness has diversified their ranks.

Walking a Fine Line

The legal risk for employers is that ambitious diversity messaging and recruiting will bleed over into personnel decision-making.  Demands for diversity by senior management and clients naturally may cause hiring coordinators impermissibly to consider race when making individual employment decisions.   A comparison of two reverse discrimination court cases shows how easy it is for employers seeking diversity to cross the line and violate discrimination laws.  

One court rejected a white plaintiff’s discrimination claim against NASA that was based in part upon statements by NASA’s leadership about its diversity initiatives.  Among other things, one NASA official publicly proclaimed that “NASA is too frail, too pale, too male and too stale” and “Women and minorities have not had the opportunities others have had.  We’re changing that.  We’re opening the doors of NASA at all levels…”  Despite these provocative statements, the Court held there was no connection between the statements and the specific decisions affecting plaintiff’s employment.  Bold diversity messaging, therefore, clearly is insufficient to establish a claim for reverse discrimination.

But when diversity goals influence individual employment decisions, a company can quickly run afoul of the law.  In a New Jersey case, a supervisor acknowledged the anodyne-sounding diversity objective that led him to terminate plaintiff instead of a similarly situated minority employee:

I believe by retaining Mrs. Williams it was sending a very clear message that we feel that our staff should be culturally diverse, our student population is culturally diverse and there is a distinct advantage to students, to all students, to be made—come into contact with people of different cultures, different background, so that they are more aware, more tolerant, more accepting, more understanding of people of all background…it’s important that our school district encourage awareness and acceptance and tolerance and, therefore, I personally think it’s important that our staff reflect that too.”

The supervisor’s rationale perfectly parroted the aspirational tone of almost any corporate diversity program.  The Court, however, held that when this rationale guides a specific decision to terminate a specific employee based upon her race, it constitutes illegal discrimination. 

Conclusion

In conclusion, employers pursuing diversity and inclusion programs must carefully compartmentalize their efforts.  Companies can adopt bold corporate messaging and they may aggressively recruit minority applicants to apply for open positions.  But individual employment decisions about who to hire, fire, or promote must still be made on a race-neutral basis.