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  • Writer's picturePaul Peter Nicolai

Thoughts for Employers from the Supreme Court Affirmative Action Decision

Updated: Aug 16, 2023

The Supreme Court recently reversed the longstanding rule that race can be considered as a plus factor among many factors when making higher education admissions decisions. The ruling effectively ended affirmative action in college and university admissions.

The decision does not directly address affirmative action in employment, which already prohibits using plus factors. While the immediate impact on employers will likely be limited, the ripple effects of the decision may create added risks for employers and ultimately impact affirmative action and diversity initiatives in the long run.

In higher education, “affirmative action” generally means considering a student’s race as one factor within a holistic review of the student’s application. The court determined that while promoting pluralism, diversity, and other educational values are admirable goals, they were not “sufficiently coherent” to survive strict scrutiny in the context of indefinitely providing racial preferences in admissions. While race, in and of itself, can no longer be an admissions factor, the ruling acknowledges that colleges and universities can still consider an applicant’s explanation of how race influenced the student concerning the individual student’s leadership and character advocacy as it relates to specific admissions-related criteria.

In employment, there are two forms of affirmative action; mandatory and voluntary. Mandatory affirmative action is required by law. Voluntary affirmative action is not. Mandatory affirmative action includes legal mandates applicable to covered federal contractors and subcontractors (covered contractors); voluntary affirmative action includes diversity-focused initiatives by companies that are not covered contractors. In addition, affirmative action in employment may target other underrepresented protected classes in addition to race.

Mandatory affirmative action based on race and gender applies to covered contractors under Executive Order 11246 and Office of Federal Contract Compliance Program (OFCCP) regulations. These regulations require contractors to assess underrepresentation in their workforce and remedy it through good faith efforts such as outreach, recruitment, and training. These regulations also require covered contractors to proactively assess compensation, hiring, and promotions systems to identify disparities based on race or gender that could indicate disparate treatment or disparate impact discrimination. OFCCP prohibits using plus factors, preferences, or quotas in mandatory affirmative action programs. Indeed, OFCCP even states on its website that affirmative action in employment is legally distinct from affirmative action in higher education admissions because the former prohibits preferences, quotas, and set-asides.

Given OFCCP’s view of affirmative action in employment and its prohibition against using plus factors, the agency will likely take the position that the decision does not impact mandatory affirmative action. OFCCP can also point to several federal circuit court cases upholding Executive Order 11246 and employment affirmative action, none of which were addressed in the court’s ruling.

In its decision, the Supreme Court questioned whether the standard race/ethnicity categories (e.g., White, Black/African American, Hispanic/Latino, Asian, Pacific Islander, Native American) were specific enough to be suitable measures of underrepresentation in the admissions context. It noted that the current categories are broad and include many ethnicities and national origins. This could lead the EEOC and OFCCP to disaggregate these categories into more specific categories, such as East Asian and South Asian, as noted by the court, for use in the employment context.

Likewise, covered contractors have been challenged by the recent sharp drop in census occupation codes, the primary data source used by covered contractors in their diversity analytics. The most recent US census data includes only 237 occupation codes (down from 488 in the prior census). The substantial reduction in occupation code data makes it more difficult for covered contractors to determine labor-market diversity availability data for some job titles. With the likely increased focus on using diversity analytics to show a manifest imbalance, anything that makes this more difficult may pose added legal risk and require more agency guidance to help contractors construct compliant programs.

The Supreme Court’s ruling could also serve as a blueprint for future challenges to employers’ mandatory and voluntary affirmative action programs, with employees adopting some of the court’s reasoning to justify their claims.

Practical Takeaways

  • Diversity-focused initiatives are likely not to be impacted in the near term. Employers should focus these initiatives more on non-discrimination in employment (through proactive training, OFCCP-style self-audits, and inclusive work environments) and ensuring equal employment opportunity (EEO) in hiring and advancement (through outreach, recruitment, and elimination of barriers). Employers should have affirmative action and diversity programs reviewed by counsel to ensure compliance with existing laws and future developments.

  • More formal mandatory or voluntary affirmative action programs will likely not be impacted, although employers should strictly follow the applicable OFCCP regulations and EEOC guidance. Counsel should review any race-conscious initiative based on diversity analytics where the employer has identified a manifest imbalance in its workforce and should be narrowly focused on remedying that imbalance. Employment decisions must not consider race or other protected characteristics as part of the decision.

  • To avoid potential lawsuits or complaints and confusion, it may be better to move away from the term affirmative action.

  • Employees may be confused about the Supreme Court’s decision, so covered contractors should consider proactive messages and training for their workforces regarding their covered contractor status and continuing obligations to comply. Employers may see more cases where affirmative action is believed to play a role in a hiring or promotion outcome.

  • If a complaint regarding an affirmative action or diversity initiative is filed with the EEOC or OFCCP, employers should be prepared to show that no plus factor, preference, or quota is being used.

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