Balancing DEI in the workplace
When the U.S. Supreme Court’s June 2023 decision in Students for Fair Admissions, Inc. significantly curtailed race-based affirmative action in higher education, many predicted that the decision would have consequences in the employment context as well. Now, less than a year later, employers are feeling the impact of that decision in expected – and unexpected – ways.
As recently reported in Bloomberg Law, public corporations, such as JetBlue Airways Corp. and Molson Coors Beverage Company, are citing Diversity, Equity and Inclusion initiatives as a “risk” factor in their 10-K filings.
According to Bloomberg, since the Court’s decision, more than two dozen publically traded companies mentioned DEI as a risk factor in their filings. It is now fair to say that DEI, and its application in corporate America, is being more closely scrutinized and many employers are now proceeding with caution.
Indeed, Atinuke Adediran, an associate professor at Fordham School of Law, noted that public companies list “risk factors” to shield themselves from potential shareholder-related actions concerning said risk factors, among other reasons. DEI, however, is new to this list and a significant departure from more typical risk factors, such as the potential impact of a merger or current or expected market conditions.
In its 10-K filed on February 12, 2024, JetBlue stated that “negative perception of DEI initiatives, whether due to our perceived over – or under – pursuit of such initiatives, may likewise result in issues hiring or retaining employees, as well as potential litigation or other adverse impacts.”
Further, some companies are now using risk-hedging language to talk about diversity efforts more broadly. Over a dozen U.S. companies including Uber have removed DEI terms like “anti-racist” and “unconscious bias” from their corporate filings this year, according to Bloomberg.
Despite this trend, DEI remains an important initiative for the majority of U.S. corporations and an expectation among many employees. However, the growing DEI pushback is a good reminder for employers that fairness and equality, regardless of protected characteristics, and based upon bona-fide qualifications, is a good compass by which to make employment-related decisions.
McDonald Hopkins' Labor and Employment team will continue to monitor developments related to DEI and will provide updates as they come.
