Over the past two years, as Ishan Bhabha and his colleagues at the law firm Jenner & Block prepared briefs for the affirmative action case that the Supreme Court ruled on last year, Bhabha realized one thing: whether higher education institutions As Harvard was the first target of diversity, equity and inclusion litigation, America's corporate boardrooms were likely next.
Bhabha began working with dozens of Fortune 500 companies to evaluate their diversity programs and ensure they had a solid legal footing if they were sued.
Proponents of corporate diversity, equity and inclusion programs, commonly called DEI, argue that they are important for hiring and retaining people of color. Critics now argue that some of these programs may unfairly exclude whites and Asians from hiring processes.
In recent months, hundreds of companies have been reexamining those initiatives after a series of challenges to diversity programs: the threat of litigation in the wake of the Supreme Court decision that voided college admissions on the basis of race, criticism of DEI initiatives by some senior-profile business leaders and a wave of layoffs in the tech industry that severely affected DEI teams.
This pushback, which came as more than 20 states weighed or passed new laws last year targeting DEI initiatives, has had a chilling effect on some corporate DEI offices, according to diversity advisors.
“When the economy is booming and politics is receptive, we see huge growth in diversity programming,” said Frank Dobbin, a DEI expert at Harvard and author of the 2022 book “Getting to Diversity.” “When there's a shift in the political winds – which is what's happening now – or a recession, we've seen cuts.”
The backlash, Dr. Dobbin said, has pushed some human resources professionals to keep their DEI efforts “under the radar.” At recent conferences he attended, Dr. Dobbin added, corporate leaders have discussed how to address DEI “in a less direct way.”
Some have explored moving away from initiatives that attract a lot of public attention, such as mandatory anti-bias training, and focusing on lower-profile DEI strategies, such as diversity task forces that bring together leaders from different corporate departments.
“If companies water down things that are ineffective, that could be a good outcome,” Dr. Dobbin said, noting that mandatory anti-bias trainings have been shown to sometimes even make bias worse. “But I do worry about the baby coming out with the bathwater.”
So far, few companies appear to have cut their programs because of the Supreme Court ruling. Three-quarters of employers surveyed by Littler Mendelson PC, the employment law firm, said they had not changed their approach to DEI because of last year's ruling, and only 1 percent reported a significant decline in their efforts, according to a survey. survey published this month.
And some executives say they are doubling down, like Crystal Castille-Cromedy, who leads DEI strategy for Hines, one of the world's largest real estate companies. Castille-Cromedy joined the firm in June 2020, days after the murder of George Floyd, and has overseen a number of diversity efforts, including the creation of a mentorship program for underrepresented groups in real estate.
Bhabha, a partner at Jenner & Block and chair of the firm's DEI Protection Working Group, said he has “some clients who say, 'Look, if I get sued for this and I have to become the face of DEI defense against a conservative reaction, I'd love to do it.'” But he said: “The vast majority of my clients are not in that group. They think, 'We'd like to keep our heads under the parapet.'”
The American Alliance for Equal Rights, a conservative nonprofit dedicated to challenging race-based policies, sued a handful of law firms last year over their diversity scholarship programs, arguing that these programs discriminate. to white and Asian applicants.
American Alliance founder Edward Blum also created Students for Fair Admissions, the group that sued Harvard over its affirmative action policies and won.
“These lawsuits have sent a powerful message to corporate America: Law firms turned to for legal advice on DEI are violating the law,” Blum said.
American Alliance filed lawsuits against law firms Perkins Coie, Morrison Foerster and Winston & Strawn. All of those companies have since opened their diversity scholarships to applicants of all races and backgrounds, and Blum's group dropped the lawsuits.
“Following the Supreme Court's landmark decision striking down race-based affirmative action in college admissions, we conducted a comprehensive review of our programs,” Winston & Strawn said in a statement. Perkins Coie said in his statement that the program's revised criteria would continue to “ensure” the firm hired attorneys “with a diversity of backgrounds and experiences.”
Morrison Foerster said he had been in the process of opening the scholarship even before the lawsuit.
In addition to the threat of litigation, some prominent business leaders have recently criticized diversity programs. Billionaire financier Bill Ackman wrote an essay this month in The Free Press, after Claudine Gay resigned as president of Harvard, criticizing what he said was “the penetration of DEI ideology into the corporate boardroom.” Elon Musk, in a post on X, wrote: “Discrimination based on race, which DEI does, is literally the definition of racism.” (Billionaire investor Mark Cuban, meanwhile, wrote on X that “DEI-Phobic companies loss is my gain.”)
Leaders who have criticized specific types of diversity programs within the industry argue that blanket criticism of DEI can be counterproductive and distract from meaningful efforts to reform corporate diversity initiatives.
“I've criticized things like our relative lack of metrics, the relative lack of accountability, the fact that leaders can put out a DEI statement and do nothing,” said Lily Zheng, DEI strategist and author of “Reconstructing DEI” Mx . . Zheng believes that criticism of racial quotas focuses on “a DEI straw man”
In 2020, after a wave of racial justice protests following the murder of George Floyd, corporate DEI programs received a groundswell of support and hundreds of employers came forward to announce new diversity initiatives. In that year alone, companies spent approximately $7.5 billion on DEI-related efforts. But some DEI leaders say the attention and investment since then has not been sustained.
“It's a sugar rush phenomenon,” said John Amaechi, a retired basketball player who now works with companies on DEI strategy. “It creates an enormous amount of energy followed by a retreat.”
In some cases, DEI programs have been hit hard by job cuts. RevelioLabs, a workforce database, published a study last year that analyzed 600 companies that have laid off workers since 2020 and found that the attrition rate of people working in DEI was almost twice that of employees in non-DEI related roles.
Many executives still maintain that their efforts to hire diverse employees contribute to company performance. For example, Armughan Ahmad, CEO of Appen, an artificial intelligence company, says that a diverse talent pool allows the company to create products trained for diverse users, which helps prevent racial bias in AI algorithms.
Many corporate leaders share that view.
“Even in places where anti-DEI legislation is passed, it's not that companies are somehow relieved that they don't have to do this work,” said Jensen Harris, co-founder of Textio, an AI HR platform used by more than 1,000 companies. “They're the ones who realize, 'Okay, DEI work is still very important, so how do we work around this legislation?'”
The Supreme Court's recent decision on race-sensitive admissions policies does not directly apply to most employers. The decision largely focused on Title VI of the Civil Rights Act of 1964, which covers institutions that receive federal funds and does not apply to most private companies. But many employers fear that their DEI initiatives could be legally challenged under Title VII, which deals with labor relations, or Section 1981 of the Civil Rights Act of 1866, which covers contracts.
Kenji Yoshino, director of the Meltzer Center for Diversity, Inclusion and Belonging at New York University School of Law, has been advising managers at Fortune 500 companies to code their DEI programs green, yellow or red . A red program indicates an initiative that has a high risk of potential litigation, such as a hiring process that gives an advantage to candidates of color; On the other hand, a program that offers mentoring broadly to anyone in the company can be classified as green.
Yoshino noted that some critics of DEI have a limited view of what the programs consist of. Many corporate diversity programs go beyond hiring processes and encompass mentoring, training, and professional development.
“The pessimists say, 'This is a terrible time for DEI, DEI is over, the sky is falling,'” Yoshino said. “I want to ask people what they think DEI really is.”
